Infrastructure and Growth and Poverty in Bangladesh

Raihan, Selim (2011): Infrastructure and Growth and Poverty in Bangladesh. Forthcoming in:

Abstract

This paper has explored the relationship between infrastructure and growth and poverty in the context of the Bangladesh economy and in this context the paper has used three different techniques. The general conclusion is that infrastructure plays extremely significant role in promoting growth and alleviating poverty in Bangladesh. The construction of the district-wise Infrastructure Development Index (IDI) and ranking of the districts on IDI suggest that the districts which are close to the capital city are having higher IDIs than the districts which are far from the capital city. The cross-section regression results suggest that the district-wise variation in head-count poverty is well explained by the variation in the IDI and the district with higher IDIs are associated with lower head-count poverty. The SAM multiplier model indicates significant rise in gross output, household consumption and value-addition because investment in physical and social infrastructure. A 20 percent increase in infrastructural investment demand would lead to 8.17 percent rise in gross output, 8.07 percent rise in value-added or gross domestic product, and 7.12 percent rise in household consumption. The exercise using the CGE model suggests that 25 percent reduction in the transport margin in the sectors would lead to rise in the real GDP by 0.57 percent, fall in the general price index by 1.43 percent, rise in exports and imports by 0.83 and 0.95 percent, and rise in national welfare by 0.39 percent. Also, the national head-count poverty would fall by 1.24 percent. The poorer household groups are likely to experience higher reduction in poverty indices compared to their non-poor

• Item Type: MPRA Paper
• Language: English
• Keywords: Infrastructure; Growth; Poverty; Bangladesh; CGE
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

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