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

Authors: Matiur Rahman; Anisul M. Islam; Prashanta K. Banerjee

Addresses: College of Business, McNeese State University, Lake Charles, LA 70609, USA ' College of Business, University of Houston-Downtown, Houston, TX, USA ' Bangladesh Institute of Bank Management, Dhaka, Bangladesh

Abstract: 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.

Keywords: public investment; private investment; real GDP growth; co-integration; causality; convergence; economic growth; Bangladesh; econometrics; gross domestic product; ARDL; VECM.

DOI: 10.1504/IJTGM.2016.077851

International Journal of Trade and Global Markets, 2016 Vol.9 No.3, pp.228 - 248

Received: 05 Oct 2015
Accepted: 19 Nov 2015

Published online: 17 Jul 2016 *

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