Five Crucial Economic Factors That Affect GDP Per Capita: A Study on Bangladesh Economy

In this paper, we aim to remark on the nine crucial economic factors that affect GDP (Gross Domestic Product) per capita as assess the importance, effect, or value of economic development for a sample of 31 years of economic data from Bangladesh for the period of 1992 to 2022. The research question is “What are the effects of these variables on GDP per capita?” To inquire into that business in detail we use multiple regression analysis in this paper as GDP (Gross Domestic Product) per capita is the regressand or dependent variable and the rest of the factors or variables are the regressors or independent variables. In this regard, we use nine independent variables in the regression analysis: Gross Domestic Product (GDP) in current billions of USD, GDP growth rate (latest) per annum, Inflation (on consumer price index), Gross Savings (%GDP), Literacy rate, Unemployment rate, Investment rate, Population growth rate, Poverty Rate. After the data analysis we found that among the nine independent variables, five have a significant impact on GDP per capita. For instance, Inflation (% of GDP), GDP (current USD), GDP growth rate, Gross Savings rate, and Poverty rate play a vital role in determining GDP per capita. Since we use time series data, to identify an accurate estimation as being present we test the stationarity of data, to conduct the time series has no unit root problem we use first difference and log difference such that the data and the estimation will become acceptable. An assortment of statistical tests, such as Normality Test, Multicollinearity, Heteroskedasticity, Autocorrelation, Goodness-of-Fit (GoF) Test, ANOVA (Analysis of Variance) Test, and Multiple Regression Analysis, were performed using GRETL (Gnu Regression, Econometrics and Time-series Library). We use CUSUM (cumulative sum) test and CUSUM (cumulative sum) square test to find out the stability of the coefficient or parameters. The research question is “What are the effects of these variables on GDP per capita?”