Economic Growth In Bangladesh Research Articles

Does capital efficiency influence economic growth in Bangladesh? Application of the Harrod-Domar model

PurposeThe main purpose of this paper is to analyse the influence of capital efficiency on the economic growth of Bangladesh using the Harrod-Domar (H-D) model.Design/methodology/approachWe use annual data from 1980 to 2019 for this paper. Three steps are taken in the data analysis. First, to check the existence of a unit root, we use the augmented Dickey-Fuller (ADF) test and to determine co-integration among the variables, we use the Johansen-Juselius co-integration test. Next, for long-run estimation, we use the dynamic ordinary least square (DOLS) estimator. The sensitivity of the long-run estimations is further checked by the fully modified OLS (FMOLS) and autoregressive distributed lag (ARDL) estimators. Lastly, we use the Granger causality test to determine the long-run causality among the variables.FindingsThe long-run co-integration test validates the co-integrating relationship among the variables. DOLS estimations reveal that the economic growth of Bangladesh is negatively associated with the incremental capital output ratio (ICOR), validating the notion that capital efficiency matters for achieving higher economic growth. On average, an increase in ICOR by a unit tends to reduce economic growth in the long term by 0.75 percent. Our results also reveal no significant relationship between savings and economic growth when the model is extended. Finally, causality results indicate unidirectional causality between ICOR and economic growth.Practical implicationsBased on the results obtained, we argue that the enhancement of capital productivity could bring efficiency because ICOR is an inverse of capital productivity. Since Bangladesh’s capital productivity is considerably low compared with other neighbouring countries, it is suggested that firms should gradually move towards technological advancement and enhance economies of scale, etc. in the long run. Moreover, policies in favour of continuous skill development programmes could be highly effective in increasing capital productivity given that capital follows a vintage structure.Originality/valueThis is the first paper to analyse the economic growth pattern of Bangladesh using the traditional H-D model by incorporating variables such as savings and ICOR and also by relaxing the assumption of time-invariant (i.e. fixed) data of the variables. Moreover, this paper extends the traditional H-D empirical model by introducing key indicators and time breaks for Bangladesh’s economy through a stepwise regression process.

Nexus between infrastructural development and economic growth: Evidence from Bangladesh through auto-regressive distributive lag and nonlinear auto regressive distributive lag analysis

This study aims to scrutinize the influence of infrastructure on the economic growth of Bangladesh, employing an extensive time series analysis spanning from 1973 to 2020. Utilizing Principle Component Analysis, two distinct indices were constructed to gauge the dimensions of economic and social infrastructure. Subsequently, Auto-Regressive Distributive Lag (ARDL) and Nonlinear Auto Regressive Distributive Lag (NARDL) bound tests were employed to assess the existence of long-run relationships among the variables under examination. The findings indicate a significant and positive contribution of economic infrastructure to both long and short-term production expansion. Upon further disaggregation into negative and positive shocks, consistent results emerge. An increase (decrease) in the economic infrastructure (EI) index by one unit corresponds to an upsurge (subside) of 0.16% (0.17%) in economic growth. In contrast, social infrastructure (SI) exhibits no significant long-run association with GDP growth. The discerned pattern suggests that EI play a pivotal role in driving aggregate output, while SI display a lag. Despite this, it is imperative to underscore the importance of SI for human development. Consequently, adopting a comprehensive and strategic approach, encompassing vision, ensuring quality inclusivity, and anti-corruption measures, is imperative for Bangladesh to fully realize the transformative potential of its infrastructure investments and foster sustained economic growth.

ICT Adoption and Its Effects on the Economic Growth of Bangladesh: A Time Series Analysis

Understanding information and communication technology (ICT) adoption’s particular effects on a nation like Bangladesh is critical because ICT adoption continues to play a significant role in promoting economic progress globally. By analysing the relationships between ICT use and economic growth in Bangladesh, this study examines data from 2002 through 2021 using a time series analysis. ICT export, gross capital formation, mobile cellular subscriptions, government budget allocation, and foreign direct investment are just a few of the independent variables the study takes into account in relation to ICT adoption. These factors were selected based on their applicability to the adoption of ICT and their potential impact on economic expansion. According to the results of the time series research, the ICT sector’s growing exports have a favourable and considerable impact on long-term economic growth. Mobile cellular subscriptions negatively affect economic growth, with significant short-term impact and insignificant long-term effect. The influence of the government budget is detrimental but insignificant for both long-term and short-term economic growth. The study comes to the conclusion that Bangladesh’s economic development is significantly benefited by the adoption of ICT. The study also highlights the significance of government assistance through budgetary allocation and strategies that draw in foreign direct investment. The results can direct the development of policies and evidence-based decision-making to use ICT adoption as an accelerator for sustained economic development in Bangladesh.

Remittances, exports, ODA, and economic growth in Bangladesh: A time series analysis

ABSTRACT This empirical study has explored the symmetric and asymmetric associations among GDP, remittances, Official Development Assistance (ODA), and exports by employing both the Autoregressive Distributed Lag (ARDL) and the Non-Linear Autoregressive Distributed Lag (NARDL) frameworks from 1986–2021. The ARDL model has found the positive impact of ODA and exports on economic growth, whereas remittance has a negative impact on growth. The NARDL framework has also supported the findings of the ARDL method. This study also provides policy recommendations to help achieve steady economic growth in the context of Bangladesh’s economy.

The roles of inflation and financial development in the effectiveness of foreign aid: Evidence from Bangladesh

The long-run economic benefits of foreign aid in a recipient country depend on the absorptive capacity of the nation in terms of institutions, macroeconomic stability, and financial development. While the role of institutional quality on the aid-growth nexus has already been empirically determined, the moderating roles of inflation and financial development have not been investigated. Therefore, our study addresses these research gaps by examining the moderating roles of inflation and financial development on the impact of aid on economic growth in Bangladesh during 1980–2020 period. It utilizes the Autoregressive Distributed Lag (ARDL) bounds testing technique. This study reveals that the impact of aid on growth depends on the levels of inflation and financial development. If inflation rises above 9.85% threshold level, the marginal effect of aid on growth turns negative. In contrast, the marginal effect of aid on growth is positive even at the maximum level of financial development. The outcomes are robust to alternative proxies and structural breaks. The implication is that an increase in aid and financial development boosts economic growth, but high inflation limits the efficacy of aid. Therefore, to reap the long-term economic benefits of aid, countries should embrace the requisite macroeconomic stability and financial development.

The Long Run Association Between Transport and Economic Growth in Bangladesh: an Econometric Analysis

Public investments in transport infrastructure have been widely used by policymakers as a tool to promote economic development. Transport infrastructure investment acts as a catalyst for productivity and economic growth. This study attempted to investigate the direction of causality between transport and economic growth in Bangladesh over 22 years, from 1999 to 2021. The coefficients of parameters in a simultaneous equation model are found via multivariate analysis and the three-stage least squares method. According to the estimated conclusion, GDP drives transport expansion and transport development considerably contributes to economic growth, which is ten times GDP. But compared to the transport elasticity of growth, the output elasticity of transport is lower. Additionally, this paper also shows that transport significantly enhances exports, marketing of agricultural goods, and industrial production.

Exploring the nexus between FDI inflows and economic growth: A sectoral level analysis.

This study investigates the relationship between Foreign Direct Investment (FDI) inflows and economic growth at sectoral levels in Bangladesh, employing a panel study framework. Utilizing sectoral-level panel data spanning six sectors from 2007-08 to 2018-19, the analysis is conducted using Panel Vector Error Correction Model (Panel VECM). Results from panel unit root tests confirm that all variables are integrated of order one I (1), indicating stationarity. The Pedroni panel co-integration test further supports the presence of co-integration among the variables. Notably, the Panel VECM reveals evidence of a unidirectional causal relationship from Real Gross Domestic Product (RGDP) to Real Foreign Direct Investment (RFDI) across all six sectors of Bangladesh. The findings underscore the significance of formulating pragmatic policies and implementing them effectively to attract FDI across sectors, thereby contributing to the overall economic growth of Bangladesh.

Treasury Yields and Its Impact on Economic Growth in Bangladesh

Treasury Yields and Its Impact on Economic Growth in Bangladesh

Consequences of Poverty and Inequality on the Economic Growth of Bangladesh

Consequences of Poverty and Inequality on the Economic Growth of Bangladesh

How can Developing Countries in Asia Achieve Economic Growth? Taking Bangladesh as an example

This study analyzes the key drivers of economic growth in Bangladesh from 1980 to 2018 based on theoretical frameworks and historical data. It takes Bangladesh’s development experience as the research object and aims to make three contributions. Firstly, it examines the main contributing factors to Bangladesh’s past growth within the analytical framework of the neoclassical growth theory. This allows summarizing the underlying causes of Bangladesh’s historical economic growth trajectory. Secondly, it investigates the current contributing factors and obstacles to growth in Bangladesh to understand how countries like Bangladesh, Myanmar and Vietnam can achieve ongoing economic growth. Lastly, the research methodology employs empirical analysis of time series data on factors such as investment, labor force, technology and GDP within the framework of neoclassical growth theory. The findings suggest that capital accumulation, driven by investment, has made the largest contribution to Bangladesh’s strong economic performance in recent decades. However, risks remain if over-reliance on the garment industry and uneven regional development are not addressed through continued policy reforms focusing on diversification, balanced development and social inclusion. The study provides preliminary guidance for Bangladesh and similar nations to sustain their growth momentum.

Finding Causality Between Finance and Growth in Bangladesh

The relationship between financial development and economic growth has gained much attention in the last three decades. It has been primarily believed that financial sector development promotes economic growth. A lot of theoretical and empirical research has been done in this field and the results which came out are a kind of mixed relationship between the two. Bangladesh, a country in the SAARC region has taken different financial reform policies in the same line with other developed and developing countries. The main purpose of this paper is to investigate the relationship between financial development and economic growth in Bangladesh. Annual time series data for the period 1976 to 2020 has been taken and the ARDL technique has been used for this purpose. The ARDL bound testing shows that there is a long-run relationship between financial development variables and economic growth. In the short run, all the proxies of financial development were found to have a significant relation to economic growth. The study has found two bidirectional causality and one unidirectional causality between the variables.

Isolation of Indigenous Bacillus Spp. From Garden Soil To Decolorize Synthetic Textile Dyes

Textile and clothing industries are major contributor to the economic growth in Bangladesh. Establishment of a number of such industries are imparting huge amount of industrial waste containing different types of chemicals including dyes. Pollutants generated from textile industries creates a huge burden on the environment. Textile industries discharge effluents containing various harmful chemicals including synthetic dyes that are very stable and a threat to living organisms. Bacillus spp. are remarkable bacteria which demonstrated potential to produce diverse kinds of metabolites for different uses. This study focuses on the potential use of Bacillus spp. isolated from the garden soil of Stamford University Bangladesh for decolorization of BemacronBlue RS (BB) and BemacronRed RS 01 (BR) dyes. Four Bacillus isolates were screened out from garden soil and named as 1B, 3A, 2C and 4B. Isolates were subjected to decolorization assay with 0.002 gm/l of BB and BR dyes. Bacillus spp. showed great potential in decolorizing BB and BR dyes, which was initiated after 2 days of incubation. Following 8 days of incubation, decolorization of BB was, 79%, 80%, 75%, 77% and BR was, 75%, 73%, 69%, 89% by the isolates 1B, 3A, 2C and 4B, respectively. This study shed some light on the potential use of indigenous garden bacteria for decolorization of textile dyes to control environmental pollution. Stamford Journal of Microbiology, 2023. Vol. 13, Issue 1, p. 1-5

Asymmetric role of the informal sector on economic growth: Empirical investigation on a developing country

The role of the informal sector in economic growth still remains an issue of debate. This study contributes to resolving this by taking into account the asymmetric effect of the informal sector on economic growth. The study applies the Non-linear Autoregressive Distributed Lag (N-ARDL) model to capture the asymmetric relationship between the informal sector activity and economic growth for the period 1982–2018 in Bangladesh. The estimation of the N-ARDL model reveals that the informal sector asymmetrically affects the domestic output and economic growth in Bangladesh for both the short-run and the long run. The study has observed an asymmetrically larger effect on output and economic growth from the falling contribution of the informal sector. Urbanization and capital growth also contribute to an increase in economic growth. Therefore, proper incentives and careful policy measures are suggested to effectively diminish the prevalence of informality and promote its transition towards a more formalized framework.

Did Remittance Inflow in Bangladesh Follow the Gravity Path during COVID-19?

Remittances are one of the major driving forces of economic growth in Bangladesh. The paper’s main objective is to empirically investigate the effect of COVID-19 on the remittance inflow to Bangladesh using a gravity model framework. We have employed monthly data of remittance inflow to Bangladesh from January 2018 to September 2022 with its top twelve partners, namely the Kingdom of Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman, Bahrain, Libya, the United Kingdom, Italy, Malaysia, Singapore, and Japan. Using the gravity equation, we tapped the COVID-19 dummy as the critical variable of our interest, along with COVID transmission, mortality, and vaccination data at home and abroad. Using Poisson pseudo-maximum likelihood (PPML), fixed-effect (FE), and random-effect (RE) estimations, we find that during the COVID-19 pandemic, remittance inflow to Bangladesh increased significantly after controlling for other Gravity variables.

Empowering Bangladesh: Illuminating the path to sustainable economic growth: Using a cutting‐edge non‐linear Autoregressive Distributed Lag approach

AbstractBangladesh, a developing country, is experiencing a rapid increase in its energy requirements due to its consistent economic growth in recent years. However, little is known about the economic contributions of access to electricity (AE), energy consumption (EC), and population growth (PG). In this study, the asymmetrical connection among PG, EC and electricity accessibility in Bangladesh is examined over a span of 36 years, from 1985 to 2021. The study used non‐linear ARDL cointegration methods as well as Granger Causality. For robustness, this study used Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegrating Regression (CCR). The results reveal that PG has a notable favourable impact on economic growth, and conversely, a declining population also leads to a substantial positive influence on economic growth. Both favourable and adverse fluctuations in electricity accessibility exhibit detrimental effects on long‐term economic growth. Over the course of time, enhancing power accessibility has contributed to the rise in economic growth. Unfavourable EC shocks exhibit a meaningfully positive influence on economic growth in Bangladesh. Nevertheless, the positive EC shock does not have a notable impact on long‐term economic growth. The data also demonstrate bidirectional causality between PG and economic growth and EC and economic growth (EG). There is also a unidirectional causal link between PG and AE and EC and PG. The findings have significant policy ramifications for those in charge of making decisions in Bangladesh that would help the country achieve its economic goals by bolstering its energy industry.

The Impact of Renewable Energy Consumption on Economic Growth in Bangladesh: Evidence from ARDL and VECM Analyses

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.

Exploring the link between green energy, CO2 emissions, exchange rate and economic growth: Perspective from emerging South Asian countries

This paper investigates the nexus between renewable energy use, CO2 emissions, exchange rate, and economic development within emerging South Asian nations, namely Bangladesh, India, Pakistan, and Sri Lanka, employing the Autoregressive Distributed Lag (ARDL) framework. It examines annual data spanning from 1990 to 2019, examining key indicators of renewable energy consumption, CO2 emissions, exchange rate, and economic development. The ARDL bounds test results demonstrate the existence of co-integration among the variables in the long run. The empirical result finds that the renewable energy consumption, CO2 emissions, and exchange rate have a significant impact on economic growth in Bangladesh, Pakistan, and Sri Lanka in the long run. In India no significant relationship found in the long run. In short run assessment, Bangladesh, India, and Sri Lanka also found same relationship with economic growth and renewable energy consumption, CO2 emissions, and exchange rate. Interestingly, In Pakistan no significant relationship has found in short run estimation analysis. Furthermore, study tried to determine the causality direction by using the Toda Yamamoto granger causality approach, which reveals bidirectional causation between exchange rate and CO2 emission in India. In Pakistan, study also found bi-directional causality among the variables renewable energy consumption, CO2 emissions, and economic growth. Finally, this paper emphasizes developing the policy as well as making a concrete decision regarding the renewable energy consumption, CO2 emissions, exchange rate, and economic development for ensuring sustainable economic growth in South Asian region. Future research could extend this work by including different dimensional data, additional countries, or using alternative or supplementary modeling techniques.

Trends and Challenges of Formal Agricultural Credit in Bangladesh: Enhancing Productivity and Promoting Inclusive Growth

Empirical studies provide evidence that agricultural finance is crucial for agriculture structural development of an economy. Ensuring the productivity of the agricultural sector is crucially important for the timely availability of agricultural credit. The purpose of this study is to look at what is going on with agricultural credit, especially in the formal sector of banking. Throughout the years, there has been a significant increase in credit disbursed through the official sector, which includes commercial banks and other financial institutions. This is a significant development, as in the past the informal sector was dominant. Non-Governmental Organizations (NGOs), private commercial banks in the area, and foreign banks have all played a role in the provision of agricultural credit to farmers throughout the country. However, despite the increasing flow of credit from formal sector institutions, some challenges need to be addressed. Accessibility remains a concern, particularly for small and marginalized farmers who struggle to access formal credit channels. For formal agricultural credit to have a positive impact, it is necessary to ensure its widespread availability, to provide financial products that are tailored to the needs of farmers, and to implement policies that reduce inefficiency and leakages in the distribution of credit. By addressing these challenges, formal agricultural credit can play a pivotal role in enhancing agricultural productivity, empowering farmers, and driving sustainable economic growth in Bangladesh.

The Impact of Capital Flight on Economic Growth in Bangladesh

The Impact of Capital Flight on Economic Growth in Bangladesh

Relationship between greenfield investment and economic growth: Evidence from Bangladesh

The key purpose of the study is to investigate the relationship between Greenfield investment and economic growth of Bangladesh using annual time series data during the period 2003–2020. The study employs Toda-Yamamoto (T-Y) tests of Granger causality method that performs Modified Wald Test (MWALD) in order to establish causal relation among different variables. There are three steps in implementing the T-Y procedure. The first step involves using different tests (ADF, PP, and KPSS test) to identify the maximum order of integration of the variable. The second step requires selecting the optimal lag length (p) based on several lag length selection criteria. In the third step, MWALD approach is used for testing the vector auto regression model for causality. The results of the tests (ADF, PP, and KPSS) concluded that the maximum order of integration of the variables is two. Then, the optimal lag length of two (p = 2) has been selected based on several lag length selection criteria. Finally, the findings reveal the evidence of unidirectional causality from Real Greenfield Foreign Direct Investment (RGFDI) to Real Gross Domestic Product (RGDP). The key contribution of this study is to investigate the Greenfield investments-growth relationship for a country like Bangladesh.