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Infrastructure is argued to be one of the critical factors for
economic growth in low income countries like Bangladesh. Efficient
infrastructure is very critical for both public and private investments and can
promote sustainable economic and social development. Under
the Sixth Five Year Plan (2010-2015),Bangladesh government aims to
achieve 8 percent growth in real GDP by the end of the plan period. However,
poor status of infrastructural development is acting as a serious constraint towardsrealising
this growth target. Improving the country’s infrastructural system will, thus,
be essential for achieving high economic growth.
Against this backdrop, the paper investigates economy-wide
impacts of infrastructural investments in the context of Bangladesh economy. At first, a SAM multiplier model is used to
explore economy-wide impacts of infrastructural investment in Bangladesh. The SAM multiplier model is a useful model to
explore economy-wide effects of any exogenous shock into the economy through
aggregate demand. Under this
model, the
economy-wide impacts of the infrastructural investment are examined by changing
the total exogenous injection vector, especially investment demand in
infrastructure. More specifically, the total exogenous account is manipulated
to estimate their effects on output (through an output multiplier), value-added
or GDP (through the GDP multiplier), and household income (through household
income multiplier) and commodity demand (via commodity multipliers). Also, this paper uses a CGE model to explore the macro,
sectoral, and household income and welfare impacts of infrastructural
investments in Bangladesh.
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