Thinking Aloud: Volume II, Issue 12

The theme of May 1, 2016 issue of Thinking Aloud is “Productivity”. The article on “Why do countries differ in total factor productivity?” argues that Total Factor Productivity (TFP) plays a key role in economic fluctuations, economic growth and cross-country differences in per capita income. The article uses cross-country panel regressions for 110 countries for the period 1995-2011 and the analysis reveals that, in order to increase the TFP, countries like Bangladesh need to improve their current low levels of human capital by enhancing investment on education and health. Also, larger trade and FDI orientations and improvement in the quality of institutions are indispensably important. The second article on “Does export orientation lead to higher productivity? Firm-level evidence from Bangladesh” explores how export orientation affects firm-level productivity by looking at the range of determinants of productivity of manufacturing firms in Bangladesh. The regression analysis reveals that after controlling for firm size, firm age, firm’s output share in the industry and access to IT services, exporting firms in Bangladesh were more productive than non-exporting ones by 156% in 2007 and by 112% in 2013. This is due to several reasons including exposure to competition in international market, technical support from external buyers, efficiency gained from exporting etc. Third page includes an in-depth interview of Dr. Bazlul Haque Khondker where he talks about productivity, growth and sustainable economic development in the context of Bangladesh. In his interview, Dr. Khondker discusses that without adequate investment in education and health sectors and quality of service delivery, it is difficult to raise productivity. The fourth page of current issue highlights SANEM events that took place in the month of April.