Does Access to Improved Water Source and Sanitation Facility Accelerate Economic Growth in Bangladesh?

Abstract

This paper examines the relationship among access to improved water, sanitation and economic growth in Bangladesh through co-integration and vector error correction model (VECM) over the period 1991 to 2014. Bangladesh has registered remarkable progress in achieving major Millennium Development Goals (MDG). Today nearly 87% of our total population has access to improved water sources and 60% have access to improved sanitation facilities which is contributing significantly towards human development in Bangladesh. Therefore we want to test whether access to improved water and sanitation accelerates economic growth in Bangladesh through a time series analysis. The Johansen co-integration tests indicate that there is long run association among the variables. The vector error correction model indicates that there is a long run causality running from improved sanitation facilities (% of population with access) and improved water source (% of population with access) to gross domestic product in Bangladesh. Similarly in the short run a causal relationship has been found among the variables as well. Further impulse response function and variance decomposition results say that improved sanitation facilities (% of population with access) and improved water source (% of population with access) can explain the major variations in our economic growth. The implication of our findings is that in Bangladesh an increase in improved access to water and sanitation is likely to positively affect our economic growth in the long run. Keeping in mind about Sustainable Development Goals (SDG), policymakers in Bangladesh need to pay special attention to ensure greater access to improved water and sanitation to boost our economic growth & development.