Exploring the Existence of J-Curve in South Asian Countries: An Empirical Analysis

Abstract

The core purpose of the present study is to investigate the impact of exchange rate devaluation on the trade balance of South Asian countries. For capturing the performance of Maldives, Bhutan, Pakistan, Nepal, Bangladesh, Sri Lanka, and India's economy, the study involves some leading economic measures like Trade Balance, Foreign Direct Investment, Exchange rate, Gross Domestic Product, and Inflation. The study made use of Panel data from the period 1980 to 2020. The study involved the Fix effect Model framework for the investigation of the J-Curve phenomenon. On behalf of the research, the study recommended some valuable suggestions for the betterment of the above-mentioned economies. Governments must implement regulations that encourage investors to utilize investment effectively and efficiently, upgrade technology, or switch to innovative or demand-friendly exports.