Effect of Public Investment on Economic Growth in Bangladesh: An Econometric Analysis

Abstract

This paper explores the role of public investment in the process of economic growth, in the context of Bangladesh economy. Due to lack of recent official statistics, necessary datasets were derived by the author for the period 1973-2011. For the estimation purposes several econometric method are used. The results show that Public Investment has positive effects on GDP in Bangladesh. So increases in public investment should have a positive net impact on economic growth which augments our economic development in future. Findings point out that keeping the high public investment level in Bangladesh together with improvement in institutional surroundings would be beneficial for economic growth. This paper concludes with a number of policy recommendations arising from the research findings.
Kewords: Public Investment, Economic Growth, Unit Root Test, Co-integration test, Jarque-Bera test, Multicollinearity test, Heteroskedasticity, Likelihood Ratio Test.