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

AbstractThis paper focuses on the casual relationship between export, import and Gross DomesticProduct (GDP) for Bhutan using annual data from 1980 to 2005. The Granger causality testand 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. Theresults of Granger causality test shows that there is a causal relationship between theexamined variables. The causal nexus is unidirectional from export to import and GDP, andGDP to import only. Here export led growth is empirically proven in Bhutan