Investment Features of Selected Industrial Sectors of Bangladesh: An Econometric Investigation

This study describes the investment features of some selected industrial sectors of Bangladesh. The industrial sectors selected for the study are drug and pharmaceuticals, electrical machinery, industrial chemical and total of all manufacturing industries. Several investment models have been developed among which flexible accelerator model and neoclassical model are considered empirically best. The distinguishing feature of the neoclassical model is that it is based on an explicit model of optimization behavior that relates the desired capital stock to interest rates, output, capital price and tax policies. However, in this study a modified form of the neoclassical model is fitted to the yearly data for selected industrial sectors of Bangladesh obtained from census of Manufacturing Industries (CMI) report published by Bangladesh Bureau of Statistics (BBS). An attempt  is made to find out the influential factors for investment as well as the investment trend for the selected industrial sectors. Findings of the study suggest that the capital stock and change in current period output are the influential factors for investment. Investment trend is more or less stable up to the period 87 - 88 and thereafter the trend is increasing