THE EFFECT OF GLOBALIZATION ON ECONOMIC GROWTH OF BANGLADESH

This study investigates the relationship between globalization (trade openness) and economic growth (GDP per capita) in Bangladesh. This study adopted a co-integration and vector error correction modeling techniques on an annual time series data within the periods of 1980-2014. The time series properties of the considered variables have been examined by applying Augmented Dickey Fuller and Philips-Perron tests. The Cointegration test and Vector Error Correction model were applied to investigate the long run and short run relationship among variables. The Cointegration test results show that all variables are cointegrated indicating that there is a stable long term relationship among them. The vector error correction model confirms a positive and significant effect of trade openness and gross fixed capital formation on GDP per capita in Bangladesh in the long-run.