Long-Term Growth Scenarios for Bangladesh
40 Pages Posted: 24 Jan 2017
Date Written: January 24, 2017
Bangladesh has achieved robust economic growth over the past 10 years, with real GDP growing by more than 6 percent on average each year. This paper investigates whether the country will be able to maintain such high levels of growth going forward. A simple growth model calibrated to the Bangladesh economy is used to analyze various growth scenarios. The main finding of the paper is that it is crucial for the country to focus on reforms to raise total factor productivity (TFP) growth, to sustain the high real GDP growth seen in the recent past. The country will fail to achieve high growth in absence of strong TFP growth despite meeting the levels of investment as outlined in the Seventh Five Year Plan. The model is also used to gain insights on government debt sustainability given different growth scenarios. The analysis highlights the significance of meeting revenue targets in maintaining sustainability, considering the planned expansion in expenditures.
Keywords: Economic Growth, Public Finance Decentralization and Poverty Reduction, Macro-Fiscal Policy, Public Sector Economics, Economic Theory & Research, Economic Adjustment and Lending, Industrial Economics
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