Asymmetric role of the informal sector on economic growth: Empirical investigation on a developing country
Article
Article Title | Asymmetric role of the informal sector on economic growth: Empirical investigation on a developing country |
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ERA Journal ID | 18485 |
Article Category | Article |
Authors | Sultana, Nahid, Rahman, Mohammad Mafizur and Murad, S.M. Woahid |
Journal Title | Structural Change and Economic Dynamics |
Journal Citation | 69, pp. 96-107 |
Number of Pages | 12 |
Year | 2024 |
Publisher | Elsevier |
Place of Publication | Netherlands |
ISSN | 0954-349X |
1873-6017 | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.strueco.2023.11.015 |
Web Address (URL) | https://www.sciencedirect.com/science/article/abs/pii/S0954349X23001704 |
Abstract | The role of the informal sector in economic growth still remains an issue of debate. This study contributes to resolving this by taking into account the asymmetric effect of the informal sector on economic growth. The study applies the Non-linear Autoregressive Distributed Lag (N-ARDL) model to capture the asymmetric relationship between the informal sector activity and economic growth for the period 1982–2018 in Bangladesh. The estimation of the N-ARDL model reveals that the informal sector asymmetrically affects the domestic output and economic growth in Bangladesh for both the short-run and the long run. The study has observed an asymmetrically larger effect on output and economic growth from the falling contribution of the informal sector. Urbanization and capital growth also contribute to an increase in economic growth. Therefore, proper incentives and careful policy measures are suggested to effectively diminish the prevalence of informality and promote its transition towards a more formalized framework. |
Keywords | Informal sector; Economic growth; Structural equation model, Nonlinear autoregressive distributed lag, Bangladesh |
Contains Sensitive Content | Does not contain sensitive content |
ANZSRC Field of Research 2020 | 380199. Applied economics not elsewhere classified |
Public Notes | Files associated with this item cannot be displayed due to copyright restrictions. |
Byline Affiliations | School of Business |
Curtin University | |
Noakhali Science and Technology University, Bangladesh |
https://research.usq.edu.au/item/z5829/asymmetric-role-of-the-informal-sector-on-economic-growth-empirical-investigation-on-a-developing-country
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