The Role of Agriculture, Industry, and Services Sector in Economic Growth of Bangladesh: An ARDL Analysis
Abstract:
Purpose - This study investigates the contributions of agriculture, industry, and services to Bangladesh’s economic growth, addressing controversies regarding their short- and long-run impacts within the framework of structural transformation.
Design/methodology/approach - Using annual time-series data from 1971–2020, the Autoregressive Distributed Lag (ARDL) bounds testing approach was employed to estimate both long-run elasticities and short-run dynamics. Complementary diagnostic and stability tests ensured robustness of the model.
Findings - Results confirm a strong long-run cointegrating relationship between GDP and the three sectors. Services emerged as the dominant driver of growth, industry contributed positively but moderately, and agriculture remained vital in both the short and long run. The error correction term indicated rapid adjustment toward equilibrium, underscoring resilience in Bangladesh’s growth process.
Research limitations - The study is limited to aggregate sectoral data, which may mask heterogeneity within subsectors. External shocks such as climate change and global trade disruptions were not explicitly modeled.
Originality/value - By jointly analyzing agriculture, industry, and services within a unified ARDL framework, this study reconciles econometric evidence with structural transformation theory, offering evidence-based insights for balanced sectoral development in Bangladesh.
Purpose - This study investigates the contributions of agriculture, industry, and services to Bangladesh’s economic growth, addressing controversies regarding their short- and long-run impacts within the framework of structural transformation.
Design/methodology/approach - Using annual time-series data from 1971–2020, the Autoregressive Distributed Lag (ARDL) bounds testing approach was employed to estimate both long-run elasticities and short-run dynamics. Complementary diagnostic and stability tests ensured robustness of the model.
Findings - Results confirm a strong long-run cointegrating relationship between GDP and the three sectors. Services emerged as the dominant driver of growth, industry contributed positively but moderately, and agriculture remained vital in both the short and long run. The error correction term indicated rapid adjustment toward equilibrium, underscoring resilience in Bangladesh’s growth process.
Research limitations - The study is limited to aggregate sectoral data, which may mask heterogeneity within subsectors. External shocks such as climate change and global trade disruptions were not explicitly modeled.
Originality/value - By jointly analyzing agriculture, industry, and services within a unified ARDL framework, this study reconciles econometric evidence with structural transformation theory, offering evidence-based insights for balanced sectoral development in Bangladesh.