Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis

Md. Sharif Hossain; Shah Alam

doi:doi:10.11648/j.ijber.20211006.15

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Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis

Md. Sharif Hossain, Shah Alam

Published in International Journal of Business and Economics Research (Volume 10, Issue 6)

Received: 21 November 2021 Accepted: 7 December 2021 Published: 24 December 2021

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Abstract

In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.

Published in	International Journal of Business and Economics Research (Volume 10, Issue 6)
DOI	10.11648/j.ijber.20211006.15
Page(s)	246-257
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Garment Sector Development, Long-run Cointegration, VEC Model, Response Function

References

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Md. Sharif Hossain, Shah Alam. (2021). Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. International Journal of Business and Economics Research, 10(6), 246-257. https://doi.org/10.11648/j.ijber.20211006.15

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ACS Style

Md. Sharif Hossain; Shah Alam. Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. Int. J. Bus. Econ. Res. 2021, 10(6), 246-257. doi: 10.11648/j.ijber.20211006.15

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AMA Style

Md. Sharif Hossain, Shah Alam. Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. Int J Bus Econ Res. 2021;10(6):246-257. doi: 10.11648/j.ijber.20211006.15

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@article{10.11648/j.ijber.20211006.15,
  author = {Md. Sharif Hossain and Shah Alam},
  title = {Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis},
  journal = {International Journal of Business and Economics Research},
  volume = {10},
  number = {6},
  pages = {246-257},
  doi = {10.11648/j.ijber.20211006.15},
  url = {https://doi.org/10.11648/j.ijber.20211006.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20211006.15},
  abstract = {In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.},
 year = {2021}
}

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TY  - JOUR
T1  - Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis
AU  - Md. Sharif Hossain
AU  - Shah Alam
Y1  - 2021/12/24
PY  - 2021
N1  - https://doi.org/10.11648/j.ijber.20211006.15
DO  - 10.11648/j.ijber.20211006.15
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 246
EP  - 257
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20211006.15
AB  - In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.
VL  - 10
IS  - 6
ER  -

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Author Information

Md. Sharif Hossain

Faculty of Business Studies, Department of Accounting and Information Systems, University of Dhaka, Dhaka, Bangladesh
Shah Alam

Faculty of Business Studies, Department of Accounting and Information Systems, University of Dhaka, Dhaka, Bangladesh

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Md. Sharif Hossain, Shah Alam. (2021). Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. International Journal of Business and Economics Research, 10(6), 246-257. https://doi.org/10.11648/j.ijber.20211006.15

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ACS Style

Md. Sharif Hossain; Shah Alam. Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. Int. J. Bus. Econ. Res. 2021, 10(6), 246-257. doi: 10.11648/j.ijber.20211006.15

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AMA Style

Md. Sharif Hossain, Shah Alam. Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis. Int J Bus Econ Res. 2021;10(6):246-257. doi: 10.11648/j.ijber.20211006.15

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@article{10.11648/j.ijber.20211006.15,
  author = {Md. Sharif Hossain and Shah Alam},
  title = {Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis},
  journal = {International Journal of Business and Economics Research},
  volume = {10},
  number = {6},
  pages = {246-257},
  doi = {10.11648/j.ijber.20211006.15},
  url = {https://doi.org/10.11648/j.ijber.20211006.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20211006.15},
  abstract = {In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Garment Sector Development Nexus Economic Growth in Bangladesh: A Dynamic Cointegration and Causality Analysis
AU  - Md. Sharif Hossain
AU  - Shah Alam
Y1  - 2021/12/24
PY  - 2021
N1  - https://doi.org/10.11648/j.ijber.20211006.15
DO  - 10.11648/j.ijber.20211006.15
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 246
EP  - 257
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20211006.15
AB  - In Bangladesh the garment sector is one of the major industrial sector which occupied its foremost presence in the economy of the country in terms of foreign exchange earnings, contribution to GDP, and employment generation and as well. The garment sector plays significant roles for socio-economic development and poverty alleviation in Bangladesh. The export-oriented readymade garments (RMG) sector in Bangladesh, started its journey in late 1970s as a small non-traditional sector of export. The industry began its journey from 1978 and formally started its journey in the 1980s, after that RMG sector of Bangladesh started growing, capture the market globally and providing valuable performance. In 1979 the garment sector exported only 0.672 million $ with operating 12 garment factories by 0.39 million workers but in 2020 within a span of two decays export values have gone up to 31456.73 million USD with its 4764 export oriented garment industries including 4.23 million workers. Thus an important question is usually raised by the researchers, is there a long-run cointegration relationship between garment sector development and economic growth in Bangladesh? To give the answer of this question this paper has tried to find out whether the long-run cointegration relationship exists between garment sector development and economic growth in Bangladesh economy. The study is used the times series data from 1976-2020 for garment sector development and economic growth. The existence of long-run cointegration relationship is found between garment sector development and economic growth in Bangladesh economy. From the estimated results of the vector error correction (VEC) model it is found that there exists short run bidirectional causality between garment sector development and economic growth. The significance and negative sign of test statistic of ECM(-1) denotes the existence of long run causality between garment sector development and economic growth. Therefore, it can be presumed that there is a long-run equilibrium connection between garment sector development and economic expansion in Bangladesh economy. From the estimated values of response function it can be said that with respect to one standard deviation the variable garment sector development responds positively for the next fifteen years in the variable economic growth in Bangladesh.
VL  - 10
IS  - 6
ER  -

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