Determining The Relationship Between Growth, Export and FDI in Selected OIC Countries

Policymakers continue to focus primarily on economic growth, which is regarded as a key means of enhancing the economic well-being of nations. The roles of exports and foreign direct investment (FDI) in the growth strategies of emerging economies have long been subjects of scholarly debate. Accordingly, the export-led growth and FDI-led growth hypotheses have been extensively examined across different countries and time periods. This study investigates a group of countries that are members of the Organisation of Islamic Cooperation (OIC) and classified within the Next Eleven (N-11), namely Bangladesh, Indonesia, Egypt, Nigeria, Pakistan, and Türkiye. Iran is excluded from the analysis due to data limitations. The study covers the period from 1990 to 2023 and employs a time-series econometric framework. Both the standard ARDL bounds testing approach and the bootstrap ARDL method are used to examine long-run cointegration relationships among economic growth, exports, and FDI. In addition, the Toda–Yamamoto and Fourier Toda–Yamamoto Granger causality tests are applied to analyze short-run causal linkages. The standard ARDL bounds tests indicate the presence of a greater number of long-run relationships; however, the bootstrap ARDL results identify cointegration only in models where economic growth is the dependent variable for Bangladesh and where FDI is the dependent variable for Egypt. Given that the bootstrap ARDL approach is considered more reliable, these findings suggest that the long-run equilibrium relationship among economic growth, exports, and FDI is more complex than previously assumed. Furthermore, the Fourier Toda–Yamamoto causality test reveals a larger number of causal linkages compared to the standard approach, reflecting its ability to account for structural breaks. Overall, among the countries examined, only the results for Bangladesh provide full support for the export-led growth hypothesis.