Factors Affecting Economic Growth of Bangladesh

Abstract

Higher economic growth is very important to achieve the vision of Bangladesh. Thus this study tries to figure out the impact of determinants of economic growth of Bangladesh using time series data has taken from the period of 1991-2016. GDP is considered as dependent variable and FDI, net inflows, inflation, employment, export and industry growth are considered as independent variables. Co-integration and VECM model with several diagnostic tests has been driven in the study. The results of unit root test shows that growth and export are stationary at level, FDI, inflation and industry become stationary at 1st differentials and employment becomes stationary at 2nd differentials. The study shows all the variables are normally distributed and there is no auto-correlation. And the result of the study is there is a statistically long run positive relationship between employment and GDP and also between export and GDP, although industry has no impact on economic growth. But industry is an important factor for economic growth. If government takes suitable and right policy, industry can boost the economic growth of Bangladesh.