Attaining Sustainable Economic Growth in Bangladesh: Role of External Financial Means of Implementation

In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.

Amin et al. (2011) examine the causal relationship among energy use, CO2 emissions and economic growth in Bangladesh and reveal that energy consumption leads to economic growth and no causal relationship exists between economic growth and CO2 emissions in Bangladesh, which implies that economic growth can be achieved without deteriorating the environmental quality. Since there is a debate regarding the fact that whether environmental degradation is measured only by considering CO2 emissions, the objective of the present study is to expand the aforementioned study for robustness check, by considering two more environmental indicators and an extended time period of 1972-2011 and hence, address the question: Can a sustainable economic growth persist without degrading the environment? We consider a multivariate model and perform the Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests to check if the variables are stationary. Next, we apply the Johansen cointegration method followed by the Granger causality test to check for robustness of the relationship among the variables. Our results confirm that Bangladesh cannot achieve economic growth without hindering the environmental quality as there is a unidirectional causality running from CO2 emissions to economic growth. The results also point out that considering only one environmental indicator might lead to a misleading conclusion regarding the economic growth and environmental quality nexus.

Purpose: This study employs an annual time series data set from 1987 to 2018 gathered from the World Development Indicators (WDI), 2021 to analyze the properties of external debt stock on financial progress(proxied by economic growth) in Bangladesh. Methodology: The objectives are determined using a variety of econometric techniques, including the Phillips-Perron (PP) unit root test, Var model, Johansen co integration test, Impulse Response Function (IRF), Variance decomposition function, and Granger causality test. The get the result of the Phillips-Perron (PP) unit root test which indicates the stationarity of all the variables at the initial difference. Findings: There is an expectant impact on financial progress (proxied by Gross Domestic Product Per capita) in Bangladesh, according to the short run Var model with the two independent variables External Debt Stock (proxied by public debt) and second lag of Gross Fixed Capital. Block Exogeneity/ Wald Tests and Johansen Co-integration test show that both lnEDS and lnGCF have a strong constructive impact on Bangladesh's financial progress in the short as well as long run. Pairwise, Granger Causality also indulgence the Bi-directional causality between lnGDPPC and lnEDS and Uni-directional causality from lnGCF to lnGDPPC. The influences of lnEDS and lnGCF on lnGDPPC are rising in the long term, showing that both variables are significantly exogenous on the dependent variable. Practical Implication: Bangladesh is now a fast-growing economy with several mega projects for infrastructural, human, and technological advancements such as roads, train, power, education, health, information technology, gas, and energy. External debt service and gross capital formation are crucial for Bangladeshi economic growth. The government should establish a priority aim for long-term economic growth by implementing suitable measures to control, maintain, regulate, and stabilize inflation at a reasonable level. Originality/Value: In a developing country, Savings within the country are insufficient to support investment for financial progress, according to the dual-gap theory and the Keynesian theory of public debt. As a result, bridging this gap for the required level of investment and achieving targeted economic growth will necessitate a bigger inflow of foreign aid or external borrowings. That’s why this study is very important. Limitations: Some limitations of this study include the absence of recent data with the factors. Also numerous factors can influence Bangladesh economic growth for instances, remittances, exchange rates and foreign direct investment all have a crucial impact on GDP growth.

Issues on climate change have been recognized as serious challenges for regional sustainable development both at a global and local level. Given the background that most of the artificial carbon emissions are resulted from the energy consumption sector and the energy is also the key element resource for economic development, this study examines economic growth, CO2 emissions and energy consumption relationship in Bangladesh by using cointegration test. For this purpose 1972-2011 periods taken and annual data of Gross Domestic Product (Y), Carbon Dioxide Emissions (CO) and Energy Consumption (EC) are used. The obtain results from this paper indicated that energy consumption has a positive and significant impact on economic growth while carbon emission has a negative and insignificant effect, ensuring that economic growth in Bangladesh can be achieved without degrading the quality of the environment.

The purpose of this study is establish to the effect of inflation and government expenditure on economic growth in Bangladesh. The study focused total of five (05) years in the period of (2015-2016) fiscal year to (2019-2020) fiscal year after major liberalization of trade took place in Bangladesh. In this paper, we want to look into the impact of Bangladesh government expenditure on growth of economic using time series data from 2016 to 2020 fiscal years. We used Secondary data and it was obtained from various sources like the Bangladesh Bureau of Statistics (BBS), Bangladesh Bank (BB) and Asian Development Bank (ADB), and World Development Indicators of the World Bank. Econometrics tools like ADF (Augmented Dickey-Fuller) unit root test, ECM (Error Correction Model) and Engel-Granger Cointegration test to estimate the short and long run association in the model are used to investigate such relationship. We use E-views 10 tools to calculate the above test. From the result of the study, we can say that a long-term relationship among the govt. expenditure, inflation and rate of economic growth. Also suggested that, when the association among economic growth and govt. expenditure is positive then economic growth and inflation are negative.

This paper aims examine the impact of e-commerce sites on the economic growth in Bangladesh. It also tries to portray the entire scenario of growing e-commerce site and its pros and cons which relates with the national economy. The internet is new window of opportunity for business minded people. E-commerce is anything that contains web enabled transaction. Not only big enterprises but also small and medium enterprises have adopted e-business platform. The scope of e-commerce sites growth is likely to lead to GDP growth and affect the national economic growth. Fruitfulness is stronger in developing country but if government considers e-commerce growth then it’s not far away when e-commerce site will be one of the most promising factor that increases National GDP. The result of this study shows that there is a strong positive relationship between all the e-commerce site factors (independent variable) and economic growth (dependent variable) in Bangladesh. Also the result of correlation shows that the relationship among all the independent variables is significant as well.

In pursuit of achieving developed country status by 2041, Bangladesh is committed to comprehensive socioeconomic development—a goal intrinsically tied to the critical task of securing a reliable, uninterrupted energy supply while optimizing utilization of available energy sources. This study used 1980–2018 annual data to examine the implications of energy transition and causal relationships among economic growth, renewable energy, and natural gas consumption in Bangladesh. A rigorous two-step process investigated the causal correlations among variables. The autoregressive distributive lag (ARDL) model was used to scrutinize long-term relationships, while a vector error correction (VEC) model was used to ascertain the directionality of these causal relationships. The outcomes of the bound tests conclusively revealed the presence of a long-run equilibrium relationship among the variables. Causality analyses indicated a unidirectional causal relationship from renewable energy consumption to economic growth in the long run and from natural gas consumption to economic growth in the short run. A bidirectional causal relationship was found between natural gas and renewable energy consumption in the long run. These findings underscore the potential of energy conservation strategies to catalyze economic growth and suggest an avenue for Bangladesh to achieve its ambitious socioeconomic development goals.

The indispensable role of electricity in expediting the process of industrialization leading to economic development, of developing nations in particular, cannot be questioned. Thus, researchers and policy makers all around the globe have endeavored themselves in identifying the contribution of electricity consumption in spawning economic growth of a nation. Furthermore, energy is also acknowledged as a key factor in attainment of the Social Development Goals (SDGs).Besides, it is globally acclaimed that foreign aid plays a direct role in attributing to economic growth of the recipient nation, while it also plays an indirect growth-role via enhancing electricity generations. The aim of this paper is to investigate the causal relationships between electricity consumption, economic growth and foreign aid inflow in Bangladesh incorporating relevant data from 1980 to 2013. Augmented Dickey Fuller (ADF) unit root test was used to test the stationarity of all the concerned variables. Johansen cointegration test is then employed to determine the long run relationships between the variables. Moreover, using Granger causality test, we observe various long run causal relationships between the variables while the Vector Error-Correction Model (VECM) approach provides the short run causalities. Results from the ADF test confirms that all our variables are stationary at their first differences, I (1) which eliminated the possibility of our regression being spurious. The Johansen cointegration test results provide evidence suggesting the existence of long run associations between the concerned variables. Moreover, results from the Granger causality test reveals a unidirectional causality running from electricity consumption to economic growth in Bangladesh in the long run. In addition, the VECM approach findings also confirm the unidirectional causality running from electricity consumption to economic growth in the short run as well. Thus, the 'growth hypothesis' is found to be valid in context of Bangladesh. As electricity consumption is found to be influencing the growth of the economy, it is recommended that Bangladesh ensures its energy security through effective energy diversification policies that are in line with the global trends in energy transition. Besides, the government can also consider its option to engage in Cross-Border Electricity Trade (CBET) with regional countries.

The relationships between economic growth and cropland changes in Bangladesh: An evidence based on annual land cover data

This study investigates the inter-temporal causal relationship between energy consumption and economic growth in Bangladesh during the period 1971-2007. This issue is of fundamental importance for the developing economy of Bangladesh. We use the Autoregressive Distributive Lag (ARDL) bounds testing approach to cointegration tests to explore the dynamic relationship between energy consumption and economic growth in Bangladesh. We apply newly developed methods based on simulations that are robust to the violation of statistical assumptions especially when the sample size is small as is the case in this paper. The interesting results of the paper are that unidirectional causality runs from energy consumption to economic growth in Bangladesh and then restrictions on the use of energy could lead to a reduction in economic growth. There is a convergence process in the long-run dynamics of energy use to real GDP so that any shock in energy adjusts with real GDP by 2-2.5 year. The growth hypothesis suggests that energy consumption plays an important role in economic growth in Bangladesh.

Nuclear energy consumption, commercial energy consumption and economic growth in South Asia: Bootstrap panel causality test

Reducing income inequality through economic growth remains a debatable issue in economic development literature and has long been the subject of extensive research. The relationship between these two factors is complex and dynamic, with the direction and strength of the relationship varying across countries and over time. Bangladesh as a developing country keeps a commendably steady growth of GDP in the recent decade. While it is believed that the growth trajectory pours its benefits in curbing income inequality, in reality, the poorer become the poorest, and the richer become the richest over the decade in Bangladesh. Therefore, the debate over economic growth and income inequality has become a great controversy. Numerous studies in Bangladesh have investigated the connection between economic growth and income inequality, but the results have been inconclusive. While some research has revealed a link between income inequality and economic growth, other studies have not identified any notable association. The issue of income inequality in Bangladesh is further complicated by the country's ongoing efforts to reduce poverty, which has resulted in both positive and negative impacts on income inequality. The lack of consensus in the literature highlights the need for continued research in this area. In light of these findings, the purpose of this conceptual paper is to review the existing literature on the relationship between income inequality and economic growth in Bangladesh. This paper provides a comprehensive overview of the various theories and empirical studies that have been conducted in this area, including the latest findings and research gaps. The paper concludes by highlighting the need for further research in order to better understand the complex and dynamic relationship between income inequality and economic growth in Bangladesh. Keywords: Income Inequality, Economic Growth, Conceptual Study, Bangladesh DOI: 10.7176/JESD/14-5-04 Publication date: March 31 st 2023

The tourism sector has grown to be the largest industry in the world, providing jobs to national and local economies. The tourism sector and foreign direct investment are expanding with time, but more research is needed to determine how these developments affect economic growth. This paper attempt to investigate the impact of tourist receipts, tourism spending, and FDI on Bangladesh’s economic growth utilizing yearly data from 1998 to 2019 by using Johansen Cointegration Approach, Vector Error Correction Model and Granger Causality test. The present study focuses on long-term or short-term effects of tourism receipts, tourism expenditures, and FDI on economic growth in Bangladesh which have been ignored in the prior studies. The Johansen Cointegration Approach is a time series analysis technique that is used to identify the long-run cointegration of the variables. Vector Error Correction Model (VECM) is also applied to investigate the long and short-run relationships between variables. The outcome of the Johansen cointegration demonstrates that in the long run, international tourism receipts, tourism expenditures and FDI have a positive impact on economic growth. The findings of the VECM demonstrate the existence of a long-term causal nexus running from tourism receipts, tourism expenditures, and FDI to economic growth. In the short term, tourism expenditures positively related to economic growth while FDI negatively correlated to economic growth in Bangladesh. The Granger Causality test findings show that international tourism receipts Granger cause economic growth and there is a unidirectional causal linkage from tourism receipts (TR) to tourism expenditures. The findings also indicate a bi-directional causal link between tourism expenditures (TE) and economic growth (GDPG). Therefore, the study recommends that the government should evaluate the importance and sensitivity of international tourism and FDI in order to boost economic growth.Graphical

The interest rate is the amount of interest paid by a borrower to a lender and is set by the central bank of a certain country. Interest rate is regarded as a key variable affecting savings and investment. The interest rate which is set by the central bank is called the base rate. The base rate affects the aggregate output. Thus, the study examined the effect of interest rates on economic growth in Bangladesh. The study did a literature review to have an overview of what others found regarding the effect of interest rates on economic growth. Based on the findings of the study, it was revealed that interest rates affect economic growth. The reduction of interest rates increases economic growth. If the interest rate is good, it keeps output growth high. The study discovered that low rates of interest help the economy grow since people can get more money to make purchases and invests in businesses, thus spurring economic growth. Access to loans from financial institutions depends on interest rates. A country cannot grow if the cost of borrowing is very high and this is significantly influenced by the interest rates. The study also noted that when the base rate increase, the interest rates from the financial institution also increases. Hence, interest rates affect the economic growth in Bangladesh. High rates tend to reduce the pace of economic development. The research concluded that interest rates should be made at a reasonable rate to spur economic growth. The study recommended that the central bank in Bangladesh, Bangladesh Bank, should develop policies and frameworks that will ensure the interest rates are key as low as possible. The government needs to embrace policies that will aid Bangladesh control interest rates and raise money circulation in the economy. Keywords: Interest Rates, Economic Growth, Bangladesh

The chapter addresses the role of microfinance in sustainable development and economic growth in Bangladesh. In Bangladesh, microfinance institutions (MFIs) have played a key role in financial inclusion. Due to the expanded outreach of the MFIs, around 43 percent of households have access to financial services. The credit market is uniquely divided between banks and MFIs. Banks are largely concentrated in the urban credit market, and MFIs are mostly concentrated in the rural credit market. Increase in microfinance outreach and loan size is expected to have an impact on poverty reduction and food security as well as economic growth. Analysis of the longitudinal Programmed Initiatives for Monga Eradication (PRIME) data from the north-western region of Bangladesh shows that microfinance complimented by non-financial services has contributed greatly toward increase in financial inclusion, improvement in food security and reduction in multi-dimensional poverty. In comparison to control households, multi-dimensional poverty decreased by 15 percentage points for the program participants. On the other hand, based on literature review and recent estimates of the macro impact of microfinance, it was shown that microfinance had contributed to GDP growth and even largely to real rural GDP growth in Bangladesh. Such macroeconomic impacts are results of the penetration of microfinance, increase in loans for micro enterprises, productive use of microcredit and increase in total factor productivity. However, it is concluded that, in future, macroeconomic impacts will increase further with the current growth of investment in micro and small enterprises and human capital development.