Impact of Sectoral Growth on the Economic Development of Bangladesh: An Experimental Study

Md Shakhaowat Hossin ,Md Alamin Miah

doi:10.7176/rjfa/11-14-09

Abstract

The study investigates the impact of sectoral growth on the economic development of Bangladesh. It has been accomplished from the viewpoint of financial intermediaries as well as real estate, renting and business activities sectors. The secondary data, for the period fiscal year (FY) 1995-1996 to the fiscal year (FY) 2018-2019, has been used to perform the analysis. The dependent variable in this study is the gross domestic product (GDP) representing the development status of the economy of Bangladesh. The independent variables- monetary intermediation (banks) sector (MIS), insurance sector (IS), other financial auxiliaries sector (FAS), real estate, renting and business activity sector (RBS) - have been used to show the relationship with GDP. A Multiple regression analysis has been used to develop the relationship. Besides, the coefficient of determination shows 70.2 % of the variance in GDP can be predicted from the independent variables. If other independent variables are incorporated in the model, 63.6% of the variation in the dependent variable (GDP) can be explained by the independent variables, which is observed by adjusted R-square value. In the analysis, it has been found a considerable effect of monetary intermediation (banks) sector (MIS), insurance sector (IS), other financial auxiliaries sector (FAS), real estate renting and business activity sector (RBS) on GDP of Bangladesh. Finally, application of the outcome of this study will be effective only to the economy of Bangladesh. Keywords: GDP, Monetary Intermediation, Correlation, Regression, Financial Auxiliaries sector (FAS), Analysis of Variance (ANOVA). DOI: 10.7176/RJFA/11-14-09 Publication date: July 31 st 2020

Highlights

Gross Domestic Product (GDP) is a very strong measure to gauge the economic health of a country and it reflects the total of the production of a country and as such comprises all purchases of goods and services produced by a country and services used by individuals, firms, foreigners and the governing bodies
Our economy which was considered, by and large, to be agriculture-based but with the opening up of the economy post-economic reforms of 1991, has become predominantly services-based with services accounting for 44.60% of the GDP and employing 35.70% of the population whereas agriculture accounts for 17.39% of GDP and employs 47.20% of the population and manufacturing and industry accounting for 25.75% of GDP and employing 24.70% of the population
The Durbin-Watson statistic is 1.037; which falls in the range to (0-4) and less than 2, we indicate that there is a positive autocorrelation among the independent variables

Summary

Introduction

GDP is a very strong measure to gauge the economic health of a country and it reflects the total of the production of a country and as such comprises all purchases of goods and services produced by a country and services used by individuals, firms, foreigners and the governing bodies. It is used as an indicator by almost all the governments and economic decision-makers for planning and policy formulation. The per capita income in the country is set to grow to $1,909

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