Md. Shakawat Hossain ID - B150203032

A REPONT ON
Determinants of GDP Per Capita in South Asian

Developing Countries: An Empirical Study.
Submitted in partial fulfillment of the requirements for the Degree of
Bachelor of Business Administration (BBA).
Department of Finance,
Jangannath University, Dhaka.
Supervised By
Dr. Mohammad Bayezid Ali Submitted By
Professor, Md. Shakawat Hossain
Department of Finance, ID: B150203032
Jagannath University, Dhaka. BBA 10th Batch
Jagannath University.
Date of Submission:
Letter of Transmittal
15 April 2020
Dr. Mohammad Bayezid Ali
Professor
Department of Finance
Jagnannath University, Dhaka
Subject: Submission of report on “Determinants of GDP Per Capita in South Asian

Developing Countries: An Empirical Study”
Sir,
With humble respect, I would like to convey your knowledge that I have prepared a report on
“Determinants of GDP Per Capita in South Asian Developing Countries: An Empirical
Study” under your kind supervision. I would also draw your kind attention to the fact that I have
tried my best to gather and organize all the information needed for the particular thesis report, in
consistency with the optimal standard under your valuable direction.
I have tried to give my best effort to prepare the report properly through there may be
shortcomings. I would be grateful if you consider those from excusable manner. May I,
therefore, wish and hope that you would be gracious enough to accept my effort and oblige
thereby.
Yours obediently,
……………………………
Md. Shakawat Hossain
ID: B150203032
BBA 10th Batch
Department of finance,
Jagannath university.
1
Acknowledgement
I would like to express my gratitude to all the people that were involved both directly and
indirectly in the preparation of this report. I apologizes to the people whose names that name
mentioned and their contribution is highly appreciate by me.
It is a matter of great contentment to be able to complete this study projects in time. I want to
start this paper acknowledging my gratefulness to the almighty Allah for giving me strength and
the ability to prepare this report. Then my most sincere thanks go to my honorable faculty
advisor-Dr. Mohammad Bayezid Ali for his continuous direction, suggestion and valuable
feedback in the completion of this paper. Without his endless support and encouragement, this
paper would not have seen daylight.
Finally I would like to thank our parents and friends whose influence and inspiration have
enabled me to complete this paper.
2
Supervisor’s Declaration
I am very pleased to declare that Md. Shakawat Hossain ID NO: B150203032, BBA 10th batch,
Department of Finance, Jagannath University, Dhaka-has been given with the topic
“Determinants of GDP per capita in south Asian developing countries: An empirical study” for
researching and writing a report on this subject.
He has reviewed all the relevant literature for three months to collect necessary data. I have
supervised him throughout the preparation of the thesis paper. I also certify that this report is an
original one and has not been submitted elsewhere previously for publication in any form. I wish
him all the best in his effort.
………………………………………
Dr. Mohammad Bayezid Ali
Professor,
Jagannath University, Dhaka.
3
Student’s Declaration
I hereby declare that the thesis paper entitled “Determinants of GDP Per Capita in South
Asian Developing Countries: An Empirical Study” is submitted in partial fulfillment of the
requirement for the degree of Bachelor of Business Administration (BBA) from department of
finance, Jagannath University, Dhaka.
I would like to solemnly declare that a thesis report on “Determinants of GDP Per Capita in
South Asian Developing Countries: An Empirical Study”, has been authentically prepare by
me. While preparing this thesis report I did not break any copyright act intentionally. I am further
declaring that I did not submit this report anywhere for awarding any degree, diploma or
certificate.
……………………………….
Md. Shakawat Hossain
ID: B150203032
BBA 10th Batch
Jagannath university, Dhaka.
4
Abstract
This paper empirically investigates the major driving forces of GDP per capita in south Asian
developing countries. The study uses the annual data of three developing countries-Bangladesh,
India and Sri-Lanka over the period 2001 to 2016. The paper test whether the independent
variable foreign direct investment (FDI), Customs and import duties (CID), IBRD and IDA
credit (IBRDIDA), Use of IMF credit ( IMFC), net domestic credit (NDC) and tax revenue (TR)
are statistically significant or not for dependent variable GDP per capita of south Asian
developing countries (GPERCAP). Some econometric tools have been employed in this paper to
make reliable, meaningful and comprehensive paper. The econometric tools used in the study are
descriptive statistics, ARDL, long run bound test, T bound test and F bound test. This paper aims
to determine the relationship between the selected independent variables and dependent variable
GDP per capita in south Asian developing countries.
5
Table of Contents
Letter of Transmittal………………………………………………………………….....1
Acknowledgement………………………………………………………………………..2
Supervisor’s declaration……………………………………..………….……………….3
Student’s declaration…………………………………………………………………….4
Student’s declaration…………………………………………………………………….5
Abbreviations………………………………………………………………………….....8
Part 1: Introduction…………………….……………………………….………….…..10
1.1 Objectives of the Study………………………………………………….………10
1.1.1 General objective………………………………………………………….…..10
1.1.2 Specific objective…………………………...………………………………….11
1.2 Rationale of the study……………………………………………..……….……11
1.3 Scope of the study……………………………………………………………….11
1.4 Limitations of the study………………………………………...……………….12
Part 2: Literature Review ………………………………………………………….….14
2.1 Empirical review………………………………………………...……………….14
Part 3: Data and research methodology………………………………………………18
3.1 Data description and sources…………………………………………………...18
3.1.1 Sources of data used in the model…………………………………...….……18
3.1.2 Definition of variables used in the model...……………….……..…….…….18
3.2 Research Methodology …………………………………………………….…...20
3.2.1 Descriptive Statistics ………………………………………………………….20
6
3.2.2 Autoregressive distributive lag (ARDL)……………………………….……20
3.2.3 Hannan-Quinn criterion (HQC)…………………………….………..………21
3.2.4 ARDL bound test........................................................................................…...21
Part 4: Analysis and Findings……………………………………….…………………23
4.1 Bangladesh .....................................................................................................…...23
4.1.1 Descriptive Statistics…………………………………………………………..23
4.1.2 Auto regressive lag model (ARDL)………………………………………......24
4.1.3 Long run bound test……………………….…………….……………………26
4.2 India……………………………………..………………………………………28
4.1.2 Auto regressive lag model (ARDL)………………………………..…………30
4.1.3 Long run bound test………….……………….………………………………32
4.3 Sri-Lanka .......................................................................................................…...34
4.1.2 Auto regressive lag model (ARDL)……………………………..……………35
4.1.3 Long run bound test………….……………………….………………………38
Part 5: Conclusion…………………………………...……………………………….…42
References…………………………………………………………………….………....43
Appendix…………………………………………………….…………………………..45
7
Abbreviations
FDI = Foreign Direct Investment
OECD = Organization for Economic Corporation and Development
M & A = Merger and acquisition
UN = United Nation
UNCTAD = United Nations Conference on Trade and Development
UECM = Unrestricted Error Correlation Model
GDP = Gross Domestic Product
ARDL = Auto Regressive Distributive Lag
CID = Customs and Import duties
IBRDIDAC = IBRD & IDA credit
IMFC = Use of IMF Credit
NDC = Net Domestic Credit
TR = Tax Revenue.
8
Chapter: 1
Introduction
9
Part 1: Introduction
Asian countries vary in size and complexity. According to united nation (2014), the population
of south Asia is about 1.749 billion which makes it the most populated region in the world. The
nature size and structure of south Asian developing countries have been changing qualitatively
and quantitatively. GDP (Gross domestic product) of these countries have been increase day by
day. Economic growth is an increase in the amount of goods and service produced per head of
the population over a period of time. In one word that is called GDP per capita. The increasing
GDP per capita is considered as one of the measure feature of economic growth and that‟s why
many questions in macroeconomic and microeconomic areas are arising day by day. Thus GDP
per capita have become the context of greater interest in the economy of the region.
Gross domestic product (GDP) is the standard measure of the value of final good and services
produced by a country during a period. GDP is the single most important indicators to capture
these economic activities. Per capita GDP is a metric that breaks down a country‟s GDP per
person. It is calculated by dividing over a country‟s population. It is a core indicator of economic
performance and commonly used as board measure of average living standards or economic
wellbeing. GDP per capita shows how much economic production value can be attributed to each
individual citizen. Alternatively this translates to a measure of national wealth since Market
value per person also readily serves as a prosperity measure. Governments use GDP per capita to
understand how the economy is growing with its population. If a country‟s GDP per capita is
growing with a stable population level it can potentially be the result of technological
progression that are producing more with a stable population level. Some countries may have
high GDP per capita but small population which usually means the built up a self-sufficient
economy based on an abundance of special resources. It is important to look at each variable‟s
contribution to understanding how an economy is growing or contracting in terms of people.
There can be several numerical relationships that can affect per capita GDP. This paper employs
the ARDL regression model and some other econometric tools to examine the determinant
factors influencing per capita GDP in South Asian developing Countries.
1.1 Objectives of the Study:
1.1.1 General Objective
The main purpose of the study is to find out the determinants of GDP per capita in south Asian
developing countries which are necessary to build up a theoretical framework first; empirical
determination of the determination of the determinants requires the use of suitable regression
model. This paper has been prepared for the partial fulfillment of BBA degree.
10
1.1.2 Specific Objective
 Descriptive statistics describe the basic feature of the data in the study.
 Auto regressive distributive (ARDL) lag describes the relationship between dependent
and independent variable.
 ARDL bound test shows the long run relationship between independent and dependent
variables.
1.2 Rationale of the Study:
GDP per capita is considered as one of the most important parameters of economic growth. It is
measurement of a countries economic output that accounts for its number of people. According
to UN (united nation), the most populated is the south Asian region and its population are
increasing day by day. So, significance of GDP per capita and its determinants leads wide range
of research paper for economic conditions of different countries and parts of the world economy.
Some research paper had been made on the topic, “Determents of GDP per capita in south Asian
developing countries: an empirical study” based on different set of variables on different
timeframe, where from my own consideration it seemed to me that these research paper use some
more relevant and some irrelevant area and variables to analyze the determents of GDP per
capita in the context of south Asian developing region. So, I have taken the initiative to prepare
the study.
1.3 Scope of the Study:
The study aims to analyze the determinants of GDP per capita in south Asian developing
countries based on the time series data for the period 2001 to 2016. This paper employed GDP
per capita (GPERCAP) as dependent variables and independent variables are Tax revenue (TR),
foreign direct investment (FDI), Customs and import duties (CID), IBRD loan and IDA credit
(IBRDA), Net domestic credit (NDC), use of IMF credit (IMFC),
The time series data for these variables are collected from the secondary sources. The research
paper is going to be prepared by showing the statistical significance of selected of independent
variables on the GDP per capita in south Asian developing countries. This paper also aims to
determine the relationship between the selected independent variables and dependent variable
GDP per capita in South Asian countries.
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1.4 Limitations of the Study:
During the study, several conditions reduced the efficiency with which the research work was
done. The information collected was not in a slandered format and additional time was required
to put the information in a standardized presentable format for consistency of the information.
Another limitation is developing a model which would enable the researcher to study the
relationship between dependent and independent variables. If the model is incorrect, the process
of analysis may not give the right results.
12
Chapter: 2
Review of Relevant Literature
13
Part 2: Literature Review
A literature review or narrative review is type of review article. A literature review is scholarly
paper which includes the current knowledge including substantive findings, as well as theoretical
and methodical contributions to a particular topic. Literature reviews are secondary sources, and
do not report new or original excremental work. This chapter has been prepared by presenting
the literature review on the topic “Determinants of GDP per capita in south Asian developing
countries: An empirical study.”
2.1 Empirical Review:
There are huge studies to reveal the determinants of GDP, GDP per capita and economic growth
through various statistical tools and econometric analysis tools and models namely New classical
model, Smithian-Marixan model, The von newmann model, The harrod-domer model, The slow
model, Sur and SEM model, panel data regression, unit root test, unobserved dynamic panel
regression, cross correlation between specific variables. These studies include both qualitative
and quantitative data to determine the impacts of various variables on GDP and GDP per capita.
These studies seek to explore the relationship between various variables on GDP and GDP per
capita.
J Alfarjat & M.M Alalaya (2017) has conducted the study based on Arab world countries. Data
of this study were collected from secondary sources such as central banks of these Arab country,
Arab unified economic reports and IFM yearly reports. Some economic model were constructed
in this study such as the new classical model, Smithian-Marixan Model, The von Neumann
model, The Harrod-domar model, The slow model. A regression analysis has been run to find the
result from the collected data. This study found that the financial structures and macroeconomic
conditions and policy setting seem to play an important role in GDP per capita of each country.
This study has proved evidence that high inflation rate is negatively associate with an
accumulation of physical capital and negative effect bearing on GDP per capita.
Islam (1995) has conducted the study based on cross section data for 173 countries available
from human development index as a result the data sources of this study is secondary. By using
cross data a regression had been run for getting result. The study found that per capita GDP is an
important determinant of human development. The rank correlation between the two is higher in
high and medium developed countries compared to low human developed group.
E PElinescu (2015) has conducted this study based on various countries on EU. Data were taken
from previously published reports, journals and central bank square model used to find the result
14
of the study. This paper highlighted the importance of human capital in ensuring economic
growth expressed as gross domestic product per capita. The model reveled a positive
relationship statistically significant between GDP per capita and innovative capacity of human
capital and qualification of employees (secondary qualification) as expected according to
economic theory. This model showed negative influence both in the economic crisis and
difference driving from countries.
In this report D Cuberes & M Teignier (2014) mentioned that gender inequality more in south
Asia, The Middle East, and North Africa but the whole study is based on world economy. And
data were collected from secondary sources like world development report 2012. The author
showed two way relationships between gender inequality and economic growth. Reference of
some model had been used to show how gender inequality affects aggregate productivity and
economic growth. This paper surveys the theoretical and empirical relationship between gender
inequality and economic growth. From a theoretical perspective the existing models can be
divided into three groups, those in which economic growth results in lower gender gap those in
which the causality run in both directions and those that qualify the effect of a decline in gender
gaps on aggregate productivity and economic growth.
TG Chirwa & NM odhiambo (2016) found that the determinants of economic growth are
different when the distinction is used. It revealed that in developing countries the key
macroeconomic determinants of economic growth include foreign aid, foreign direct investment,
fiscal policy, investment, trade, human capital development, demographics, monetary policy,
Natural resources, reforms and geographic, regional political and financial factors. The study
was conducted based on developed and developing countries, south-eastern and European
countries. While these study reveal the key macroeconomic determinant of economic growth in
developing and developed economies, the size of their effects on economic growth are different
from study to study. There are some determinants such a foreign aid, population growth, human
capital investment, fiscal policy variables, geographic location and reforms among others that
shows mix result. This suggests that the genuine growth effects of these determinants are not
homogenous between economies.
L Muinelo-Gallo & Roca-Sagale‟s (2013) studied the relationship between income inequality
and economic growth through fiscal policy. The empirical analysis uses a panel dataset of 21
OECD countries catalogued as high income by World Bank. Some data are collected from
costello-climent (2010) and Folster and Henrekson (1999).The human capital variables are
obtained from Barro and Lee (2001), while the GiNi index of education is obtained from Castello
and Domenech (2002). Mean and standard deviation were calculated. Sur model and SEM model
15
were run to find the study result out. The study finds that gross income inequality determines
different fiscal policy outcome which subsequently affect the evolution of economic growth and
net income inequality. The results of study indicate that increasing distribute expenditure in high
income countries with a well-established welfare state reduces income inequality but does not
necessarily harm GDP growth.
EM Ekanayake & D Chatrna (2010) uses annual data on a group of 85 developing countries
covering Asia, Africa, Latin America and Caribbean for the period 1980-2007. Data were
collected from secondary sources, Organization for economic corporation and development
(OECD), World Bank, World development indicator database, the freedom house, the freedom in
the world 2008 database. The major point emerging from this work is that foreign aid has a
mixed impact on economic growth of developing countries
H Boulhol, A De Serres & M Molnar (2008) has conducted the study based on OECD countries.
Data were collected from the secondary sources. This paper examines how much of the cross-
country dispersion in economic factors. A macro growth regression was run to find the result.
The key point of this aspect of geography is the recognition that proximity may have favourable
impact on productivity, through various channels operating via product and Labour markets. In
case of product markets, one of the key channels is that proximity induces strong competition
between producers, thus encouraging efficient use of resources and innovation activity.
In this study M Wang & MC Sunny Wong has examined how different FDI affect economic
growth in the host country. In this paper they separate FDI into two major components (1) green
field investment (2) cross border merger and acquisition (M&A) in the estimation process mean
and standard deviation were calculated to find the study result and then run a regression analysis.
Data of the study were collected from secondary sources like (UNCTAD, 2000). Empirical
result on the growth effect of FDI remains uncertain in the literature. These ambiguous highlight
the need for further empirical investigation in the FDI growth literature. The results indicate that
the growth effect of Greenfield investment is significantly positive while that of M&A is
negative.
DE Bloom & JE Finlay (2008) has conducted the study based on Asian economy (especially on
East Asia). Secondary data sourced were used in this study, such as, penn word table, world
pollution prospects (United Nation 2007), World bank data 2007. By using demographic data
(working age shares, life expectancy, population growth, and population density) a regression
analysis has been run. The study found that the nature of economic growth between two periods
1965-1990 and 1990-2005 is very different. Japan experienced a slowdown South Korea and
China surged ahead with stronger performance in the second period.
16
Chapter: 3
Data and Research Methodology
17
Part 3: Data and Research Methodology
Data and research methodology chapter of this report has been explained the description and the
sources of the data collected and the methodology-how the collected data has been analyzed by
some econometric tools.
3.1 Data Description and Sources
Data employed in the research paper are secondary in nature. The annual data for the period
2001-2016 have been used in this paper.
3.1.1 Sources of Data Used in the Model
The study has been conducted based on multi-economy (Bangladesh, India, Sri-Lanka). The
main data sources of this study are World Bank. Some data have been collected from central
bank of each country (Bangladesh bank, Reserve bank of India, central bank of Sri-Lanka).
3.1.2 Definition of Variables Used in the Model
Tax revenue: Tax revenue is defined as the revenues collected from taxes on income and profits,
social security contributions taxes levied on goods and services, Payroll taxes, on ownership and
transfer of property and transfer of property and other taxes. Total tax revenue as a percentage of
GDP indicates the share of countries output that is collected by the government through taxes. It
can be regarded as one measure of the degree to which the government controls the economy‟s
resources. The tax burden is measured by taking the total tax revenues received as a percentage
of GDP. This indicator relates to government as a whole (all government levels) and is measured
in million USD and percentage of GDP.
Customs and import duties: Customs and import duties are a tax collected on imports and
some exports by countries customs authorities. A goods value will usually dictate the import
duty. Depending on the context, import duty may also be known as a customs duty, tariff, and
import tax or import tariff. Import duties have two distinct purposes: raise income for the local
government and to give a market advantage to locally grown and produced goods that are not
subject to import duties. A third related goal is sometimes to penalize a particular nation by
charging high import duties on its product.
Foreign direct investment: The foreign direct investment (FDI) is an investment in the form of
controlling ownership in a business in one country by an entity based in another country. Broadly
foreign direct investment includes merger and acquisitions, building new facilities, reinvesting
18
profits earned from overseas operations and intra company loans. In narrow sense, foreign direct
investment refers just to building new facility and a lasting management interest in an enterprise
operating in an economy other than that of investor. A foreign direct investment (FDI) is an
investment made by a firm or individual in one country into business interests located in another
country. Generally, FDI takes place when an investor establishes foreign business operations or
acquires foreign business assets in a foreign company. However, FDIs are distinguished from
portfolio investments in which an investor merely purchases equities of foreign based
companies. FDI is the sum of equity capital, long-term capital and short-term capital as shown in
the balance of payments. FDI usually involves participation of management, joint venture,
transfer of technology and expertise.
GDP per capita: Per capita gross domestic product (GDP) is a metric that breaks down a
country‟s GDP per person. It is calculated by dividing GDP over a country‟s population. GDP
per capita is a universal measure globally for gauging the prosperity of nations. Worldwide it is
used by economists alongside GDP to analyze the prosperity of a country and its economic
growth. GDP per capita is gross domestic product divided by midyear population. GDP of
purchasing price is the sum of gross value added by all resident producers in the economy plus
any product taxes and minus any subsides not included in the value of the products. It is
calculated without making deductions for description of fabricated assets or for depletion and
degradation of natural resources.
IBRD loan and IDA credit: IBRD loans and IDA credit are public and publicly guaranteed debt
extended by the World Bank group. The international bank for reconstruction and development
(IBRD) lends at market rates. Credits from international development association (IDA) are
concessional rates. Data are in current US dollars.
Use of IMF credit: Data related to the operations of the IMF are provided by the IMF treasures
department. They are converted from special drawing rights into dollars using end of period
exchange rates for flows.
Net foreign assets: Net foreign assets (NFA) determines whether a country is creditor or debtor
nation by measuring the difference in its external assets owned by a nation mines the value of its
domestic assets that are owned by foreigners, adjusted for changes in valuation and exchange
rates.
Net domestic credit: Net domestic credit is the sum of net credit to the nonfinancial public
sector, credit to the private sector and other accounts.
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3.2 Research Methodology
Research methodology is the specific procedures or techniques used to identify, select, process,
and analyze information about a topic. In a research paper, the methodology section allows the
reader to critically evaluate a study‟s overall validity and reliability. The methodology mainly
answers the question: How was it analyzed?
In this paper, collected secondary data for the selected variables are analyzed by different
econometric tools to test the hypothesis in a reliable way. The econometric analysis tools-
descriptive statistics, ARDL model (regression analysis ) long run form and bound test have been
employed in this study to analyze the determinants of GDP per capita in south Asian developing
countries and thus to make a comprehensive thesis paper.
3.2.1 Descriptive Statistics
Descriptive statistics are brief descriptive coefficients that summarize a given data set, which can
be either a representation of the entire or a sample of a population. Descriptive statistics are
broken down into measures of central tendency and measures of variability (spread). Measures of
central tendency include the mean, median, and mode, while measures of variability include the
standard deviation, variance, the minimum and maximum variables, and the kurtosis and
skewness. Descriptive statistics, in short, help describe and understand the feature of specific
data set by giving short summaries about the sample and measures of data. The most recognized
types of descriptive statistics are measures of center: the mean, median, and mode, which are
used almost all level of math and statistics. The mean or the average is calculated by adding all
the figures with in the data set and then dividing by the number of the figures within the set. The
standard deviation is a statistic measures the dispersion of a dataset relative to its mean and is
calculated as the square root of the variance. It is calculated as the square root of variance by
determining the variation between each data point relative to the mean, there is higher deviation
within the data set; thus, the more spread out the data, the higher the standard deviation.
3.2.2 Auto Regressive Distributive Lag (ARDL)
An autoregressive distributive lag (ARDL) model is an ordinary least square (OLS) based model
which is applicable for both non-stationary time series as well as time series with mixed order of
integration. This model takes sufficient number of lags to capture the data generating process in
general to specific modeling framework.
The general autoregressive distributive lags (ARDL) is written
20
ᶲ(L)Yt= α+θ(L)Xt+Vt
Where ᶲ(L) is an order-p polynomial that for stability, has roots lying, equation can be written as
Yt= α+ᶲiYt-1+….+ᶲpYt-p+θ0Xt+θ1Xt-1+….+θqXt-q+Vt
With a sample of t observations, this model can be estimated for T-max {pq} observations.
3.2.3 Hannan-Quinn Criterion (HQC)
Hannan-Quinn criterion is a criterion for model selection. It is given as
HQC= 2Lmax+ 2kln(ln(n))
Where L max is the log likelihood, k is the number of parameters and n is the number of
observations.
3.2.4 ARDL Bound Test
ARDL bound testing approach is a cointegration method developed by Pesaran et al. (2001) to
test presence of the long run relationship between the variables. This procedure, relatively new
method, has many advantages over the classical cointegration tests. Firstly the approach is used
irrespective whether the series or l (0) 0r l (1). Secondly, unrestricted error correlation model
(UECM) can be derived from ARDL bound testing through a simple linear transformation. This
method has both short and long run dynamics. Thirdly the empirical results show that the
approach is superior and provides consistent results from small sample.
21
Chapter: 4
Analysis and Findings
22
Part 4: Analysis and Findings
Analysis of this study has been performed by various econometric tools and econometric tools
employed in this paper are descriptive statistics, ARDL model (regression analysis) and log run
form and bound test. The output of the analysis parts are explained below:
4.1 Bangladesh
The economy of Bangladesh is developing market economy. In the first quarter of 2019,
Bangladesh‟s was the world‟s seventh fastest growing economy with a rate of 7.3% real GDP
annual growth. Econometric analyses of Bangladesh are explained below:
Table 1: Descriptive statistics of GDP per capita and other economic variables of Bangladesh.
GPERCAP CID FDI IBRDIDAC IMFC NDC NFA TR

Mean 4.508150 201616.6 1208.325 9929.106 908.3150 4454057. 688857.8 647803.8
Median 4.831139 167524.6 1066.772 10633.08 985.5168 3476535. 431652.5 504996.0
Maximum 5.950915 439300.0 2831.153 11890.49 1612.750 10647236 2197619. 1518860.
Minimum 1.960382 83276.37 52.30493 6456.048 134.6713 1211335. 57534.23 192607.6
Std. Dev. 1.119706 107589.0 931.5755 1670.404 573.9566 3004036. 685635.1 428963.7
Skewness -0.841024 0.749079 0.498043 -0.764469 -0.125568 0.687304 1.038366 0.674920
Kurtosis 2.771962 2.512341 1.932619 2.419211 1.313608 2.237488 2.785192 2.123075
Jarque-Bera 1.920857 1.654857 1.420993 1.783311 1.937992 1.647316 2.905970 1.727377

Probability 0.382729 0.437172 0.491400 0.409976 0.379464 0.438824 0.233871 0.421604
Sum 72.13040 3225866. 19333.21 158865.7 14533.04 71264906 11021725 10364860

Sum Sq. Dev. 18.80614 1.74E+11 13017493 41853760 4941393. 1.35E+14 7.05E+12 2.76E+12
Observations 16 16 16 16 16 16 16 16
The descriptive statistics shows the statistical presentation of data for the period 2001 to 2016.
GDP per capital (GPERCAP) has a mean value of 4.508150, while maximum and minimum
values are 5.950915 and 1.960382 respectively. Customs and Import duties (CID) have mean
value of 201616.6, while maximum and minimum values are 439300.0 and 83276.37
respectively. Foreign direct investment (FDI) has a mean value of 1208.325, while maximum
and minimum values are 2831.325 and 52.30493 respectively. IBRD loan and IDA credit
(IBRDAC) has a mean value of 9929.106, while maximum and minimum values are 11890.49
23
and 6456.048 respectively. Use of IMF credit (IMFC) has a mean value of 908.3150, while
maximum and minimum values are 1612.750 and 134.6713 respectively. Net domestic credit
(NDC) has a mean value of 4454057, while maximum and minimum values are 10647236 and
1211335 respectively. Net Foreign asset (NFA) has a mean value of688857.8, while maximum
and minimum values are 2197619 and 57534.23 respectively. Tax revenue (TR) has a mean
value of 647803.8, while maximum and minimum values are 1518860 and 192607.6
respectively. Median, Standard Deviation, sum of all factor have been shown on the description
statistics.
4.1.2 Auto Regressive Lag Model (ARDL)
Dependent Variable: LOG(GPERCAP)

Method: ARDL
Date: 03/09/20 Time: 08:16
Sample (adjusted): 2002 2016
Included observations: 15 after adjustments
Maximum dependent lags: 1 (Automatic selection)
Model selection method: Hannan-Quinn criterion (HQ)
Dynamic regressors (1 lag, automatic): LOG(CID) LOG(FDI)
LOG(IBRDIDAC) LOG(IMFC) LOG(NDC) LOG(TR)
Fixed regressors: C
Number of models evalulated: 64
Selected Model: ARDL(1, 1, 1, 1, 1, 1, 1)
Table 2: ARDL model of Bangladesh.
Variable Coefficient Std. Error t-Statistic Prob.*
LOG(GPERCAP(-1)) -1.073085 0.387043 -2.772522 0.2204

LOG(CID) 1.271875 0.609975 2.085126 0.2847
LOG(CID(-1)) 0.573194 0.532249 1.076927 0.4764
LOG(FDI) 0.253924 0.150006 1.692761 0.3397
LOG(FDI(-1)) 0.945483 0.315736 2.994535 0.2052
LOG(IBRDIDAC) 6.688607 2.028013 3.298109 0.1874
LOG(IBRDIDAC(-1)) -3.906742 1.776793 -2.198761 0.2717
LOG(IMFC) -1.173934 0.402224 -2.918609 0.2101
LOG(IMFC(-1)) 1.057774 0.362952 2.914364 0.2104
LOG(NDC) -4.641921 2.498087 -1.858191 0.3143
24
LOG(NDC(-1)) 4.717463 2.350810 2.006739 0.2943
LOG(TR) -0.460778 1.132898 -0.406725 0.7541
LOG(TR(-1)) -2.709797 0.946940 -2.861635 0.2140
C -10.98068 15.39393 -0.713312 0.6055
R-squared 0.995981 Mean dependent var 1.491504

Adjusted R-squared 0.943728 S.D. dependent var 0.294565
S.E. of regression 0.069876 Akaike info criterion -3.325567
Sum squared resid 0.004883 Schwarz criterion -2.664721
Log likelihood 38.94176 Hannan-Quinn criter. -3.332607
F-statistic 19.06079 Durbin-Watson stat 3.506786
Prob(F-statistic) 0.177606
*Note: p-values and any subsequent tests do not account for model
selection.
In this model Log (GPERCAP) is dependent variable. Regression result shows that during the
period 2001 to 2016, among the variable used in the model, no variables are statically significant
at 5% level of significance.
Log (GPERCAP(-1)) has a coefficient of -1.07 indicating that 1% change in previous year
GPERCAP leads to 1.07% change in present year GPERCAP in negative direction.
Log (CID) has a coefficient 1.27 implying that 1% change in present year customs and import
duties leads to 1.27% change in GPERCAP in present year. Log (CID (-1)) has a coefficient 0.57
meaning that 1% change in previous year CID leads to 0.57% change in GPERCAP in present
year.
Log (FDI) has a coefficient 0.25 indicating that 1% change in present year foreign direct
investment leads to 0.25% change in GPERCAP in present year. Log (FDI (-1)) has a coefficient
0.95 meaning that 1% change in previous year FDI leads to 0.95% change in GPERCAP in
present year.
Log (IBRDIDAC) has a coefficient 6.68 implying that 1% change in present year IBRDIDAC
leads to 6.68% change in GPERCAP in present year. That is huge. Log (IBRDIDAC (-1)) has a
coefficient -3.91 meaning that 1% change in previous year IBRDAC leads to 3.91% change in
GPERCAP in negative direction in present year.
25
Log (IMFC) has a coefficient -1.17 implying that 1% change in present year use of IMF credit
leads to 1.17% change in GPERCAP in negative direction in present year. Log (IMFC(-1)) has a
coefficient 1.06 meaning that 1% change in previous year IFMC leads to 1.06% change in
GPERCAP in present year.
Log (NDC) has a coefficient -4.64 meaning that 1% change in present year net domestic credit
leads to -4.64% changes in GPERCAP in negative direction in present year. That is huge. Log
(NDC(-1)) has a coefficient 4.72 meaning that 1% change in previous year NDC leads to 4.72%
change in GPERCAP in present year.
Log (TR) has a coefficient -0.46 indicating that 1% change in present year tax revenue to 0.46%
change in GPERCAP in negative direction in present year. Log (TR (-1)) has a coefficient -2.71
meaning that 1% change in previous year CID leads to 2.71% change in GPERCAP in negative
direction in present year.
The R-Squared, statistic measure of the success of the regression model in predicating the values
of the dependent variable within the sample indicates that 99.59% of the variance of the
dependent variable LOG (GPERCAP) is explained by the selected variable LOG (CID) LOG
(FDI) LOG (IBRDIDAC) LOG (IMFC) LOG (NDC) LOG (TR).
The more accurate statistic of the goodness of fit the model, Adjusted R-squared shows that the
explanatory power of the model is also good in this case and about 94.37% of the variance of
LOG (GPERCAP) is explained by the dependent variables of the model for the period 2001 to
2016.
Overall, the result shows that the value of F-statistic is 19. 06 with a probability 0.1776
indicating that the combined effect of independent variables used in the model on the dependent
variable ( GDP per capita) is not statistically significant at 5% level of significance.
The estimation generated by the model for the period 2001 to 2016, indicates that the summery
measure (S.E o regression based on the estimated variance oh the residuals is 0.0698 and lower
value is good for the model meaning the fitness of the model is good.
4.1.3 Long Run Bound Test
The bound test suggests that the variables are bound together in log-run when GDP per capita is
dependent variable. In this paper F-bound test and T-bound test have been explained.
Table 3: F-Bound test of Bangladesh
26
F-Bounds Test Null Hypothesis: No levels relationship
Test Statistic Value Signif. I(0) I(1)
Asymptotic:
n=1000
F-statistic 9.967966 10% 2.12 3.23
K 6 5% 2.45 3.61
2.5% 2.75 3.99
1% 3.15 4.43
Finite Sample:
Actual Sample Size 15 n=30
10% 2.457 3.797
5% 2.97 4.499
1% 4.27 6.211
In this test (F-bound test) null hypothesis is H0= No levels relationship or there is no
cointegration between GDP and other variables. If F statistics is smaller than I(o) lower bound,
the null hypothesis is accepted. And if the F statistics is greater than the l(1) higher bound the
null hypothesis is rejected. Here F statistics is 9.96 and at 5% level of significance l(0) is 2.45
and in l(1) is 4.49. That means the null hypothesis is rejected. There is a long run relationship
between variables. Or there is cointegration between dependent and independent variables.
Table 4: t-Bound test of Bangladesh
t-Bounds Test Null Hypothesis: No levels relationship
t-statistic -5.356215 10% -2.57 -4.04

5% -2.86 -4.38
2.5% -3.13 -4.66
1% -3.43 -4.99
27
In this test (T-bound test) null hypothesis is H0= No levels relationship or there is no
cointegration between GDP and other variables. If T statistics is higher than I(o) lower bound,
the null hypothesis is accepted. And if the T statistics is smaller than the l(1) higher bound the
null hypothesis is rejected. Here T statistics is -5.3562 and at 5% level of significance l(0) is -
2.86 and in l(1) is -4.83. That means the null hypothesis is rejected. There is a long run
relationship between variables. Or there is cointegration between dependent and independent
variables.
Table 5: Estimated long-run coefficients of Bangladesh
Variable Coefficient Std. Error t-Statistic Prob.
LOG(CID) 0.890011 0.412220 2.159071 0.2761

LOG(FDI) 0.578561 0.109358 5.290523 0.1189
LOG(IBRDIDAC) 1.341897 0.907598 1.478514 0.3786
LOG(IMFC) -0.056032 0.121678 -0.460496 0.7253
LOG(NDC) 0.036439 0.640972 0.056850 0.9638
LOG(TR) -1.529399 0.582490 -2.625625 0.2317
In long run, elasticity coefficient of use of IMF credit and tax revenue all are negative and their
values are -0.0560 and -1.5293 respectively. No variables are statically significant within the
conventional 1-10% level of significance. The long run elasticity coefficient of customs and
import duties, foreign direct investment, IBRD and IDA credit and Net domestic credit are
positive. And their values are 0.890011, 0.578561, 1.341897, and 0.036439 respectively.
4.2 India
The economy of India is characterized as developing market economy. According to IMF, on per
capita income basis, India ranked 142nd by GDP (nominal) and 119 th by GDP (PPP) in 2018.
And from 2014-18 India was the fastest major growing economy. Econometric analyses of India
are explained below:
28
Table 6: Descriptive statistics of GDP per capita and other economic variables of India

Mean 5.263702 1187215. 24378.20 32922.22 3457.033 51439760 12027362 7515449.
Median 6.140219 1004490. 26312.31 33613.34 3212.255 41771264 12205849 6149125.
Maximum 7.042349 2168500. 44458.57 38185.96 6236.676 1.14E+08 24563266 17032420
Minimum 1.587599 400310.0 3681.985 26092.81 856.0468 12455076 2284737. 1870590.
Std. Dev. 1.766447 630334.7 15029.70 4664.168 2551.368 34860321 6818521. 4723465.
Skewness -0.958522 0.272880 -0.163358 -0.276944 0.021749 0.485561 0.291314 0.554662
Kurtosis 2.542843 1.569194 1.618549 1.482217 1.030221 1.805769 2.068127 2.151311
Jarque-Bera 2.589366 1.563373 1.343433 1.740306 2.587948 1.579510 0.805229 1.300581

Probability 0.273985 0.457633 0.510831 0.418887 0.274179 0.453956 0.668570 0.521894
Sum 84.21923 18995440 390051.2 526755.6 55312.52 8.23E+08 1.92E+08 1.20E+08

Sum Sq.
Dev. 46.80501 5.96E+12 3.39E+09 3.26E+08 97642176 1.82E+16 6.97E+14 3.35E+14
Observations 16 16 16 16 16 16 16 16
value of 1187215, while maximum and minimum values are 2168500 and 400310.0 respectively.
Foreign direct investment (FDI) has a mean value of 24378.20, while maximum and minimum
values are 44458.57 and 3681.99 respectively. IBRD loan and IDA credit (IBRDAC) has a mean
value of 32922.22, while maximum and minimum values are 38185.96 and 2692.81 respectively.
Use of IMF credit (IMFC) has a mean value of 32922.22, while maximum and minimum values
are 6236.68 and 856.05respectively. Net domestic credit (NDC) has a mean value of 51439760,
while maximum and minimum values are 10647236 and 12455076 respectively. Net Foreign
asset (NFA) has a mean value of 12027362, while maximum and minimum values are 24563266
and 2284737 respectively. Tax revenue (TR) has a mean value of 7515449, while maximum and
minimum values are 17032420 and 1870590 respectively. Median, Standard Deviation, sum of
all factor have been shown on the description statistics.
29

Method: ARDL
Date: 03/09/20 Time: 07:44
Fixed regressors: C
Table 7: ARDL model of India.
LOG(GPERCAP(-
1)) -0.002446 0.187417 -0.013050 0.9917
LOG(CID) -7.309902 2.881512 -2.536829 0.2390
LOG(CID(-1)) -4.742459 0.934166 -5.076675 0.1238
LOG(FDI) 0.137310 0.218001 0.629859 0.6422
LOG(FDI(-1)) -0.773891 0.177054 -4.370938 0.1432
LOG(IBRDIDAC) 18.36850 6.993014 2.626692 0.2316
LOG(IBRDIDAC(-
1)) 5.008766 2.915184 1.718165 0.3356
LOG(IMFC) -1.391492 0.999976 -1.391525 0.3967
LOG(IMFC(-1)) -0.617996 0.357723 -1.727581 0.3340
LOG(NDC) -13.99184 2.034018 -6.878916 0.0919
LOG(NDC(-1)) 18.14075 5.243644 3.459569 0.1791
LOG(TR) 9.118160 2.183023 4.176851 0.1496
LOG(TR(-1)) -5.135294 3.706204 -1.385594 0.3980
C -186.2026 75.93079 -2.452267 0.2465

30
selection.
period 2001 to 2016, among the variable used in the model, no variables are statically significant
at 5% level of significance. Log (NDC) is statistically significant at 10% level of significance.
Log (GPERCAP(-1)) has a coefficient of -0.0024 indicating that 1% change in previous year
GPERCAP leads to 0.0024% change in present year GPERCAP in negative direction.
Log (CID) has a coefficient -7.31 implying that 1% change in present year customs and import
duties leads to -7.31% change in GPERCAP in negative direction in present year. Log (CID (-1))
has a coefficient -4.74 meaning that 1% change in previous year CID leads to 4.74% change in
-0.77 meaning that 1% change in previous year FDI leads to 0.77% change in GPERCAP in
negative direction in present year.
coefficient 5.01 meaning that 1% change in previous year IBRDAC leads to 5.01% change in
GPERCAP in present year. Both are in positive direction.
Log (IMFC) has a coefficient -1.39 implying that 1% change in present year use of IMF credit
leads to 1.39% change in GPERCAP in negative direction in present year. Log (IMFC(-1)) has a
coefficient -0.62meaning that 1% change in previous year IFMC leads to 0.62% change in
lead to -13.99% changes in GPERCAP in negative direction in present year. That is huge. Log
31
(NDC(-1)) has a coefficient 18.14 meaning that 1% change in previous year NDC leads to
18.14% change in GPERCAP in present year.
Log (TR) has a coefficient 9.19 indicating that 1% change in present year tax revenue to 9.19%
change in GPERCAP in present year. Log (TR (-1)) has a coefficient -5.14 meaning that 1%
change in previous year CID leads to 5.14% change in GPERCAP in negative direction in
present year.
Dependent variable LOG (GPERCAP) is explained by the selected variable LOG (CID) LOG
2016.
Overall, the result shows that the value of F-statistic is 20.29 with a probability 0.1722 indicating
that the combined effect of independent variables used in the model on the dependent variable
(GDP per capita) is not statistically significant at 5% level of significance.
Table 8: F-Bound test of India
Asymptotic:
n=1000
F-statistic 8.378926 10% 2.12 3.23
k 6 5% 2.45 3.61
2.5% 2.75 3.99
32
1% 3.15 4.43
Finite Sample:
10% 2.457 3.797
5% 2.97 4.499
1% 4.27 6.211
and in l(1) is 4.5 That means the null hypothesis is rejected. There is a long run relationship
between variables. Or there is cointegration between dependent and independent variables.In l(1)
is 3.61. That means the null hypothesis is rejected. There is a long run relationship between
variables. Or there is cointegration between dependent and independent variables.
Table 9: t-Bound test of India
t-statistic -5.348735 10% -2.57 -4.04

5% -2.86 -4.38
2.5% -3.13 -4.66
1% -3.43 -4.99
33
null hypothesis is rejected. Here T statistics is -5.35 and at 5% level of significance l(0) is -2.86
and in l(1) is -4.38. That means the null hypothesis is rejected. There is a long run relationship
Table 10: Estimated long-run coefficients of India
LOG(CID) -12.02296 4.015242 -2.994329 0.2052

LOG(FDI) -0.635028 0.214220 -2.964378 0.2071
LOG(IBRDIDAC) 23.32023 10.12362 2.303546 0.2607
LOG(IMFC) -2.004585 1.328024 -1.509450 0.3725
LOG(NDC) 4.138788 4.273913 0.968384 0.5102
LOG(TR) 3.973149 2.157439 1.841605 0.3167
In long run, elasticity coefficient of customs and import duties, foreign direct investment and use
of IMF credit all are negative and their values are -12.02296, -0.635 and -2.0045 respectively.
No variables are statically significant within the conventional 1-10% level of significance. The
long run elasticity coefficient of IBRD and IDA credit, net domestic credit and tax revenue are
positive. And their values are 23.32, 4.14, and 3.97 respectively.
4.3 Sri-Lanka
Sri Lanka is the second wealthiest nation in south Asia after Maldives and is an upper middle
income nation. The country has experienced an annual growth of 6.4 percent from 2003 to 2012.
. Econometric analyses of Sri Lanka are explained below:
Table 11: Descriptive statistics of GDP per capita and other economic variables of Sri-Lanka

Mean 4.948277 111257.4 569.9119 2407.485 1162.654 3093217. 78549.60 671339.1
Median 4.803928 64003.50 541.3500 2433.841 792.0642 1886021. 116444.2 602277.0
Maximum 9.003873 361596.1 955.9200 2970.031 3118.079 8556109. 422234.3 1463689.
Minimum 2.243685 26156.00 171.7900 1578.159 277.7846 609543.8 -364124.4 205839.0
Std. Dev. 1.990706 99361.27 298.5725 409.9128 943.4845 2630750. 216864.5 400201.5
34
Skewness 0.467367 1.225839 0.018318 -0.481915 0.763494 0.855694 -0.577593 0.573026
Kurtosis 2.234071 3.411037 1.448999 2.338305 2.254706 2.332081 2.906442 2.260056
Jarque-Bera 0.973583 4.119782 1.604630 0.911206 1.924768 2.249978 0.895471 1.240635

Probability 0.614595 0.127468 0.448290 0.634066 0.381981 0.324656 0.639074 0.537774
Sum 79.17244 1780119. 9118.591 38519.75 18602.47 49491477 1256794. 10741425

Sum Sq. Dev. 59.44363 1.48E+11 1337183. 2520427. 13352444 1.04E+14 7.05E+11 2.40E+12
Observations 16 16 16 16 16 16 16 16
value of 111257.4, while maximum and minimum values are 361596.1 and 26156 respectively.
Foreign direct investment (FDI) has a mean value of 569.9119, while maximum and minimum
values are 955.9200 and 171.79 respectively. IBRD loan and IDA credit (IBRDAC) has a mean
value of 2407.485, while maximum and minimum values are 2970.031 and 1578.159
respectively. Use of IMF credit (IMFC) has a mean value of 1162.654, while maximum and
minimum values are 3118.079 and 277.7846 respectively. Net domestic credit (NDC) has a mean
value of 3093217, while maximum and minimum values are 8556109 and 609543.3 respectively.
Net Foreign asset (NFA) has a mean value of 78549.60, while maximum and minimum values
are 422234.3 and -364124.4 respectively. Tax revenue (TR) has a mean value of 671339.1, while
maximum and minimum values are 1463689 and 205839 respectively. Median, Standard
Deviation, sum of all factor have been shown on the description statistics.

Method: ARDL
Date: 03/09/20 Time: 08:07
Fixed regressors: C
35
Table 12: ARDL model of Sri-Lanka.
LOG(GPERCAP(-
1)) 0.065547 0.073861 0.887429 0.5379
LOG(CID) -1.271584 0.175676 -7.238240 0.0874
LOG(CID(-1)) -2.179653 0.120686 -18.06056 0.0352
LOG(FDI) 1.328636 0.105616 12.57984 0.0505
LOG(FDI(-1)) -1.796594 0.129899 -13.83067 0.0459
LOG(IBRDIDAC) 1.216978 0.343532 3.542541 0.1751
LOG(IBRDIDAC(-
1)) 2.907876 0.284157 10.23333 0.0620
LOG(IMFC) 0.178749 0.057190 3.125531 0.1971
LOG(IMFC(-1)) 0.128653 0.069798 1.843225 0.3165
LOG(NDC) -4.096886 0.330345 -12.40185 0.0512
LOG(NDC(-1)) 7.165417 0.647319 11.06938 0.0574
LOG(TR) 2.647552 0.202971 13.04400 0.0487
LOG(TR(-1)) -3.552310 0.384254 -9.244698 0.0686
C -23.29107 1.672994 -13.92179 0.0456

selection.
period 2001 to 2016, among the variable used in the model. Log (FDR), Log (FDR (-1)), Log
36
(NDC) and Log (TR) are statically significant at 5% level of significance. Some other variable
are statistically significant at 10% level of significance.
Log (GPERCAP(-1)) has a coefficient of 0.066 indicating that 1% change in previous year
GPERCAP leads to 0.066% change in present year GPERCAP in positive direction.
Log (CID) has a coefficient -1.27 implying that 1% change in present year customs and import
duties leads to 1.27% change in GPERCAP in negative direction in present year. Log (CID (-1))
has a coefficient -2.18 meaning that 1% change in previous year CID leads to 2.18% change in
-1.80 meaning that 1% change in previous year FDI leads to 1.80% change in GPERCAP in
negative direction in present year.
coefficient 2.90 meaning that 1% change in previous year IBRDAC leads to 2.90% change in
Log (IMFC) has a coefficient 0.18 implying that 1% change in present year use of IMF credit
leads to 0.18% change in GPERCAP in positive direction in present year. Log (IMFC(-1)) has a
coefficient 0.13 meaning that 1% change in previous year IFMC leads to 0.13% change in
leads to -4.10% changes in GPERCAP in negative direction in present year. That is huge. Log
(NDC(-1)) has a coefficient 7.17 meaning that 1% change in previous year NDC leads to 7.17%
change in GPERCAP in present year.
Log (TR) has a coefficient 2.65 indicating that 1% change in present year tax revenue to 2.65%
change in GPERCAP in positive direction in present year. Log (TR (-1)) has a coefficient -3.55
meaning that 1% change in previous year CID leads to 3.55% change in GPERCAP in positive
direction in present year.
37
Dependent variable LOG (GPERCAP) is explained by the selected variable LOG (CID) LOG
2016.
Overall, the result shows that the value of F-statistic is 188.24 with a probability 0.05indicating
that the combined effect of independent variables used in the model on the dependent variable
(GDP per capita) is statistically significant at 5% level of significance.
Table 13: F-Bound test of Sri-Lanka
Asymptotic:
n=1000
F-statistic 527.7983 10% 2.12 3.23
k 6 5% 2.45 3.61
2.5% 2.75 3.99
1% 3.15 4.43
Finite Sample:
10% 2.457 3.797
5% 2.97 4.499
1% 4.27 6.211
38
and in l(1) is 4.49. That means the null hypothesis is rejected. There is a long run relationship
Table 14: t-Bound test of Sri-Lanka
t-statistic -12.65144 10% -2.57 -4.04

5% -2.86 -4.38
2.5% -3.13 -4.66
1% -3.43 -4.99
null hypothesis is rejected. Here T statistics is -12.65 and at 5% level of significance l(0) is -2.86
and in l(1) is -4.38. That means the null hypothesis is rejected. There is a long run relationship
between variables. Or there is cointegration between dependent and independent variables
Table 15: Estimated long-run coefficients of Sri-Lanka
LOG(CID) -3.693323 0.563469 -6.554618 0.0964

LOG(FDI) -0.500782 0.179347 -2.792246 0.2189
LOG(IBRDIDAC) 4.414190 0.450517 9.798047 0.0647
LOG(IMFC) 0.328965 0.045272 7.266376 0.0871
LOG(NDC) 3.283771 0.588724 5.577778 0.1129
LOG(TR) -0.968222 0.278107 -3.481475 0.1781
39
In long run, elasticity coefficient of customs and import duties, foreign direct investment and tax
revenue all are negative and their values are -3.69, -0.5 and -0.96 respectively. Customs and
import duties, foreign direct investment IBRD IDA credit and use of IMF credit are statically
significant within the conventional 1-10% level of significance. The long run elasticity
coefficient of IBRD and IDA credit, use of IMF credit and net domestic credit are positive. And
their values are 4.41, 0.33, and 3.28 respectively.
40
Chapter: 5
Conclusion
41
Part 5: Conclusion
This paper finds that the previous year customs and import duties, foreign direct investment,
previous year foreign direct investment, net domestic credit, previous year net domestic credit,
and tax revenue are statistically significant to the GDP per capita of Sri Lanka at 5% level. Most
of the factors (previous year GDP per capita, customs and import duties, previous year customs
and import duties, previous year foreign direct investment, previous year IBRD and IDA credit,
use of IMF credit and tax revenue) has given mix result. The negative coefficient of net domestic
credit suggests that the net domestic credit is negatively correlated to the GDP per capita of
South Asian developing countries and the positive coefficient of previous year net domestic
credit indicates that the previous year net domestic credit is positively correlated to the GDP per
capita of South Asian developing countries whereas net domestic credit in long run is positively
correlated to the GDP per capita to the selected South Asian developing countries. The foreign
direct investment of South Asian developing countries is positively correlated to the GDP per
capita indicating that an increase in foreign direct investment increases the GDP per capita of the
selected Asian developing countries. This is because the increasing foreign direct investment
creates new job and solves unemployment problems. It is also observed that the coefficient of
IBRD and IDA credit is positive and indicates that increase in IBRD and IDA credit increases
the GDP per capita growth in South Asian developing countries. And in long run IBRD and IDA
credit is positively correlated to the GDP per capita in selected South Asian developing countries
indicating that IBRD and IDA credit has been used efficiently in those countries. In long run net
domestic credit and IBRD and IDA credit are positively correlated and other selected factors
(customs and import duties, foreign direct investment, use of IMF credit and tax revenue have
mix impact to the GDP per capita in South Asian developing countries.
Based on the findings the this paper concludes that selected Asian developing countries known
as most populated region can influence GDP per capita through appropriate policies. This is to be
mentioned here that government of these countries should emphasis on vocational and technical
education and can provide non-grantee loan to enhance the entrepreneur of those countries.
42
References:
 Dr. jihad Alfarajat and Dr. Mohammad M Alalaya (2017), “Determinants of Growth
GDP per capita through panel data Analysis in selected Arab Countries”, Global
Advanced Research Journal of Management and Business Studies (ISSN: 2315-5086)
Vol. 6(5) pp.121-139 september, 2017.
 Sadequl islam (1995), The human development index and per capita GDP.
 Elena pelinescua (2015), “The impact of human capital on economic growth, 2 nd
international conference „economic Scientific Research-Theoretical, Empirical and
Practical Approaches‟, ESPERA 2014, 13-14 November 2014, Bucharest, Romania.
 DAVID CUBERES1* and MARC TEIGNIER (2014), “GENDER INEQUILITY AND
ECONOMIC GROWTH: A CRITICAL REVIEW”, journal of international
Development j. Int. Dev. 26, 260-276 (2014) published online 29 November 2013, in
Wiley online Library.
 Themba G. Chirwa, Nicholas M Odhiambo (2016),” MACROECONOMIC
DETRMINANTS OF ECONOMIC GROWTH: A REVIEW OF INTERNATIONAL
LITERATURE”, South East European journal of economics and business volume 11(2)
2016, 33-47 DOI: 10.1515/jeb-2016-0009
 Leonel Muinel-Gallo, Orioroca-Sagales (2012), “Joint determinants of financial policy,
income inequality and Economic growth”.
 E.M Ekanayake, Dasha Chantrna (2014),”The effect of foreign aid and economic growth
in developing countries”, Journal of international Business and cultural studies.
 Herve Boulhol, Alain de serres and Margit Molnar (2008), “The contribution of
economic geography to GDP per capita”.
 Miao Wang and M C sunny wong (2009), What drives economic growth? The case of
cross border M&A and Greenfield activities.”
 David E. BLOOM and Jocelyn E. FINLAAY (2008),”Demographic change and
Economic Growth in Asia. “Asian economic policy review, (2009) 4, 45-64.A
Some Other References
https://data.oecd.org/tax/tax-
revenue.htm#:~:text=tax%20revenue.of%20property%2c%20and%20other%20taxes.
https://www.investopedia.com/terms/i/import-duty.asp
https://en.wikipedia.org/wiki/Foreign_direct_investment#:~:text=A%20foreign%20direct%20investmen
t%20(FDI,a%20notion%20of%20direct%20control.
https://www.investopedia.com/terms/p/per-capita-gdp.asp
43
https://www.investopedia.com/terms/n/net-foreign-assets-nfa.asp
https://www.investopedia.com/terms/d/descriptive_statistics.asp#:~:text=Descriptive%20statistics%20
are%20brief%20descriptive,measures%20of%20variability%20(spread).
https://ideas.repec.org/a/spt/stecon/v5y2016i4f5 4 3.html
https://www.igi-global.com/dictionary/ardl-bounds-testing/47420
https://www.wikipedia.org/
https://www.investopedia.com/
https://www.wordbank.org/
44
Appendix
Bangladesh
Year GPERCAP TR CID FDI IBRDIDAC IMFC NDC

2001 3.113805 192607.56 83276.37 78.53 6456.048 207.8254 1211335.00
2002 1.960382 210297.09 89394.54 52.30 7075.581 134.6713 1378004.00
2003 2.941853 242612.47 84609.84 268.29 8069.102 143.5744 1492469.00
2004 3.55336 270086.14 113076.31 448.91 8894.55 303.8014 1726745.00
2005 4.965843 304745.99 129552.43 760.50 8687.879 375.7565 2035549.00
2006 5.244531 339724.59 135650.24 456.52 9297.235 547.3774 2416728.00
2007 5.753421 380310.89 135517.08 651.03 10077.3 574.9755 2750356.00
2008 4.80617 481320.97 165260.91 1328.42 10612.97 758.1594 3240974.00
2009 3.878501 528671.03 169788.34 901.29 10746.04 1474.663 3712096.00
2010 4.39098 624846.43 196640.61 1232.26 10653.18 1402.906 4578513.00
2011 5.253096 795482.00 241297.70 1264.73 10712.23 1270.812 5612587.00
2012 5.298245 952275.50 283214.80 1584.40 11159.22 1212.874 6333406.00
2013 4.794402 1074524.50 289025.00 2602.96 11582.99 1496.42 6944445.00
2014 4.856108 1160313.60 310527.50 2539.19 11417.31 1470.003 8064856.00
2015 5.368783 1288181.67 359733.90 2831.15 11533.58 1612.75 9119607.00
2016 5.950915 1518860.00 439300.00 2332.72 11890.49 1546.47 10647236.00
India
Year Gpercap TR CID FDI IBRDIDAC IMFC NDC
2001 3.03 1870590.00 400310.00 5128.09 26468.22 856.05 12455076.21
2002 2.06 2162660.00 446740.00 5208.97 26092.81 926.06 14446421.64
2003 6.09 2543460.00 484580.00 3681.98 26504.38 1012.20 15822240.17
2004 6.19 3049580.00 574220.00 5429.25 28379.25 1057.86 18669862.38
2005 6.23 3661520.00 648800.00 7269.41 28004.17 973.58 21555150.48
2006 6.40 4735120.00 860670.00 20029.12 30440.34 1024.75 26143975.76
2007 6.05 5931470.00 1027990.00 25227.74 31998.72 1076.42 30326551.44
2008 1.59 6052980.00 980990.00 43406.28 32794.42 1049.19 38100836.96
2009 6.35 6245270.00 832430.00 35581.37 34432.25 6236.68 45441690.84
2010 7.04 7930720.00 1356800.00 27396.89 37068.18 6126.64 56048343.31
2011 3.89 8891300.00 1492610.00 36498.65 38129.01 6107.70 66523569.98
2012 4.17 10776100.00 1866240.00 23995.69 38162.79 6114.26 76747370.79
2013 5.13 12358700.00 1872640.00 28153.03 38185.96 6126.52 87528059.28
2014 6.19 12448826.20 1879760.00 34576.64 37238.47 5763.74 94641997.39
2015 6.80 14556470.00 2102160.00 44009.49 36508.61 5512.79 104130600.83
2016 7.00 17032420.00 2168500.00 44458.57 36348.02 5348.09 114454411.62
45
Sri-Lanka
Year Gpercap TR CID FDI IBRDIDAC IMFC NDC

2001 2.24 205839.00 26156.00 171.79 1578.16 303.40 609543.80
2002 3.14 221786.00 28307.00 196.50 1738.47 406.32 685204.80
2003 5.05 231648.00 34184.00 228.72 2054.26 498.58 748285.67
2004 4.56 281552.00 41096.00 232.80 2168.30 403.99 898502.07
2005 5.38 336829.00 45390.00 272.40 2095.00 482.58 1067480.94
2006 6.84 428379.00 52661.00 479.70 2244.55 350.94 1368964.32
2007 6.01 508947.00 55987.00 603.00 2356.76 363.19 1591623.88
2008 5.20 585621.00 63844.00 752.20 2380.92 277.78 1886274.28
2009 2.82 618933.00 79560.00 404.00 2486.76 1341.22 1885766.85
2010 7.28 724746.50 64163.00 477.56 2530.52 1919.84 2278521.43
2011 7.68 812611.00 75973.80 955.92 2652.15 2325.24 3872141.20
2012 9.00 908911.00 216672.00 941.12 2752.29 3118.08 4732887.06
2013 2.59 1005890.00 191815.00 932.55 2884.18 2664.81 5519080.36
2014 3.99 1050362.34 198482.98 893.63 2842.98 1820.73 6311775.94
2015 4.05 1355681.56 244231.08 679.66 2784.43 1240.21 7479315.81
2016 3.34 1463688.86 361596.14 897.05 2970.03 1085.54 8556108.75
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A REPONT ON

Determinants of GDP Per Capita in South Asian

Submitted in partial fulfillment of the requirements for the Degree of

Bachelor of Business Administration (BBA).

Jangannath University, Dhaka.

Dr. Mohammad Bayezid Ali

Jagnannath University, Dhaka

Subject: Submission of report on “Determinants of GDP Per Capita in South Asian

Md. Shakawat Hossain

BBA 10th Batch

Dr. Mohammad Bayezid Ali

Jagannath University, Dhaka.

Md. Shakawat Hossain

BBA 10th Batch

Jagannath university, Dhaka.

1.1 Objectives of the Study………………………………………………….………10

1.1.1 General objective………………………………………………………….…..10

1.1.2 Specific objective…………………………...………………………………….11

1.2 Rationale of the study……………………………………………..……….……11

1.3 Scope of the study……………………………………………………………….11

1.4 Limitations of the study………………………………………...……………….12

Part 2: Literature Review ………………………………………………………….….14

2.1 Empirical review………………………………………………...……………….14

Part 3: Data and research methodology………………………………………………18

3.1 Data description and sources…………………………………………………...18

3.1.1 Sources of data used in the model…………………………………...….……18

3.1.2 Definition of variables used in the model...……………….……..…….…….18

3.2 Research Methodology …………………………………………………….…...20

3.2.1 Descriptive Statistics ………………………………………………………….20

3.2.3 Hannan-Quinn criterion (HQC)…………………………….………..………21

3.2.4 ARDL bound test........................................................................................…...21

Part 4: Analysis and Findings……………………………………….…………………23

4.1 Bangladesh .....................................................................................................…...23

4.1.1 Descriptive Statistics…………………………………………………………..23

4.1.2 Auto regressive lag model (ARDL)………………………………………......24

4.1.3 Long run bound test……………………….…………….……………………26

4.1.1 Descriptive Statistics…………………………………………………………..29

4.1.2 Auto regressive lag model (ARDL)………………………………..…………30

4.1.3 Long run bound test………….……………….………………………………32

4.3 Sri-Lanka .......................................................................................................…...34

4.1.1 Descriptive Statistics…………………………………………………………..34

4.1.2 Auto regressive lag model (ARDL)……………………………..……………35

4.1.3 Long run bound test………….……………………….………………………38

FDI = Foreign Direct Investment

OECD = Organization for Economic Corporation and Development

M & A = Merger and acquisition

UNCTAD = United Nations Conference on Trade and Development

UECM = Unrestricted Error Correlation Model

GDP = Gross Domestic Product

ARDL = Auto Regressive Distributive Lag

CID = Customs and Import duties

IBRDIDAC = IBRD & IDA credit

IMFC = Use of IMF Credit

NDC = Net Domestic Credit

1.1 Objectives of the Study:

1.1.1 General Objective

1.2 Rationale of the Study:

1.3 Scope of the Study:

2.1 Empirical Review:

3.1 Data Description and Sources

3.1.1 Sources of Data Used in the Model

3.1.2 Definition of Variables Used in the Model

3.2.1 Descriptive Statistics