Some Macro-Factors Influencing Industrial Performance in Bangladesh: A Co-integration Analysis

This study attempts to identify the key drivers of the industrial performance in Bangladesh over the period 1972–2014. ARDL (autoregressive distributed lag) and Johansen approach to co-integration are applied. Both empirical tests confirm a long-run relationship between the industrial value-added, net export of goods and services, gross capital formation, GDP per capita growth, population density and government expenditure. In both tests population density is found to have the largest positive effect on industrial performance and gross capital formation is found to be the second largest influencing factor. This study confirms that external balance of goods and services and government expenditures have the smallest effects on the industrial performance. Government expenditure is found to have a negative impact on industrial performance in ARDL approach, the coefficient is insignificant, though.