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Total Factor Productivity in Bangladesh: Impacts and Determinants

Bangladesh has been experiencing a steady increase in the growth rate of real GDP since independence, accelerating from an average of less than 4% per year during 1972-1990 to 6.5% in 2010-2016. While the long term track record for the role of capital accumulation in driving growth is generally very good, the recent results are worrisome.  In the last four years, the investment rate seems to have stagnated, especially the private investment effort. The skills gap yet presents a fundamental policy challenge for future growth strategy.

Considering the stagnant Investment-GDP ratio, large pool of unskilled labor with low participation in secondary education, it is necessary to explore the contribution of labor and capital stock in growth   of Bangladesh. Moreover, Total Factor Productivity is an endogenous variable and can be influenced by government policies. Apart from estimating the contributions of labour, capital and TFP to economic growth, exploration on determinants of TFP also becomes an obvious exercise.

The study intends to meet two specific objectives. The primary objective is to explore the dominant sources of persistent growth in recent times in Bangladesh. The study will also carry out an exercise of analyzing the determinants of TFP in Bangladesh in last decade

Study Team: Tahreen Tahrima Chowdhury and Rizwana Islam

Timeline: 20 January, 2017 to 20 May, 2017

Sponsored by :  BIDS Research Endowment Fund 

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