Title: HOW UNEMPLOYMENT REACT RESPECTIVE TO GDP GROWTH, INFLATION, DEMOGRAPHIC CHANGE AND FOREIGN DIRECT INVESTMENT (FDI)
Author:
Omar Faruk
Abstract:
Unemployment poses a persistent challenge across South Asia, particularly in Bangladesh where it has become a pressing issue. Factors such as economic conditions, demographic structure, women’s participation, and rural-to-urban migration contribute significantly to this problem. The relationship between economic growth and unemployment in Bangladesh is notably negative. This study aims to assess the impact of key macroeconomic factors on the rising unemployment rate in Bangladesh. It utilizes a dataset spanning from 1995 to 2019, focusing on GDP, inflation, population growth, and FDI. The Augmented Dickey Fuller test is employed to determine the stationarity of variables, revealing that GDP, inflation, and FDI are stationary at the level and intercept, while unemployment is stationary at the first difference. Through further analysis including co-linearity, co-integration tests, and the least squares method, it is evident that there exists a long-term relationship between these factors and unemployment in Bangladesh. Notably, economic indicators such as GDP and FDI significantly influence the unemployment issue. Theoretically, there is a positive correlation between unemployment and economic growth. Granger causality testing confirms a unidirectional influence, with the unemployment rate impacting economic factors. The findings of this study offer valuable insights for policymakers, enabling them to tailor policies aimed at reducing unemployment in Bangladesh.
Keywords: GDP, Unemployment, growth.
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