Growth Effects of Export Import, Foreign Direct Investment and Remittances in South Asian Countries : An Empirical Analysis using Panel Cointegration and Dynamic OLS Model

This paper investigates the long run growth effects of the external factors like export and import, foreign direct investment, and foreign remittances in South Asian countries. To estimate the same the Panel cointegration and Panel Dynamic Ordinary Least Squares (DOLS) have been used. The panel cointegration results show that the variables used in the model are conintegrated and they have long run relationship. Further, the Panel DOLS model estimated coefficients suggest that a 1 percent increase in FDI can cause 0.2367 percent increase in the country’s GDP of the selected South Asian countries in the long run (p=05). Estimated coefficient of the export import shows that a 1 percent increase in export import can cause 0.0072 percent increase in the GDP (p=05), and a 1 percent increase in the remittances can cause 0.0856 percent increase in the GDP of the selected south Asian countries in the long run (p =01). The overall R-Squared (R2) is 98 percent. Thus, this suggests that the external factors have significant influence on the economic growth of the South Asian countries in the long run