Proceedings of 13th Asian Business Research Conference
26 - 27 December, 2015, BIAM Foundation, Dhaka, Bangladesh, ISBN: 978-1-922069-93-1
The Impact of Electrification on Economic Development
towards Bangladesh Economy: An Empirical Analysis
Sakib B. Amin, Quazi S.Z. Annoor, Hiroto Nakagawa and Lamia L.
Khandker
Electrification has now become the crucial factor that drives economic development in any
developing country. Numerous studies have showed a direct positive correlation between
poverty diminution, increase in employment, increase in the standard of living,
technological and knowledge diffusion with the increasing rate of rural electrification.
Economic development has also facilitated rural electrification, which furthermore
contributes to the development in the rural areas. If the high rate of transmission and
systematic loss and agency problems are kept into minimum level, rural electrification may
enable the rural areas to be sustainable, self-sufficient and progressive, which will
accelerate the economic growth and development of overall economy. Electrification helps
induce productivity and skills development by enabling longer work hours by lighting up
workplaces and powering up technological devices like computers. Electrification is
expected to improve of access to information, social and financial services, and improve
access to better healthcare through access to modern diagnostic machines. Electrification
opens up tremendous opportunities to boost the economic development and solve social
problems along the way, like elimination of poverty. Increased access to electricity will also
enable the economy to explore its options to improve, both in nominal and real terms.
The objective of this study is to investigate the causal relationship between electrification
and economic growth in Bangladesh over the period 1980-2010 and to check whether the
empirical evidence supports the conventional hypothesis as discussed above. We would
like to address the following question:
Can electrification enhance economic growth?
We considered a bivariate model and performed the Augmented Dickey Fuller (ADF) and
Phillips Perron (PP) tests to check if the variables are stationary, either at their level or at
first differences. Using Johansen cointegration method, the empirical findings indicate that
there exists long run cointegration between the variables. Next, we applied the Granger
causality test and our results revealed that electrification plays a key role for the economic
development in Bangladesh. Thus, Bangladesh should take more rigorous steps for
electrification throughout the country.
Field of Research: Economics
______________________________________________________________
Dr. Sakib B. Amin, Assistant Professor, Department of Economics, North South University
Email: sakib.amin@northsouth.edu
Ms. Quazi S. Z. Annoor, BSS Student, Department of Accounting & Finance, and Corresponding Author,
North South University, Email: shafwat.zareen@northsouth.edu
Mr. Hiroto Nakagawa, BSS Student, Department of Economics, North South University,
Email: hirotona2009@yahoo.co.jp
Ms. Lamia L. Khandker, BSS Student, Department of Economics, North South University,
Email: lamia_lazmi@yahoo.com