Abstract

Bangladesh has been experiencing spectacular growth over the last three decades. Although macroeconomic as well as socioeconomic indicators are on a positive trend, it is still a matter of debate whether this increasing trend of growth will sustain in the long run. While there has been a handful research in this field, there isan enormous scope for contributing to the literature on the long-term economics of Bangladesh. This research has introduced a new variable, namely human security, in the augmented Solow model to estimate the productivity growth of Bangladesh which is yet to be done by any researcher. This thesis attempts to decompose the growth of output per unit of labor, i.e., gross domestic product per unit (effective) labor into input-physical capital per unit of (effective) labor, and productivity growth in the context of Bangladesh using the time series over 1981-2019. For analyzingproductivity growth, an intensive form of Cobb-Douglas production function has beenused. The “Perpetual Inventory Method” has been employed to determine physical capital input. Human capital as a proxy of the human capital index and human security as a proxy of the human security index has been used to improve the quality of labor. To check the associations between variables, different methods of non-stationary time series econometrics have been employed. These methods include the Johansen test of cointegration to check the cointegration between the variables, followed by VECM, FMOLS, and CCR model, in addition to OLS regression model. Furthermore, the OLSmethod has been used to estimate the determinants of the Solow residual. From the analysis, it has been found that the value of productivity growth is reduced upon improvement of the quality of labor adjusted for human capital and human security. Government education expenditure, inflation deflator, corruption control, and rule of law have a significantly positive impact, while globalization index and regulatory quality have significantly negative impact on productivity growth. The research has policy suggestions to invest more public funds in human resources development, take policy to reduce corruption, and prepare strategic plans to capture the benefits of globalization. Keywords: Productivity Growth, Solow Residual, Total Factor Productivity, Human Capital, Human Security, Economic Growth