Investigating the Roles of Physical Infrastructure, Financial Development and Human Capital on Economic Growth in Bangladesh

Abstract

This article investigates the dynamic relationship among physical infrastructure, financial development, human capital and economic growth in Bangladesh, employing Autoregressive Distributed Lag (ARDL) bound co-integration and Granger causality test for the period 1985–2019. The study finds a significantly positive long-term impact of physical infrastructure and human capital on economic growth. However, the effect of financial development on growth is found to be negative, and the result suggests that financial development will take place with economic growth. From the policy perspective, this study emphasises increasing investment in physical infrastructure and human capital for Bangladesh to foster long-term economic growth.

Financial progress, inward remittances, and economic growth in Bangladesh: Is the nexus asymmetric?

“…The study suggests that strategies to reduce inflation, improve resource solidarity, and appropriately allocate capital are necessary to boost economic growth. Similarly [ 16 ], find a negative nexus between financial progress and economic growth in Bangladesh by examining data from 1985 to 2019. However, they reveal a long-term positive influence of infrastructure advancement and human capital on economic growth, recommending more investment in structural development and the utilization of human capital.…”

“…The effects of financial progress and remittances on economic growth have been the subject of numerous studies in Bangladesh [ 6 , 7 , [15] , [16] , [17] , [18] , [19] , [20] ]. For example [ 15 , 16 , 18 ], employed the ARDL model to examine the effects of financial progress and remittances on economic growth in Bangladesh [ 7 ].…”

“…The effects of financial progress and remittances on economic growth have been the subject of numerous studies in Bangladesh [ 6 , 7 , [15] , [16] , [17] , [18] , [19] , [20] ]. For example [ 15 , 16 , 18 ], employed the ARDL model to examine the effects of financial progress and remittances on economic growth in Bangladesh [ 7 ]. employed the Johansen cointegration method and Granger causality test to identify the long-run relationship and the direction of the causality, and [ 17 , 19 , 20 ] employed the VECM model to understand the relationship between the variables being studied.…”

The Impact of Real Government Spending in Physical and Social Infrastructures on Economic Growth

“…This reflects negative effects increase in the long-run. The negative impact of port infrastructure on economic growth is caused by more imported goods than exported ones (Cong et al, 2020;Ahmed et al, 2020), or non-optimal use of the capacity. Another cause is that the existence of the port is not aligned with its surroundings market (Miller, 2017), or improper maintenance.…”

How financial development and economic growth influence human capital in low-income countries

“…On the other side, past literature suggests that studying finance and human capital relationship is essential to understanding economic growth. Among other studies, the notable works in this regard include Ang (2008), Pagano (1993), De Gregorio (1996), De Gregorio and Guidotti (1995, Ahmed et al (2020). Theoretically, human capital and financial development are equally important for good economic growth (Sehrawat and Giri, 2017).…”