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Foreign Capital Inflow and Economic Growth: A Two Gap Model for the Bangladesh EconomyAuthor(s): S AhmadSource: The Bangladesh Development Studies, Vol. 18, No. 1 (March 1990), pp. 55-79Published by: Bangladesh Institute of Development StudiesStable URL: http://www.jstor.org/stable/40795371 .Accessed: 06/02/2015 00:40

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The Bangladesh Development Studies Vol. XVIII, March 1990, No. 1

Foreign Capital Inflow and Economic Growth: A Two Gap Model for the

Bangladesh Economy* S AHMAD**

This paper attempts to examine the effect of foreign capital inflow on growth of output, domestic saving, imports and production structure. In doing so, a simultaneous equation model for the Bangladesh economy in the framework of the dual gap analysis has been estimated using the time series data for the period 1960/61-1979/80. It is found that foreign capital inflow was conducive for economic growth. It has substituted domestic saving as' the government might have relaxed saving efforts with its inflow. It increased the productive capacity of the economy financing the development projects. It facilitated the expansion of the tertiary sector. The increased services I rom the tertiary sector along with increased imports of raw materials and intermediate goods (financed by it.) increased output in the primary and manufacturing sectors. Thus foreign capital inflow changed the production structure of the economy with resulting changes in the composition of GDP, exports and imports.

I. INTRODUCTION

A few but important constraints to growth faced by almost all the less developed countries (LDCs) are shortages of skilled manpower, domestic saving and foreign exchange. Chenery and Bruno (1962), Chenery and Adelman (1966), Chenery and MacEwan (1966) and Chenery and Strout (1966) have examined in the framework of two-gap (deficient saving and foreign exchange) models how foreign capital inflow is capable of easing the saving and foreign exchange constraints and thus has a positive contribution to economic growth of LDCs. Their two-gap approach to growth is critically evaluated by among others Bruton (1969), Fei and Ranis (1968), Findlay (1973), Luxton (1979), Rahman (1967) and Quibria (1981). But it is not evaluated by anybody with respect to impact of foreign capital inflow on strategic variables which affect economic growth. In this respect, the two-gap approach misses some essential points which are presented below.

This article is mainly based on a few chapters of the author's Ph. D. dissertation. The author is grateful to Dr. Robert C. Rice and an anonymous referee for their useful comments. lie is responsible for remaining errors and omissions.

"Associate Professor, Department of Economics, University of Dhaka, Dhaka- 1000, Bangladesh.


56 The Bangladesh Development Studies

Firstly, all the studies on the two-gap theory concentrate on how foreign capital inflow removes the binding constraint and has a favourable impact on the economic growth of a LDC. But growth of output is not the only variable which foreign capital inflow can affect. Moreover, growth is usually affected by changes in such strategic variables as domestic saving, imports, exports, production structure of the economy, etc. None of the dual gap models have estimated the impact that foreign capital inflow has on these strategic variables.

Secondly, in two-gap models, foreign capital inflow performs the role of suplementing, instead of substituting, domestic saving in investment as it is seen to finance only required imports. But in a LDC like Bangladesh where the two-gap exists, a significant portion of foreign capital inflow finances imports of consumer goods to save millions of people from starvation and malnutrition. When foreign capital inflow finances imports of consumer goods, the additive hypothesis in a two-gap model that the sum of foreign capital inflow and domestic saving equals investment becomes questionable.

Thirdly, almost all the studies on the dual gap analysis have treated the required imports as one aggregate variable in the models. The required imports consist of imports of intermediate and capital goods. While imports of intermediate goods are essential for utilization of the existing productive capacity in a LDC, the imports of capital goods are necessary for creation of additional productive capacity. In a LDC with two gaps, consumer goods are also imported. The financing of these three categories of imports with foreign capital normally has divergent effects on growth of output, gross domestic saving (GDS), exports and production structure of an economy. To take care of these effects in the analysis of the effects of foreign capital inflow on the overall economic growth, it is proper to use the three categories of imports (namely, imports of consumer, intermediate and capital goods) in the two-gap model.

Fourthly, per capita income rises with the growth of an economy. With the increase in per capita income, the demand for final consumer goods increases, and so does the input requirement for production. Again a rise in the per capita income would be accompanied by changes in the production structure. If this changed production structure is unable to meet the demand for final consumer goods and input requirements, imports would increase. So import demand arises not only due to the level of income but also due to inability of the domestic production structure to match the domestic demand. Thus, to explain the import demand, the production structure should be explicitly taken into consideration. Hardly any dual gap models has done this.

Fifthly, the growth process passes through different phases and in each phase growth is limited by one dominant constraint. Different phases of the growth process are characterized by different production structures. In each phase the production structure partially determines the saving-investment and foreign exchange gaps. These gaps are partly closed by foreign capital inflow, which, in turn, changes the production structure through increases in investment. Thus, foreign capital inflow affects the growth process through changes in the production structure. Again changes in the production


Ahmad : Foreign Capital Inflow and Economic Growth 57

structure in response to internal and external demand are likely to change exports and imports. They are expected to affect domestic saving, saving of foreign exchange and growth. Therefore, the growth process and the production structure are interdependent. To take care of such interdependence, the production structure should be incorporated in the two-gap model for analysing the growth process in LDCs.

Finally, the estimation of equations in the two-gap models are based on the single equation method (SEM). But the SEM is incapable of taking into account the interdependence among variables. In fact, the variables involved in the growth process for instance, consumption, domestic saving, investment, imports, exports, production structure, etc. are interdependent. To take of such interdependence, a simultaneous equation model can be used and estimated using a simultaneous equation method (SIMEM).

The purpose of the present paper is to test the following hypotheses with reference to Bangladesh using a two-gap model which incorporates the above points:

(1) Foreign capital in How is conducive to growth of output. (2) Foreign capital inflow has a positive effect on domestic saving. (3) Foreign capital inflow positively affects the availability of all cartegories

of imports, not just imports of intermediate and capital goods. (4) Foreign capital inflow affects the production structure.

In testing the hypotheses, an estimating model is presented in Section II, estimation of the estimating model is discussed in Section III, the empirical findings are analysed in Section IV and finally a conclusion is added in Section V.

II. THE ESTIMATING MODEL

Our estimating model is deduced from the basic two-gap model consisting of ten behavioural equations, one equilibrium condition, ten definitional variables and four identities which were presented and discussed in Ahmad (1986, pp. 125-158). Details about its derivation were given in Ahmad (1986, pp. 158- 164). The variables included in the basic two-gap model are the following.

Endogenous Variables : Q=total output, AQ = change in total output, QJ3 =output in the primary sector, *

qJ11 = output in the manufacturing sector, QP/Qt = share of the primary sector

in total output, Q |/Qt = share of the manufacturing sector in total output.

*The primary sector in the present study is defined to include agriculture, forestry, fishery, livestock, mining, and quarrying. The manufacturing sector includes both small and large scale manufacturing industries. The tertiary sector includes all the sub-sectors except those included in the primary and manufacturing sectors and hence is considered as the residual one. For instance, it includes the sub-sectors: construction, power, gas, water and sanitary services; transport, storage and communications; trade services; housing services: banking and insurance; public administration and defence; professional and miscellaneous se naces.



T C Qt/Qt = share of the tertiary sector in total output, M ,= imports of

r k consumer goods, Mj = imports o intermediate goods, M , = imports of

capital goods, ML = total imports, St = gross domestic saving, Yt = per capita output, It = investment of domestically produced capital goods, Kt =

capital stock and the exogenous variables :

Xt = total exports of goods and services It = gross investment, N( = population size, Ct = total consumption expenditure, M* = imports of services including net factor payments. Ft =

foreign capital inflow defined as the deficit in the current account of the balance of payments, Pj = area cropped, Gt=government recurring expenditure Dt = depreciation, Kt_j = capital stock in the previous year. In addition, the subscript t denotes the time period. All the endogenous and exogenous variables are in real terms.

In initial ordinary least squares (OLS) runs the disturbance terms in the growth, domestic saving and import demand functions of the basic two-gap model are found to violate the assumption of homocedasticity. For this reason the variables in these functions are expressed as proportions of total output in the estimating model. As the disturbance terms of the structural equations for the production structure in the basic two-gap model satisfy the assumption of homocedasticity they are retained unchanged in the estimating model. To be consistent with the equations 1-4 of the estimating model, the variables in the rest of the relations of the basic two-gap model are expressed as proportions of total output. However, the estimating model is given below.

1. Growth Function for Binding Saving Constraint

AQt S( Ft Mt ""

= K /o " + Wo q[" ( (xoo /g) qT + e 1 1

Growth Function for Binding Foreign Exchange Constraint

AQ( X Ft M W M op AQ( =(/g) p +(/g) gj-

Ft - (o/g) Q^-(IWg) (IWg) - + elt 9t Qt



2. Domestic Saving Function

St AQt Xt F, T=s + m2 "T+a2 r+fi2 r+2t

3. Import Demand Function

(, < ct of o" M" xt Pt Qt

^ Qt Q, 9,

** ^

Mt AQ( Xt Ft (ii) - = m4 op +a4 ^ + 4 f +E4t

Mt it 9t xt Ft () ~ =m5 OT +d5 - + a5 Q

- h Qf + 5t

4. Production Structure

P k 9t Mt X, F,

(i) - = m6 + d6 log y{ + c6 log pt + r|6 + (x6 ^ + 6 ^

Qt Qt

e!11 Q x, Ft (ii) = m7 + d7 log y( + c7 log + t' log N( + a - + 7 - + e?t Qt Qt M Wt

Qt AQ( Gt Xt F, (iii) - =m8 + d8 - +C8 ^ + gj-

+ 8 ^ ,8(

5. Exports

X, %



6. Gross Investment

Q =

Q

7. Per Capita Output

y, = Qi/n,

8. Population Size

N, = ,

9. Total Consumption Expenditure

Q "

Q

10. Imports of Services

11. Foreign Capital Inflow

II II Qi

= Qt

12. Area Cropped

p. = pi

13. Govt. Revenue Expenditure

q = a 9, s, Mf M Mf 9? 9tm qJ

Endogenous Variables : rr-, y y q" , - , , . . .

y y Qt Qt Qt Qi Qt Qt

Exogenous Variables : ^j-, ~

Yr Nt q

Q ' Pt ' Q



To derive the estimating model, the constrained investment function, equilibrium condition and all the identities are used. Because of this, they are dropped from the estimating model. It is not also necessary to keep them in the estimating model while the purpose of the model is only to analyse the past. Thus the estimating model has eight equations to determine eight endogenous variables.

III. ESTIMATION OF THE ESTIMATING MODEL

We have examined the identifiability of the equations of our estimating model. Using the necessary condition for identification, we have found every equation of the model identified. Even though the necessary condition is not sufficient for identification, it is usually considered for identification in practice. Ahmad (1983) has found domestic saving as the dominant constraint to

growth in Bangladesh during the period under study. We have estimated the saving constrained version of our estimating model using time series data2 for the period 1960/61 -1979/80. In estimating the model the Ordinary Least Squares (OLS) method, First Order Autoregressive Method (FOAM), Two-Stage Least Squares (2SLS) and Three-Stage Least Squares (3SLS) methods have been used. We have followed the Hildreth-Lu search procedure (Hildreth and Lu 1960) in the FOAM estimation and Zellner and Theils method (Zellner and Theil 1962) in the 3SLS estimation.

The OLS and FOAM methods may be termed as single equation method (SEM) while the 2SLS and 3SLS methods may be termed as simultaneous equation methods (SIMEM). Apart from the fact that single equation estimates are subject to bias, they are also presented and discussed. There are two reasons for doing so. Firstly, most of the findings on the relationships between foreign capital inflow, on the one hand and economic variables of the present study on the other, are based on the SEM. Our single equation estimates are, therefore, expected to serve the comparative purposes. Secondly, we like to find out the extent of the difference between the single equation estimates and the simultaneous equation estimates when the same data are used. Such a differencece is expected because the single equation estimates include only the direct effect of explanatory variable (s) while the simultaneous equation estimates take account of total (both direct and indirect) effects. However, the results obtained by the SEM and SIMEM are given in Tables 1, 2 and 3, Appendix A.

The coefficients of the SEM and the 2SLS method are very similar both in sign and magnitude; but the coefficients obtained by the 3SLS method widely differ from those of the SEM (i.e., OLS and FOAM) and the 2SLS method; some cases in sign, some cases in magnitude and some cases in both sign and magnitude. These differences may be attributed to the following factors. Firstly, the 3SLS method takes account of both the direct and indirect effects

2 Relevant data that were used in estimation of the estimating model ean be obtained from the author on request.



of a variable in the system of simultaneous equations. Secondly, there may exist some specification errors in some equations in the estimating model. Specification errors arise due to inclusion of an irrelevant variable or omission of a relevant variable in an equation, or choice of a linear relation among the variables in an equation while the true relation is in fact, non -linear. It is very difficult to eliminate the specification error in a particular equation where inclusion of an independent variables is usually dictated by the theoretical considerations, and where choice of a linear model is the rule of the social sciences in the face of lhe complexity and difficulties of the non-linearities. Thirdly, the 3SLS method assumes that the disturbance term in every equation of the simultaneous equation model satisfies the assumptions of the classical OLS method. But in some equations of our model, the disturbance terms are autocorrelated but in other equations they are not. In the absence of a suitable method of computation to estimate such simultaneous equations, we have to use Zellner and Theil's 3SLS method which is partially inappropriate due to some autocorrelated disturbance terms.

It may be noted that the results of the SEM and 2SLS method are more dependable than those of the 3SLS method because of likely presence of specification errors in some equations of the estimating model and partial inappropriateness of Zellner and Theil's method in the 3SLS estimation. Since our sample size is small and we know little about the small sample properties of the 2SLS and 3SLS estimators (Pindyck and Rubinfeld 1981, p. 338), our findings on the basis of the 2SLS and 3SLS methods are tentative.

The whole of the period 1960/61-1979/80 may be divided into two sub- periods, namely the pre-liberation period (1960/61 - 1969/70) and the post- liberation period (1972/73-1979/80). Both the sub-periods differ to some extent with respect to economic, social and political institutions and policies. Furthermore, the data for the years 1970/71 and 1971/72 are not available. For these reasons a dummy variable (using 1 for each year of the pre-liberation period and 0. otherwise) is introduced in each equation estimated with use of data covering the period 1960/61 - 1979/80. It is retained in the equation only when its inclusion increases R2 irrespective of whether its coefficient is significant or not. However, a significant dummy variable in a structural equation suggests that the structural relation differs between the pre- and post-liberation periods. For instance, a significant dummy variable in the import demand function for intermediate goods would indicate that the import demand function for intermediate goods in the post-liberation period is structurally different from that in the pre-liberation period.

We have also estimated the model using the SEM and a one-year lag in F/Q. The variable Ffl/t-l *s considered as simply as an independent variable in each estimating equation. All the coefficients of Ft_j/Qt_j are found insignificant at the 5 per cent level, for which the results are not reported here.

IV. ANALYSIS OF THE EMPIRICAL FINDINGS

Growth of Output/GDP In the estimating model, the growth rate of GDP is made dependent on the

gross investment rate. The average imported capital coefficient for gross



investment is found to be 0.06 (equation 3 (iii). Tables 1 and 2, Appendix A). It is the coefficient between imports of capital goods and gross investment, both as proportions of GDP, and is significantly positive al the 10 per cent level. It suggests that if the gross-investment rate is 100, the import rate for capital goods on average is 6. In otherwords, imports of capital goods have formed, on average, about 6 per cent of gross investment in Bangladesh.

The estimated growth function shows that GDS, foreign capital inflow and imports of capital goods, all as proportions of GDP, have positive effects on the growth rate of GDP in Bangladesh (Tables 1 and 2, equation 1, Appendix A) and the positive relationships are significant at the 5 per cent level. Thus the results support the hypothesis that foreign capital inflow is conducive for growth of output.

The value of R2 for the growth function is veiy low and negative. The low and negative R2 may be the result of the estimation of the growth function without intercept. In such a case, the ratio of explained sum of squares to total sum of sqares may not be within the range 0 and 1 and hence normal interpretation for R2 is not valid (Aigner 1971, pp. 85-90). As a result one cannot suggest that the low R2 for the growth function is an indication of inadequacy in explaining the growth of GDP by the variables: GDS, foreign capital inflow and imports of capital goods. It cannot also be denied that other factors such as non-availability of skilled manpower, bureaucratic administrative controls on economic activities, corruption in the administration, political instability, weather conditions, etc. may explain, to some extent, the variation of the growth of GDP. These factors are not included in the growth function as we are interested to establish a proportional relationship between change in total output (AQ) and gross investment.

Domestic Saving GDS has played a significantly positive role in the growth of GDP in

Bangladesh. There are various factors which might have affected GDS. Among them, growth rate of GDP, foreign capital inflow and exports as proportion of GDP have explained about 76 per cent of the saving rate in Bangladesh.

Even though theorectically we expect a positive relationship between the saving ratio and the growth rate of GDP, we have obtained a negative relationship between them using the SEM and 2SLS method (Tables 1 and 2, Appendix A) and the negative relationships are insignificant at the 5 per cent level. The relationship between the saving ratio and the growth rate of GDP based on the 3SLS method is also found negative but significant at the 1 per cent level (Table 3, Appendix A). The growth of the labour productivity seemed to have increased and hence

worked in the direction of causing the saving ratio to increase and the increasing dependency ratio in the age structure of population might have worked in the direction of causing it to decrease while the other factors such as fiscal inadequacies to tax the upper income groups rigorously, tax rebates from income taxation, leakages from the domestic saving, etc. might have prevented the saving ratio from rising with the growth rate of GDP. The combined effect of all these factors probably caused the negative relationship between the saving ratio and the growth rate of GDP in Bangladesh (Ahmad 1986, pp. 272-273).



The coefficient of Ft/Q( in the saving function based on the SEM, 2SLS and 3SLS methods are found to be negative (Tables 1, 2 and 3, Appendix A). The negative coefficients obtained by the SEM and 2SLS method are significant at the 1 per cent level and that of the 3SLS method is insignificant at the 5 per cent level. Thus the effect of foreign capital inflow on GDS appears to be non- positive. It suggests that the government of Bangladesh might have relaxed the saving efforts with receipt of foreign capital. Any way our result does not support the positive relationship between GDS and foreign capital inflow.

Exports are expected to have a positive effect on GDS. The coefficients of Xt/Qt based on the SEM, 2SLS and 3SLS methods are positive but insignificant at the 5 per cent level (Tables 1, 2 and 3 Appendix A). Thus exports appear to have non-negative effects on GDS. Hence our findings do not contradict the positive relationship between GDS and exports in the case of Bangladesh even if our data are insufficient to support it.

Foreign Exchange Allocation A foreign exchange crisis began in Pakistan after the Korean War in 1952.

Even though Bangladesh in the pre-liberation period accounted for more than 50 per cent of Pakistan's total foreign exchange earnings and obtained only one-third of Pakistan's total imports, it became the victim of Pakistan's foreign exchange crisis being one of its provinces. Since then Pakistan used to prepare the foreign exchange budget (FEB) to face the shortage of foreign exchange. After liberation in 1971 Bangladesh inherited the foreign exchange budgeting system from Pakistan and used to prepare the FEB. However, the FEB dealt with free foreign exchange which could be allocated to finance any part of the import bill. In this sense, foreign exchange from exports was free whereas that from foreign assistance and barter trade was not free.

Theoretically we expect a positive relationship between each category of imports and exports. The coefficients of expports-GDP ratio based on the 3SLS methods seem to suppt our expectation (Table 3, Appendix A). The coefficients of exports-GDP ratio based on the SEM and 2SLS method in the import demand functions for consumer and intermediate goods are positive and significant at the 5 and 1 per cent levels (Tables 1 and 2, Appendix A). They indicate that export earnings have positive effects on the availability of imports of consumer and intermediate goods. Even if the coefficients of exports-GDP ratio based on the SEM and 2SLS method in the import demand function for capital goods are negative and statistically insignificant at the 5 per cent level (Tables 1 and 2, Appendix A), they do not contradict our theoretical expectation that export earnings have a positive effect on the availability of imports of capital goods. However, our results appear to suggest that export earnings financed the imports of all categories of commodities in Bangladesh. This assertion is supported by the features of FEB and consequent allocation of foreign exchange for different categories of imports.3

The coefficient of Ft/Qt based on the SEM, 2SLS and 3SLS methods are found to be positive and significant at the 1 per cent level in the import demand functions for intermediate and capital goods (Tables 1, 2 and 3, Appendix A). But the coefficients showing the effects of foreign capital inflow on imports of consumer goods have the expected sign but are statistically ^rhc salient features of the foreign exchange budget (FEB) and the licensing systems during the pre- and post-liberation periods can be seen in Ahmad (1986, pp. 237-246).



significant at the 5 per cent level (Tables 1, 2 and 3. Appendix A). Thus our results support the hypothesis that foreign capital inflow financed all categories of imports in Bangladesh. This is also corroborated by the features of the FEB in both the pre- and post-liberation period. Furthermore, the significance of the coefficients of Ft/Qt in the import demand functions for intermediate and capital goods and their insignificance in the import demand function for consumer goods suggest also the following things. Firstly, foreign exchange was, at least, in past a constraint to economic development of Bangladesh. Secondly, the increased availability of foreign capital would not necessarily increase imports of consumer goods. This is because, it was not only the availability of foreign capital but also other exogenous factors such as high restrictions on imports of consumer goods (except food imports) through foreign exchange control policies, and the import licensing system, the amount of food deficit in case of food imports, etc. preventing the free market mechanism from playing its role freely were important in determining the availability of consumer good imports with foreign capital inflow. However, increased availability of foreign capital inflow is most likely to increase imports of intermediate and capital goods.

The coefficients of ML/Qt in the import demand function for capital goods have the expected negative sign and are significant at the 5 and 1 per cent level (Tables 1, 2 and 3, Appendix A). It indicates that imports of capital goods appear to be given preferential treatment in foreign exchange allocation over the imports of consumer goods. Thus our results seem to support the hypothesis of rational foreign exchange allocation in a situation of foreign exchange crisis that consumer goods be allowed to be imported if foreign exchange is available after the import demand for capital goods has been satisfied.

Import Substitution Bangladesh has almost exclusively dependent on agriculture in 1947. Still

today it is a food deficit area. Since 1947 industrialization was the strategy of development. The goal of self-sufficiency in foodgrains and manufactured products was sought through import substitution during both pre- and post- liberation period.

In Bangladesh imports of consumer goods increased due to an increase in total consumption expenditure. This proposition is supported by the coefficient of Ct/Qt in the import demand function for consumer goods, because the coefficients of C(/Q( based on the SEM, 2SLS and 3SLS methods have the expected positive sign and are significant at the 1 per cent level (Tables 1, 2 and 3, Appendix A). If the total consumption expenditure as proportions of GDP increases by 100 per cent, the imports of consumer goods as proportions of GDP increase by 23 per cent (Tables 1 and 2, Appendix A). Imports of consumer goods consisted of both agricultural and manufactured commodities.

Since the variable 9^/Qt is introduced as a proxy variable in the import demand function for consumer goods to indicate the presence of import substitution in primary products, its coefficients are expected to have negative sign. Its coefficients based on the SEM, 2SLS and 3SLS methods are negative and significant at the 5 and 1 per cent levels (Tables 1, 2 and 3, Appendix A).



They suggest that import substitution occurred in consumer goods produced in the primary sector, because an increase in primary production in Bangladesh in a particular year, other things remaining the same, would increase the primary share in GDP but decrease imports of primary products, as proportions of GDP, in that particular year. Such primary products are foodgrains, mainly rice and wheat (Ahmad 1986, pp. 313-314).

The coefficients of Qm/Qt4 in the import demand function for consumer goods obtained by the SEM and 2SLS method are negative but insignificant at the 5 per cent level (Tables 1 and 2. Appendix A). They suggest that import substitution might have taken place in manufactured consumer goods but such import substitution is not significant. Again the coefficients of Q/Q^in the import demand function for capital goods being negative and insignificant at the 5 per cent level (Tables 1 and 2, Appendix A) are indicative of insignificant import substitution in capital goods. The coefficients of AQt/Q(^ in the import demand function for intermediate

goods obtained by the SEM and 2SLS method are positive and insignificant at the 5 per cent level (Tables 1 and 2, Appendix A). They suggest that im port. - GDP ratio for intermediate goods did not decline with the growth rate of GDP. But their positivity does not also rule out the possibility of an increase in the import-GDP ratio for intermediate goods with an increase in the growth rate of GDP. Probably two factors are mainly responsible for this. Firstly, import- GDP ratio for intermediate goods did not decline because of the self- sufficiency strategy in foodgrain and manufactured products. Secondly, increased dependence on foreign capital might have tied Bangladesh to import intermediate goods for the aid-financed projects, completed or on- going, from the donor countries and thus made it difficult to reduce imports of intermediate goods.

Production Structure The production structure in the Bangladesh economy underwent" some

changes in the process of economic growth. There were some discontinuous shifts in the sectoral shares in GDP from the primary to the manufacturing and tertiary sectors. Various factors caused such shifts but discussion would be limited to the factors included in the model.

Production Structure and Per Capita Real Income Theoretically we expect a negative relationship between the primaiy share and per capita real income. The coefficients of y{ obtained by the SEM, 2SLS

^hine positivity of the coefficients of Qj /Qt in the import demand function for consumer and capital goods obtained by the 3SJS method is theoretically unexpected.

^Thc significantly negative coefficients of AQ{/Q{ in the import demand function for intermediate goods obtained by the 3Sl^S method is not discussed here because Ahmad (1986, p. 4761) have found no empirical evidence to import substitution in intermediate goods.



and 3SLS methods in the function for the primary share are positive and significant at the 1 per cent level (Tables 1, 2 and 3 Appendix A). It means that per capita real income had a positive relationship with the primary share. The main reason for this was the continuous fall in the absolute expenditure on the primary products for the Bangladesh economy as a whole with declining trend of per capita real income. The declining absolute expenditure on the agricultural products caused the primary share to decline.

A positive relationship is expected between the manufacturing share and per capita real income. But the coefficients of yt obtained by the SEM, 2SLS and 3SLS methods in the function for the manufacturing share are negative and significant at the 5 and 1 per cent levels (Tables 1, 2 and 3, Appendix A). They suggest a negative relationship between the manufacturing share and per capita real income. It implies that the absolute exppenditure on the manufactured products increased in spite of the declining per capita real income for the economy. This was probably due to the greater increase in the absolute expenditure of the upper income groups offsetting the smaller decrease in the absolute expenditure of the lower income groups on the manufactured products.

Since the per capita real income declined throughout the period under study, on the basis of theoretical knowledge it is ruled out as a causative factor for a rise in the tertiary share. Instead, growth rate of output is used as an independent variable to explain it. The coefficient of AQj/Qj based on the SEM and 2SLS method are insignificant at the 5 per cent level while that based on the 3SLS method is positive and significant at the 1 per cent level (Tables 1, 2 and 3, Appendix A). The 3SLS result suggests that the growth rate of GDP had a positive impact on the tertiary share. Perhaps the rise in the tertiary share was partly caused by demand for increased services associated with the growth of GDP.

Production Structure and Area Cropped, Imports of Capital Goods, Population, Economic Overheads, and Government Revenue Expenditure Area cropped had a negative relationship with the primary share which is

theoretically unexpected and the negative relationship is significant at the 1 per cent level (Tables 1, 2 and 3, Appendix A). Increased area cropped caused increased primary production and increased value added in the primary sector. Since the rates of change of output in manufacturing, trade and transport services are highly correlated with the rate of change of output in agriculture (Islam 1977, p. 139), the increased area cropped enhanced the value added in the manufacturing and tertiary sectors much faster than in the primary sector and thus caused the primary share to decline. A positive relationship is expected between the primary share and imports

of capital goods as proportions of GDP. On the contrary, we have obtained a negative relationship between them and the negative relationship is significant at the 5 and 1 per cent levels (Tables 1, 2 and 3. Appendix A). The negative relationship perhaps was caused by the fact that an increase of imports of capital goods was associated with a decrease of production in the primary



sector due to mechanical breakdown of agricultural machinery and bad weather or that good harvests accompanied by good weather conditions even if the capital good imports would have declined. The coefficients of N with the manufacturing share based on the SEM, 2SLS

and 3SLS are positive and significant at the 5 and 1 per cent levels ( Tables 1, 2, and 3, Appendix A). They suggest that population size was important for expansion of the manufacturing sector providing wide market to the manufactured products and economies of scale in their production.

We have the expected positive relationship between the manufacturing share T and the tertiary share even though the positive coefficients of Q t /Qt based on the SEM an 4 2SLS method are insignificant at the 5 per cent level ( Tables 1 and 2, Appendix A) and that obtained by the 3SLS method is significant at the 1 per cent level (Table 3, Appendix A ). Thus the positive relationship suggests that activities of the tertiary sector particularly economic overtheads. banking and construction, etc. appear to support the development of the manufac-turing sector.

The coefficients of Gt/Qt in the tertiary share obtained by the SEM, 2SLS and 3SLS methods have the expected positive sign and are significant at the 1 per cent level (Tables 1, 2 and 3, Appendix A). They indicate that government revenue expenditure increased the value added in the tertiary sector through direct and indirect expansion of employment.

Production Structure and Exports The coefficients of Xt/Qt with the primary share based on the three methods

are positive as expected and that obtained only by the 3SLS method is significant at the 1 per cent level (Tables 1, 2 and 3. Appendix A). This implies that exports have expansionary impact on the primary sector.

The coefficients of Xt/Qt have the unexpected negative signs in the manufacturing share. Its negative relationships with the manufacturing share are significant at the 1 per cent level. They might be caused by the fact that processing of the primary products increased the value added and share of the manufacturing share but increased manufactured product were not associated with increased manufactured exports due to consumption liberalization (Khan 1963, pp. 208-231) and import substitution strategy of industrial development (Ahmad 1986. pp. 305-308). We have the expected positive relationship between the exports as

proportions of GDP and the tertiary share. The positive relationships based on the three methods are significant at 1 per cent level (Tables 1, 2 and 3, Appendix A) suggesting that expansion of exports increased the value added in the tertiary sector.

Production Structure and Foreign Capital Inflow (i) Piimary Sector The coefficients of Ft/Q| in the primary share are expected to be negative

but they are found positive using the SEM 2SLS and 3SLS methods of



estimation (Tables 1, 2 and 3, Appendix A). The positive coefficient obtained by the SEM is insignificant at the 5 per cent level while that based on the 2SLS method is significant at the 5 per cent level and that based on the 3SLS method is significant at 1 per cent level. This implies that we have obtained a positive relationship between the primary share and foreign capital inflow as a proportion of GDP. The justification for this relationship is given below.

Foreign capital inflow in the primary sector was received in the form of food assistance, commodity assistance and project assistance. Food assistance in Bangladesh was used for foodgrain imports under PL-480 which generated counterpart funds. Some part of the counterpart funds financed the Rural Works Programme ( RWP) and Food for Works Programme (FWP). With the implementation of these programmes, food assistance increased agricultural productivity, agricultural production and area under crop production directly through providing irrigation, drainage. Hood control embankments and indirectly through construction of roads and employment of rural and landless labourers. It also created disincentives for farmers to produce. It is very difficult to draw conclusions about its overall effects on the Bangladesh economy. Its negative effects would have been much lower had the subsidized imported foodgrains been distributed to the extremely poor consumers. The commodity assistance contributed to increasing productivity and

production in the primary sector through financing the procurement and distribution of agricultural inputs to farmers.

The project assistance in the agricultural sector was spent on production undertaken by the Agricultural Directorate, the Bangladesh Agricultural Development Corporation(BADC), the Forest Directorate, the Forest Industries Development Corporation (FIDC), the Fisheries Directorate, Fisheries Development Corporation and the Livestock Directorate. Projects of these organizations are both production oriented and research oriented, which directly or indirectly increased production in the primary sector.

Project assistance was allocated to the rural institutions of Bangladesh in the post-liberation period. It financed projects which increased production directly through providing agricultural inputs, credit and services, and indirectly through extending physical facilities for research and training, providing training facilities for farmers, fishermen and weavers.

Relatively a large amount of project assistance was spent on flood control, irrigation and electricity generation projects of the Flood Control and Water Resource Development. These projects through provision of irrigation facilities, protection from flood damage, improved drainage of waterlogged areas, and rural electrification facilitated the increased production in the agricultural sector.

(W Manufacturing Sector We expect the coefficients of Ft/Q( with the manufacturing share to be

positive but have obtained them with negative sign using the SEM, 2SLS and 3SLS methods ( Tables 1, 2 -and 3, Appendix A). The negative relationships between the manufacturing share and foreign capital inflow as proportions of



GDP are significant at the 5 per cent and 1 per cent level. They may be explained as follows.

Foreign capital inflow supported the import substituting industrialization in Bangladesh. It developed the manufacturing sector but with an inappropriate technology. It created the industrial capacity much of which was not utilized, underutilization being higher in the post -liberation period compared to the pre-liberation period in spite of higher inflow of foreign capital. Some industries were over-expanded with foreign capital inflow but they contribute nothing at the margin to the manufacturing output due to negative marginal productivity of labour and capital in those industries (Soligo and Stern 1965). Furthermore, the productivity of foreign capital was apparently greater for the primary and tertiary soctor than the manufacturing sector. There was foreign private investment in the manufacturing sector but the reported value added from the industries set up with foreign private capital was very small or negative because of artificially high accounting prices of their imports from their parent companies abroad. Thus the foreign capital inflow had both the positive and negative effects on the manufacturing sector. Probably its negative effects were larger than its positive effects causing the negative relation.

(Hi) Tertiary Sector The coefficients of Ft/Qt with the tertiary share have the expected positive

sign and the coefficients based on the SEM, 2SLS and 3SLS methods are significant at the 5 per cent, 1 per cent and 10 per cent level, respectively (Tables 1, 2 and 3, Appendix A). They suggest that foreign capital inflow had significantly positive impact on the tertiary share. This positive relationship may be explained in this way. Aid financed projects in the tertiary sector employed local people and thus

directly increased its value added. Some of these projects helped production and distribution directly and sometimes with some time lags. Some other projects facilitated economic growth through the generation of external economics. Some portion of the commodity assistance was also used to finance maintenance imports for this sector. Some of the aid financed projects in the agricultural and manufacturing sectors involved construction works which directly increased the value added in the construction sector. Construction activities under the RWP and FWP in the rural sector increased the value added in this sector. Thus foreign capital inflow as a proportion of GDP was found to have a significantly positive effect on the tertiary share.

V. CONCLUSION

Studies on the two-gap theory hypothesize that foreign capital inflow can promote economic growth in LDCs by relieving constraints to growth. Like the empirical studies of Cohen ( 198), Papanek ( 1973 ), Voivodas ( 1974) , Stoneman (1975), and Gupta ( 1975), our study support the above hypothesis opposing Griffin and Enos (1970) who have found a negative relationship between growth of output and foreign capital inflow as proportion of GDP.



Rahman (1967) and Griffin (1970) have propounded the "Psychological Hypothesis" that an increase in foreign capital inflow causes a relaxation of the government's domestic saving efforts and thus reduce domestic saving. Since the domestic saving was the dominant constraint to the economic growth of Bangladesh and we have found a non-positive relationship between the domestic saving and foreign capital inflow, our study suggests that Bangladesh government might have relaxed its saving efforts. Thus it tends to support the "Psychological hypothesis" as Rahman ( 1968), Griffin (1970), Ahmed (1971), Weisskopf (1972), Papanek (1973), and Gupta (1975) have corroborated it.

Since foreign capital inflow was found to have a positive effect on all categories of imports in Bangladesh, our study lends support to the hypothesis of Massel, et al. (1972) and Voivodas (1974) that there is positive relationship between imports and foreign capital inflow.

Like Chenery and Syrquin (1975) we have found that foreign capital inflow caused a change in the production structure of the Bangladesh economy. They have found that the primaiy share declines and the manufacturing share rises with an inflow of foreign capital in LDCs. We have obtained a positive relationship between the primary share and foreign capital inflow as proportions of GDP, and a negative relationship between the manufacturing share and foreign capital inflow as proportions of GDP. Thus, our findings are opposite to those of Cheneiy and Syrquin with respect to the effects of foreign capital of Chenery and Syrquin with respect to the effects of foreign capital inflow on the primary and manufacturing shares. However, they and we have obtained the similar finding of a positive relationship between the tertiary share and foreign capital inflow as proportions of GDP.

Foreign capital inflow had a positive contribution to the growth of GDP but made the government of Bangladesh to relax the saving efforts. There were some import substitution in all categoreis of imports but the extent of import substitution was not adequate enough to reduce overall import demand. There were shifts in the sectoral shares of GDP but such shifts were discontinuous. Thus there were structural changes in the Bangladesh economy during the last two decades but such changes were not adequate to ensure self-sustained growth reducing its dependence on foreign capital inflow.

REFERENCES

Ahmad 1983: S. Ahmad, "The Dominant Constraint on Growth in Bangladesh", The Bangladesh Development Studies, Vol. XI, December.

1986: S. Ahmad, Foreign Capital Inflow and Economic Growth: A Case Study oj Bangladesh, Unpublished Ph. D. dissertation, Department of Economics, Monash University, April.

Ahmed 1971: N. Ahmed, "A Note on Haavelmos Hypothesis", The Review of Economics and Statistics, Vol. 53, November.

Aigner 1971: D. J. Aigner, Basic Econometrics, Prentice Hall Inc. Englewood Cliffs, New Jersey.



Bruton 1969: H. J. Bruton, The Two-Gap Approach to Aid and Development: Comment", The American Economic Review, Vol. 59, June.

Chenery and Adelman 1966: H.B. Chenery and I. Adelman, "Foreign Aid and Economic Development: The Case of Greece", The Review of Economics and Statistics, Vol. 48, February.

- - -and Bruno 1962: H.B. Chenery and M. Bruno. "Development Alternatives in an Open Economy: The Case o Israel ", The Economic Journal, Vol. 72, March.

and MacEwan 1966: H.B. Chenery and A. MacEvvan, "Optimal Patterns o Growth and Aid: The Case o Pakistan " in Adelman, I. and Thorbeeke, E. (eds). The Theory and Design of Economic Development, The John Hopkins Press, Baltimore.

and Srout 1966: H. B. Chenery and M.A. Strout, "Foreign Assistance and Economic Development ", The American Economic Review, Vol. 56, September.

and Syrquin 1975: H. B. Chenery and M. Syrquin, Patterns of Development: 1950-1970, World Bank, Oxford University Press, London.

Cohen 1968: B. I. Cohen, "Relative Effects of Foreign Capital and Larger Exports on Economic Development ', The Review of Economics and Statistics, Vol. 50, May.

Fei and Ranis 1968: J. C. H. Fei and G. Ranis. "Foreign Assistance and Economic Development: Comment", The American Economic Review, Vol. 58, September.

Findlay 1973: International Trade and Development Theory, Columbia University Press, New York.

Griiiin 1970: K. B. Grillili, "Foreign Capital, Domestic Savings and Economic Development", The Oxford Bulletin of Economics and Statistics, Vol. 32, May.

and Enos 1970: K.B. Griflin and J.L. Enos, Foreign Assistance: Objectives and Consequences ", Economic Development and Cultural Change, Vol. 18, April.

Gupta 1975: K. L. Gupta, "Foreign Capital Inflows. Dependency Burden and Saving Rates in Developing Countries: A Simultaneous Equation Model", Kyklos. Vol. 28.

Hildreth and Lu 1960: C. Hildreth and J. Y. Lu, "Demand Relationships with Auto-correlated Disturbances", Technical Bulletin, 276, Michigan State University Agricultural Experiment Station, May.

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Luxton 1979: P. Luxton, "A New Look at the Two-Gap Approach to Economic Development", The Indian Journal oj Economics, Vol. 59, January.

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Latin American Countries", The Review oj Economics and Statistics, Vol. 54, May.

Papanek 1973: G. F. Papanek, "Aid. Foreign Private Investment, Savings and Growth in Less Developed Countries", Journal oj Political Economy, Vol. 81, January/February.

Pindyck and Rubinfeld 1981: R. S. Pindyck and D. L. Rubinfeld, Economic Models and Economic Forecasts, Second edition. McGraw-Hill Company, New York.

Quibria 1981: G. Quibria, "Two-Gap Models of Foreign Aid: A Survey", Journal of Economic Development, Vol. 5. No. 1.

Rahman 1967: M. A. Rahman, "The Welfare Economics of Foreign Aid", The Pakistan Development Review, Vol. 7, Summer.

1968: M. A. Rahman. "Foreign Capital and Domestic Saving: A Test of Haavelmos Hypothesis with Cross-Country Data", The Review of Economics and Statistics, Vol. 50, February.

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Stoneman 1975: C. Stoneman, "Foreign Capital and Economic Growth", World Development, Vol. 3, January.

Voivodas 1974: C. S. Voivodas, Foreign Capital Ini low and South Korean Growth", Economic Development and Cultural Change, Vol. 22, April.

Weisskopf 1972: T. E. Weisskopf, "The Impact of Foreign Capital Inflow on Domestic Saving in Underdeveloped Countries", Journal oj International Economics, Vol. 2.

Zellner and Theil 1962: A. Zellner and H. Theil, "Three Stage Least Squares: Simultaneous Estimation of Simultaneous Equations", Econometrica, Vol. 30, January.



Appendix A TABLE 1

ESTIMATION OP THE MODEL FOR BANGLADESH BY THE SEM : 1960/61-1979/80

(t-ratios in parentheses)

1. Growth Function : OLS

AQl Si R Mt 9 -r^ = 0.18-r^ + 0.1877- + 0.18 + -- R2= 9 - 0.18d.f.l6

yt t n. l

(2.01)c (2.01)c (2.01)c I)W= 1.90

2. Saving Function : FOAM

^- + 0.1 0-O.6I) - 0.05-^1 1.23 ll +1.14 -=f R2 = 0.76 d.f. 12 H H wt Wl

(0.47) (-0.91) (-0.49) (-3.09) (1.21) DW=1.24

3. (i) Import Function lor Consumer Goods : FOAM

< ct or 0 < ,, x, = 0.23r^-- 0.32 0.09 0.82 +0.23 7^- ,, +0.26-^ x, 9t 9t q 9t 9t a 9

(3.34)a (- 2.93)b (-0.80) (- 2.71)b (1.31) (2.02)c

R2=0.58 d. f. 11

OW= 2.49 (ii) Import Function for Intermediate Goods : OLS

Mt AQ, Ft X , o - =- 0.02D+ 0.02 7=^+0.2277-+ 0.5677- , R2 o = 0.78 d.i. 13

Q t ^t t ^t (- 2.91)b (1.21) (3.69)a (7.59)a D'V=1.98

(iii) Import Function lor Capital Goods : FOAM

t I t Ir X - t 0.04D + 0.06 ^ ^ I 0.07 1- 0.46 - **

- O.20 -^- X

^ R2 = 0.83

9t ^ 9t ** ^

(4.31)a (1.83)c (-0.70) (5.79)a (-1.45) DW=1.19 ___

7V'K/JB i (Conici.)


Ahmad : Foreign Capital Injlow and Economic Growth 75

TABLE 1 (Conici.)

4. (i) Function for Primary Share : OLS

- = 0.92+0.73 log y -1.35 log '' -2.20 - + 0.66-^- + 0.05r^- Qt

9l Qi a

(1.53) (3.62)a (- 3.92)a (- 2.60)b (1.28) (0.13)

R2 =0.77 d.f. 11

I)W = 1 .67

(ii) Function for Manufacturing Share : FOAM

= 0.08+0. 121) -0.22 log y + 0.28 log Nt+0.17 0.39^-1.06^. Qt 9t

^ ^

(0.60) (5.38)a (- 2.85)b (2.69)b (1.44) (- 3.01)b (- 6.22)a

R2 = 0.86 d.f. 10

DW=2.81

(iii) Function for Tertiary Share : FOAM

9( AQ, Ci, F X, =0.21 - 0.070 - 0.05-~- + 1.36 r- + 0.45 77- + 1.40 -~- Q H H 9t 9(

(12.25)a (- 3.38)a (-1.33) (7.99)a (2.73)b (4.24)a

R2 = 0.92 d.f. 11

DVV= 2.08

Two-tailed t-test is performed a = significant at 1 per cent level b = significant at 5 per cent level e significant at 10 per cent level.



TABLE 2

ESTIMATION OP THE MODEL FOR BANGLADESH BY THE 2SLS METHOD: 1960/61-1979/80

(t- ratios in parentheses)

1. Growth Function .v,k

-r-i- - 0.18 rf --0.18 ri- +0.18 9t 01 l. g

(2.07)b (2.07)b (2.07)b

2. Saving Function

S( AQt Ft Xi 77-= 0.10 - 0.6D - 0.06-^ 1.21 ^- +1.10-^- yt ty H H

(0.85) (- 0.90) (- 0.54) (- 2.94)a (1.13)

3. Import Function for Consumer Goods

Mt C. 0[ 0t Mt p. v - -= 0.23 --- 0.31 0.09 0.81 +0.23 -^ gi +0.26-^-

q l Qt o, . o, gi !

(3.24)a (- 2.83)a (-0.78) (-2 06)'1 (1.29) (2.00)

(ii) Import Function lor Intermediate Goods

i AQ F X - i -- 0.02) + 0.02 -1+ 0.22 ^- + 0.57 -r^- *^t O ^t ^t *^t wt (- 3.36)a (0.99) (4.19)a (8.70)a

(iii) Import Function for Capital Goods

Mt I. 9t rt Xt . 0.04D + 0.06 ~ 0.07 + 0.45 -^ 0.20 rf q Qt 9( ft Qt

(4.19)a (1.77)r (-0.64) (5.60)a (-1.41) . .

(Conta.)


Ahmad : Foreign Capital In/low and Economic Growth 77

TABLE 2 (Contei. )

4. Function for Primary Share

of M iv x. =0.37 - 0.98 log yt - 1.39 log pt - 5.07 + 1.60^-+0.77 r- q 9t Wl Wl

(0.50) (3.80)a (- 3.51)a (- 3.16)a (2.21)b (1.44)

(ii) Function for Manufacturing Share

or - = 0.09 + 0. 121) - 0.22 logyL . . +0.28 log - N( + 0. 18 03HQ yt 105 o yt Qt

. . - ^

yt o yt

(0.65) (5.28)a (- 2.83)a (2.61)a (1.44) (- 2.95)a (- 6.06)a

(iii) Function for Tertiary Share

9t. jq{ g, '' x, - =0.21 - 0.071) - 0.05-7:7-+ 1.37 r~+ 0.44 7^+ 1.40 rf Q 9t t 9t Q[ wt

(12.06)a I- 3.33)a (-1.30) (7.90)a (2.66)a (4. 18)a

In 2SlvS method of estimation, t-statistics follow an asymptotic standard normal distribution.

a = significant at 1 per cent level b = significant at 5 per cent level c = significan I at 10 per cent level.



TABLE 3

ESTIMATION OF THE MODEL FOR BANGLADESH BY THE 3SLS METHOD: 1960/61-1979/80

(I -ratios in parentheses)

1. Growth Function

Qt St F( Mt Qt tm0A5i St +0I5qT F( +ai5T wt

(1.79)c (1.79)c (1.79)c

2. Saving Function

^+0.14 - 0.150 - 0.27^--- 0.82 rj- + 0.93 rr*- wt wt yt i

(2.85)a (1.77)b (- 7.85)a (-1.41) (0.84)

3. (i) Import. Function for Consumer Goods

=0.36 -^ 0.60 +0.60 1.5) -f 0. 16 --+0.4O -

Qt 9|

Qt Q{ Q{ 9t 9l

(6.65)a ( 7.51)a (3.2


TABLE 3 (Con Id.)

4. (i) Function for Primary Share

Of Mf p x =0.23+ 1.23 log yt- 1.81 log p( - 25.24 +7.53 -+7.02^. (0.64) (3.27)a (- 3.40)a (-14.08)" (3.93)a (7.37)a

(ii) Function for Manu laetu ring Share

Q? Ft xt - = 0.12 +0.1 ID -0.20 logyt " + 0.20 log Nt +0.28 a25^ *

L12?^ t Q{ "

9t * t (2.26)b (8.32)a (- 4.29)a (4.45)a (5.31) a (- 3.30)a (- 7.83)a

(iii) Function for Tertiary Share

9t AQt Gt Ft X. =0.26 - 0.09D +0.11 "0^+0.81 ^ -29 "+ 138 ~ wt

(18.18)a(-4.39)a (4.95)a (6.43)a (1.86)c (4.89)a

In 3SLS method of estimation, t-statistics follow an asymptotic standard normal distribution.

a = significant at 1 per ceni level b = significant at 5 per cent level c = significant at 10 per cent level.


Article Contentsp. [55]p. 56p. 57p. 58p. 59p. 60p. 61p. 62p. 63p. 64p. 65p. 66p. 67p. 68p. 69p. 70p. 71p. 72p. 73p. 74p. 75p. 76p. 77p. 78p. 79

Issue Table of ContentsThe Bangladesh Development Studies, Vol. 18, No. 1 (March 1990), pp. 1-118, i-ixFront MatterThe Macroeconomics of Policy Reform: Experiments with a CGE Model of Bangladesh [pp. 1-35]On Cost-Benefit Analysis of Weaving by Handlooms, Powerlooms and Mills in Bangladesh, 1986/87 [pp. 37-54]Foreign Capital Inflow and Economic Growth: A Two Gap Model for the Bangladesh Economy [pp. 55-79]Notes and CommentsSome Aspects of Inflation in Bangladesh [pp. 81-92]A Note on the Income Velocity of Circulation of Money in Bangladesh [pp. 93-105]

Book ReviewReview: untitled [pp. 107-115]

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