Impact of GDP, Inflation, Population Growth and FDI on Unemployment: A study on Bangladesh Economy

Abstract

Unemployment is a major problem in almost all of the countries of south Asia. Unemployment has become the consistent crucial problem in Bangladesh. Economic conditions, demographic structure, women contribution, movement of rural to urban are the major causes of unemployment in Bangladesh. Economic growth and unemployment have a negative relation in Bangladesh. This study is performed to see the impact of some crucial macroeconomic factors on the increasing growth rate of unemployment in Bangladesh. For conducting the study, data set of GDPs, inflation, population growth, FDI during the period of 1995-2019 of Bangladesh has been used. To find out the impact of inflation, economic growth, population growth and FDI on unemployment rate this study used the Augmented Dickey Fuller test for Unit Root to check whether variables are stationary or non-stationary. Gross Domestic Product (GDP) and Inflation, FDI are stationary on level and intercept and unemployment is stationary on first difference. From the augmented dicky fuller test, co linearity and co integration test, least square method it is observed that there is long run relationship exists among the factors and unemployment in Bangladesh. Economic factors like GDP and, FDI have significant influence on unemployment problem in Bangladesh. Theoretically there has a positive relation between unemployment and economic growth. Granger causality test confirms the unidirectional influences come from the unemployment rate to the economic factors as well. This study will help policy makers to modify policy to reduce the unemployment rate in Bangladesh.