Economic Growth In Bangladesh Research Articles

Footwear Industry in Bangladesh: Implementation of Six Sigma Methodology

The increasing economic growth in Bangladesh encourages the growth of Leather sector. This condition results in an intense competition among the leather products industries particularly footwear industries which encourages companies to produce quality products in order to meet customers’ satisfaction. One of the methods to control the quality is by using Six Sigma (SS). SS is a method of improving the quality towards the target of 3.4 defects per million opportunities for each production of goods and services. SS is divided into two methods, namely DMAIC (Define, Measure, Analyse, Improve, and Control) and DMADV (Define, Measure, Analyse, Design, and Verify). It can be implemented not only for big companies but also for SMEs. This study was conducted to determine the application of quality control aspect of SS in leading export oriented footwear industry in Bangladesh using DMAIC method. By using this tool, it can be seen that the sigma value in the different production line like court shoe and oxford shoe production line are 6324 and 6300 with the possibility of error products contained are 32938 and 32814 per million opportunities respectively. In the application of SS in this study, there are various causes of defective products, namely toe lasting problems, inefficient ironing, insufficient chilling, etc.

Impacts of Foreign Direct Investment on Economic Growth of Bangladesh: An Econometric Exercise

Economic Growth is a concerning issue for the development of Bangladesh. Foreign direct investment (FDI) is a potential weapon for economic development, especially for Bangladesh. It can help us to build up physical capital, decrease unemployment rate, increase production capacity and create a good economic relationship between the domestic economy with global economy .This study examines the impacts of foreign direct investment on economic growth in Bangladesh during the period of 1990-2015 by using Ordinary Least Square (OLS) method. The findings of the study reveal that FDI has its negative signs, which indicates that there is inverse relationships between FDI and economic growth.The negative sign of FDI support that Bangladesh should attract FDI by increasing human capital, creating a good political environment and enhancing adequate infrastructure facilities, which will improve our economic growth.

Key Ratios Analysis between Conventional and Islamic Banking in Bangladesh

The proliferation of banking sector is an indicator of economic growth in Bangladesh. Conventional Banks as well as the Islamic Banks significantly influence the national economy although there are a number of dissimilarities between the two banking systems. This study was carried out to identify the differences of Conventional and Islamic Banking sectors in terms of ratio analysis. A total of 10 banks in which 5 Conventional and 5 Islamic banks were selected for the study. Some key financial ratios were being used for the analysis. It is found from the study that the Conventional and Islamic Banks had much influence on the national economy as they hold the deposit of general public and invest the funds in profitable projects. The earnings per share (EPS), return on asset (ROA), return on equity (ROE) and return on capital employed (ROCE) were greater in Islamic Banks. It clearly indicates that the Islamic Banks were more profitable and performing a good job in the context of Bangladesh although people preferred Conventional Banking most. JEL Classification Code: G 21

Fiscal Deficit and Economic Growth in Bangladesh

The economy of Bangladesh is currently going through a period of continuous budget deficit. The present data suggest that the government budget deficit, on average, is nearly 5% of the country’s GDP. This has been true since the early 2000s. To finance this deficit, governments have been borrowing largely from domestic and foreign sources resulting in inflationary pressure on one hand, and crowding out of private investments on the other. During the same period, although the economy has grown steadily at a rate of more than 6%, this growth is less than the potential. This article presents an econometric study of the impact of government budget deficits on the economic growth of Bangladesh. We conduct a time-series analysis using ordinary least squares estimation, vector error correction model, and granger causality test. The findings suggest that the government budget deficit has statistically significant negative impact on economic growth in Bangladesh. Policy implications of our findings include reestablishing the rule of law, political stability in the country, restructuring tax structure, closing tax loopholes, and harmonizing fiscal policy with monetary policy to attract additional domestic and foreign investment.

Energy Consumption, Economic Growth & Environmental Quality: A Causal Relationship Revisited for the Bangladesh Economy

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.

Sex Differences in Obesity, Dietary Habits and Physical Activity among Urban Middle-Class Bangladeshis

The sustained economic growth in Bangladesh during the previous decade has created a substantial middle-class population, who have adequate income to spend on food, clothing, and lifestyle management. Along with the improvements in living standards, has also come negative impact on health for the middle class. The study objective was to assess sex differences in obesity prevalence, diet, and physical activity among urban middle-class Bangladeshi. In this cross-sectional study, conducted in 2012, we randomly selected 402 adults from Mohammedpur, Dhaka. The sampling technique was multi-stage random sampling. We used standardized questionnaires for data collection and measured height, weight, and waist circumference. Mean age (standard deviation) was 49.4 (12.7) years. The prevalence of both generalized (79% vs. 53%) and central obesity (85% vs. 42%) were significantly higher in women than men. Women reported spending more time watching TV and spending less time walking than men (p<.05); however, men reported a higher intake of unhealthy foods such as fast food and soft drinks. We conclude that the prevalence of obesity is significantly higher in urban middle-class Bangladeshis than previous urban estimates, and the burden of obesity disproportionately affects women. Future research and public health efforts are needed to address this severe obesity problem and to promote active lifestyles.

Trade Liberalization and Its Effects on the Economic Growth of Bangladesh: An Empirical Analysis

The objective of this paper is to assess the effectiveness of the trade policy on Bangladesh economy between the periods 1990 to 2010. This research analyzes the achievements of the economy regarding the important variables such as growth of GDP, export, import, exchange rate, terms of trade, and foreign reserve after the trade liberalization in 1990s. The study demonstrates that the inward policy of the trade liberalization reduces the import while the forward policy increases the employment, production, and export. Finally, liberalization policy improves overall economic indicators as GDP per capita, FDI, and remittances have been growing up since pre-liberalization. The study shows that both export and import have increased noticeably since liberalization, with import rising faster than export in the period immediately after liberalization.&#x0D;

Reaping Demographic Dividend in Bangladesh: Challenges and Prospects

Demographic change in Bangladesh is opening up new economic opportunities. As in many countries, declining infant and child mortality helped to spark lower fertility, effectively resulting in a temporary baby boom. As this cohort moves into working ages, Bangladesh finds itself with a potentially higher share of workers as compared with dependents. If working-age people can be productively employed, Bangladesh’s economic growth stands to accelerate. Theoretical and empirical literature on the effect of demographics on labor supply, savings, and economic growth underpin this effort to understand and forecast economic growth in Bangladesh. Policy choices can potentiate Bangladesh’s realization of economic benefits stemming from demographic change. Failure to take advantage of the opportunities inherent in demographic change can lead to economic stagnation.

Foreign Direct Investment, Trade, and Economic Growth: An Empirical Analysis of Bangladesh

The study reveals that there is a relationship between foreign direct investments, trade, and growth rate of per capita GDP for Bangladesh with the help of annual time series data for 1973 to 2014. The Vector Error Correction Model (VECM) analysis shows that there is a long-term relationship between these variables. To check the validity of the VECM model, we did a few post-estimation diagnostic tests, and found that the residuals of the regressions have a normal distribution and do not show any auto-correlation. The trade and foreign investment variables have a significant impact on the growth rate of GDP per capita. Because FDI and trade are two important components of economic growth in Bangladesh, it is important to frame policies that promote growth and reduce the barriers for capital flows.

Relationship between Remittance and Economic Growth in Bangladesh: an Autoregressive Distributed Lag Model (ARDL)

Relationship between Remittance and Economic Growth in Bangladesh: an Autoregressive Distributed Lag Model (ARDL)

The Relative Effectiveness of Monetary and Fiscal ‬Policies on Economic Growth in Bangladesh‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

This study explores the relative effectiveness of monetary and fiscal policies on economic growth in Bangladesh for the period from fiscal year 1974 to2015 employing cointegration and Vector Error Correction Model (VECM). We use nominal GDP as a proxy for economic growth, while broad money supply (M2) and reserve money (RM) as proxies for monetary policy. Total government revenue (TR) and total government expenditure (TE) are used as proxies for fiscal policy. The Johansen cointegration tests reveal that monetary policy (M2 and RM) has a greater long run positive impact on economic growth over fiscal policy in Bangladesh. The results of VECM show that there is a weak long run causality running from monetary and fiscal policies to economic growth. VECM also finds that GDP, M2 and TR play a part to adjust any disequilibrium, while TR picks up the disequilibrium rapidly and guides the variables of the system back to equilibrium. VECM Granger causality/block exogeneity Wald test results show that M2 is the leading indicator with respect to economic growth in Bangladesh in the short run. Moreover, economic growth is a leading indicator with respect to fiscal policy in the short run. Thus, we conclude that monetary policy is the more effective channel than fiscal policy to promote economic growth in the short run and long run in Bangladesh.

Public versus private investment in economic growth of Bangladesh: an econometric analysis

This paper analyses the roles of per capita real public and private investment growths in influencing per capita real GDP growth in Bangladesh spanning over 1972-2012. Autoregressive Distributed Lag (ARDL) procedure is applied for co-integration and Vector Error-Correction Model (VECM) is implemented for long-run and short-run dynamics. All three variables are found co-integrated. The findings from the estimates of VECM reveal long-run convergence with very slow speed of adjustment. The short-run dynamic interactive feedbacks among the variables are weak. Apparently, private investment plays a greater role than public investment in improving per capita real GDP growth in Bangladesh. The paper contributes to the existing body of literature in terms of applying improved econometric methodology and for a country (Bangladesh) for which no such rigorous study on this issue has yet been undertaken, to our knowledge.

The Impact of key Macroeconomic factors on Economic Growth of Bangladesh: a VAR Co-integration Analysis

This study analyzes the impact of key macroeconomic factors on economic growth of Bangladesh from the period of 1988 to 2012.The key macroeconomic factors studied are market capitalization, foreign direct investment and real interest rate. This study also examines the long run and short run relationship between the economic growth and capital market, foreign direct investment, and real interest rate by using vector autoregressive (VAR) model. The VAR results suggest that the market capitalization, foreign direct investment and real interest rate have impact on economic growth in the long run, but in short run it does not have any predictable behavior. The variance decomposition results also conclude the same result as VAR model. All variables have the long run effects on economic growth but it does not have in short run, and the effects increases with time. Based on the finding, this study suggests that the government should come out with the appropriate macroeconomic plan and policy to draw more inward foreign direct investment, increase market capitalization and stabilize real interest rate in order to faster the economic growth in future. As finding of this study shows that these factors do not have significant impact on economic growth in Bangladesh in the short run

The Determinant of Foreign Direct Investments, Evidence from Bangladesh

This paper analyses the determinants and the relationship between foreign direct investment (FDI) and economic growth of Bangladesh. The study uses panel data analysis over the period from 2004 to 2013 to test the hypotheses. The study employs an OLS method for the analysis, and to determine the macroeconomic variables that influence FDI inflow in Bangladesh for the sample period. We find evidence that inbound FDI is positively correlated with the gross capital formation, imports of goods and political stability. This finding suggests that FDI inflow is directly related to the political stability of Bangladesh and, gross capital formation and imports increases during the stable political situation. Further, we also find evidence that corruption rate, good governance and unemployment rate are negatively correlated with the inbound FDI. This finding provides evidence that higher corruption rate and the unemployment rate are bad for the macroeconomic development and provide a negative signal to foreign investors. Our research is aligned with the previous research finding. Our research findings have implications for the government of Bangladesh to stabilize the political situation and standardize the inflation rate so that the FDI inflows enhance and influence the economic growth.

The Impact of key Macroeconomic factors on Economic Growth of Bangladesh: a VAR Co-integration Analysis

This study analyzes the impact of key macroeconomic factors on economic growth of Bangladesh from the period of 1988 to 2012.The key macroeconomic factors studied are market capitalization, foreign direct investment and real interest rate. This study also examines the long run and short run relationship between the economic growth and capital market, foreign direct investment, and real interest rate by using vector autoregressive (VAR) model. The VAR results suggest that the market capitalization, foreign direct investment and real interest rate have impact on economic growth in the long run, but in short run it does not have any predictable behavior. The variance decomposition results also conclude the same result as VAR model. All variables have the long run effects on economic growth but it does not have in short run, and the effects increases with time. Based on the finding, this study suggests that the government should come out with the appropriate macroeconomic plan and policy to draw more inward foreign direct investment, increase market capitalization and stabilize real interest rate in order to faster the economic growth in future. As finding of this study shows that these factors do not have significant impact on economic growth in Bangladesh in the short run

FDI and Economic Growth: An Empirical Investigation of India and Bangladesh

This study examines the effect of foreign direct investment (FDI) on economic growth in Bangladesh and India. The study also identifies the motivating factors and problems of FDI inflows in Bangladesh and India. We employ bivariate regression, ordinary least squares (OLS), and Granger causality estimation to examine the effect of FDI on GDP growth in Bangladesh and India using data for the period 1974-2014. The bivariate regression results find that FDI is positively correlated with GDP growth and have positive effect on economic growth for both countries. The regression results indicate that FDI is positively correlated to the economic growth of Bangladesh but it has not yet been established as a significant determining factor for the economic growth. On the other hand, the result indicates that FDI is negatively correlated to the economic growth in India and it has not yet been established as a significant determining factor for the economic growth. It cannot be said that FDI has a positive or negative impact on economic growth both the countries. We conclude that the effect of FDI on economic growth is ambiguous for both India and Bangladesh.

The Impact of Foreign Direct Investment on the Economic Growth of Bangladesh

This study empirically investigated, first, the trend of the Foreign Direct Investment (FDI) inflow in Bangladesh and, second, the impact of the overall FDI inflow on the economic growth of the country, analyzing fiscal data from the years 1996/1997 to 2011/12. The study further examined the impact of three sub-sectors of FDI, namely agriculture, industry, and service, on Gross Domestic Product (GDP). FDI inflow in Bangladesh has evolved cyclically over the years. The Annual Development Program (ADP) of Bangladesh had a significant positive impact on GDP. Overall, although FDI inflow in Bangladesh was low, it had a significant positive impact on GDP. Sectorial analyses, however, revealed that, while FDI in both the agriculture and service sectors had statistically significant positive impacts on their corresponding GDP, FDI in the industry sector did not have a significant impact on the GDP growth in that sector

The Determinant of Foreign Direct Investments, Evidence from Bangladesh

This paper analyses the determinants and the relationship between foreign direct investment (FDI) and economic growth of Bangladesh. The study uses the time series regression model over the period from 2004 to 2013 to test the hypotheses. The study employs an OLS method for the analysis, and to determine the macroeconomic variables that influence FDI inflow in Bangladesh for the sample period. We find evidence that inbound FDI is positively correlated with the gross capital formation, imports of goods and political stability. This finding suggests that FDI inflow is directly related to the political stability of Bangladesh and, gross capital formation and imports increases during the stable political situation. Further, we also find evidence that corruption rate, good governance and unemployment rate are negatively correlated with the inbound FDI. This finding provides evidence that higher corruption rate and the unemployment rate are bad for the macroeconomic development and provide a negative signal to foreign investors. Our research is aligned with the previous research finding. Our research findings have implications for the government of Bangladesh to stabilize the political situation and standardize the inflation rate so that the FDI inflows enhance and influence the economic growth.

Exchange Rate and Economic Growth Nexus: Evidence from Bangladesh

In the paper a close look at exchange rate and economic growth nexus in Bangladesh for a period of 1985-2012 using time series analysis, considering Exchange Rate, FDI, Trade Openness, and Portfolio Equity as explanatory variables and linkage with GDP. We employed Johansen-Juselius cointegration test, multivariate Granger Causality and ADF and PP stationary tests for this purpose. All the variables were found stationary after first differencing both with trend & intercept and no trend. The empirical result shows explanatory variables have significant impact on economic growth in Bangladesh. We also found unidirectional causality, exchange rate to GDP per capita, exchange rate to trade openness and trade openness to GDP per capita in short run. The accumulated response of GDP per capita to exchange rate (ER) and trade openness is positive and significant. So, policy makers in Bangladesh should pay special attention to these areas in order to support economic growth rates.

The Relationship Between Inflation and Economic Growth of Bangladesh: An Empirical Analysis from 1961 to 2013

The link between inflation and economic growth is one of the most important controversies in the economic literature. It is widely believed that moderate and stable inflation rates promote the development process of a country, and hence economic growth. Moderate inflation supplements return to savers, enhances investment, and therefore, accelerates economic growth of the country. This paper empirically explores the present relationship between inflation and economic growth in the context of Bangladesh. Using annual data set on real GDP and Gross Domestic Product Deflator (GDPD) for the period of 1961 to 2013, an assessment of empirical evidence has been acquired through the co-integration test, error correction models and Granger Causality test. The empirical evidence demonstrates that there exists a statistically significant long-run <i>negative</i> relationship between inflation and economic growth for the country as indicated by a statistically significant long-run <i>negative</i> relationship running from Gross Domestic Product Deflator (GDPD) to GDP. Again the empirical evidence demonstrates also that there exists a statistically significant long-run <i>positive</i> causality running from GDP to Gross Domestic Product Deflator (GDPD). In addition, economic growth affects inflation positively. But when increase in the rate of inflation goes beyond the threshold inflation level then inflation affects economic growth negatively. The paper discusses the important policy implications of the results.