An Empirical Study on Export, Import and Economic Growth in Bhutan

Abstract

This paper focuses on the casual relationship between export, import and Gross Domestic Product (GDP) for Bhutan using annual data from 1980 to 2005. The Granger causality test and Co-integration Models are employed taking care of stochastic properties of the variables. The co-integration analysis suggests that there is a long-run equilibrium relationship. The results of Granger causality test shows that there is a causal relationship between the examined variables. The causal nexus is unidirectional from export to import and GDP, and GDP to import only. Here export led growth is empirically proven in Bhutan.