Vol. 2, No. 2/2013

5 downloads 61 Views 5MB Size Report
Effective adaptation will manage or reduce the vulnerability and even maximise ...... hosting engine, which executes and replicates the execution according to user requests. •. Software as a .... Reseller/Value Added reseller. 0. 10. 20. 30. 40.

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Vol. 2, No. 2/2013

Copyright © 2012, Asian Business Consortium | GDEB

Page 1

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168



ABC Journals         

Online Submission Peer Reviewed Open Access Online Archives Paperless Review Prompt Feedback Well Indexed Global Circulation International Authorship 

Copyright © 2012, Asian Business Consortium | GDEB

Page 2

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

GLOBAL DISCLOSURE OF ECONOMICS AND BUSINESS International Standard Serial Number: 2305-9168 (Print) International Standard Serial Number: 2307-9592 (Online) www.gdeb.weebly.com Established: 2012 Review Process: Blind peer-review Volume 2, Number 2/2013 (Forth Issue)

 Copyright Reproduction in any form or by any means of any part of this production requires the written permission of the publishers.

Published by

All communication should be addressed to the Executive Editor, GDEB Email: [email protected]

Asian Business Consortium www.abcreorg.weebly.com www.abc.us.org

Copyright © 2012, Asian Business Consortium | GDEB

Page 3

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

We are working closely with many other major databases to get AJASE indexed, including AcademicOne, EBSCO, EI Compendex, CAS, ProQuest, DOAJ, and etc. We will gradually publish the index information of the journal and try to have a high ISI impact factor for AJASE. AJASE is under the indexing process with ISI, Ulrich’s, EBSCO, Scopus, DOAJ and JournalSeek.

www.gdeb.weebly.com

Copyright © 2012, Asian Business Consortium | GDEB

Page 4

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

EDITORIAL BOARD Chief Editor Panel Dr. Mohinder Chand, Professor, Department of Kurukshetra University, India

Tourism and Hotel Management,

Dr. Abdul Ghafoor Awan, Professor of International Business & Finance and Dean of Faculties, Institute of Southern Punjab, Multan, Pakistan Dr. A. F. M. Ataur Rahman, Department of Economics, North South University, Bangladesh Dr. Lawrence Arokiasamy, Faculty of Management, Business and Social Sciences, Quest International University Perak, Malaysia

Executive Editor Dr. Alim Al Ayub Ahmed

Faculty of Business, ASA University Bangladesh

Consulting Editors Dr. Md. Mostafizur Rahman, Department of PS& HRD, Rajshahi University, Bangladesh Dr. Bilkis Raihana, Dept. of Economics, Asian University of Bangladesh Dr. Ekta Sharma, AM School of Management, Ahmmedabad University, India Dr. Dharani Kumar Ajithdoss, Dept of Veterinary Pathobiology, Texas A&M University, USA Dr. Santosh Singh Bais, Dept. of Commerce & Management, Govt. First Grade College, Karnataka, India Dr. Shahzad Ali Khan, Head of Department of Health Systems & Policy, Quaid-e-Azam University, Pakistan Dr. Muhammad Mohiuddin, President, AEDAUL, Laval University, Quebec, Canada Dr. Gulzar A. Khuwaja, Department of Computer Engineering, King Faisal University, Saudi Arabia Dr. Halenar Igor, Slovak University of Technology in Bratislava, Slovakia Dr. Sharad Sharma, Bowie State University, USA Dr. Mojtaba Moradi, Department of Statistics, University of Guilan, Iran Dr. Ek Raj Ojha, HNRSC, Kathmandu University, Nepal Md. Tofael Hossain Majumder, Dept of Accounting and Information Systems, Comilla University, Bangladesh

Current Editor-in-Chief: Dr. Lawrence Arokiasamy

The Editorial Board assumes no responsibility for the content of the published articles.

Copyright © 2012, Asian Business Consortium | GDEB

Page 5

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Asian Business Consortium is a self supporting organization and does not receive funding from any institution/government. Hence, the operation of the journal is solely financed by the processing fees received from authors. The processing fees are required to meet operations expenses such as employee salaries, internet services, electricity etc. Being an Open Access Journal, GDEB does not receive payment for online subscription as the journals are freely accessible over the internet. It costs money to produce a peerreviewed, edited, and formatted article that is ready for online and print publication, and to host it on a server that is freely accessible without barriers around the clock.

Copyright © 2012, Asian Business Consortium | GDEB

Page 6

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Global Disclosure of Economics and Business Blind Peer-Reviewed Journal Volume 2, Number 2/2013 (Forth Issue) Contents

1. 2.

3. 4.

5.

6.

7.

8. 9.

10.

11.

12

13

China‘s Economic Growth - 21st Century Puzzle Prof. Dr. Abdul Ghafoor Awan Agricultural Adaptation to Climate Change: Issues for Developing Countries Md. Atiqul Islam Role of Guava to National Economy of Bangladesh: An Empirical Study Sayed Mohibul Hossen Current Account Dynamics, Adjustment and Capital Mobility in Bangladesh Mohammad Masud Alam, Rezai Karim Khondker, & Mohammad Shahansha Molla Organizing: An Islamic Perspective Dr. Md Golam Mohiuddin; Gaffar Olanrewaju Yusof; & Afroza Bulbul Assessment of CSR Performances in Some Selected Commercial Banks in Bangladesh Md. Abul Kalam Azad, Mohammad Zahir Raihan, & Mohammad Zahid Hossain Bhuiyan Employees‘ Motivation in Public and Private Commercial Banks in Bangladesh: A Study on Need-Based Approach Md. Hasebur Rahman Goodness of Cloud Computing: does Bangladesh ready for it Md. Ahsan ul Hasan Consumers‘ Perception and Performance Appraisal of Mobile Phone Companies in Bangladesh Tajul Islam; Rajidul Hoque; & Md.Ashraful Alam Employee-Organization Congruence and Job Performance: Development of a Conceptual Model Perera, G.D.N., Prof. Dr. Khatibi, A., & Dr. Navaratna, N.N.J. HRM Practices and its Impact on Employee Performance: A Study of the Cement Industry in Bangladesh Mst. Momena Akhter; Md. Nur-E-Alam Siddique; Md. Asraful Alam A Study on SWOT Analysis of Pharmaceutical Industry: The Bangladesh Context Meem Rafiul Hoq, Md. Ali Ahsan, & Tanim – A – Tabassum Micro Credit and Women Empowerment: A Study on Grameen Bank‘s Strategy of Poverty Alleviation Mohammed Thanvir Ahmed Chowdhury; Musa. Halima Begum; Md. Ridwan Reza; & Tahrima Chowdhury Jannath

9-29 30-41

42-49 50-59

60-72

73-83

84-91

92-100 101-115

116-124

125-132

133-141

142-157

GDEB Publishes Online and Print Version Both

Copyright © 2012, Asian Business Consortium | GDEB

Page 7

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Asian Business Consortium realizes the meaning of fast publication to researchers, particularly to those working in competitive and dynamic fields. Hence, we offer an exceptionally fast publication schedule including prompt peerreview by the experts in the field and immediate publication upon acceptance.

Copyright © 2012, Asian Business Consortium | GDEB

Page 8

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

st

China’s Economic Growth - 21 Century Puzzle Prof. Dr. Abdul Ghafoor Awan Dean of Faculties, Institute of Southern Punjab, Multan, Pakistan

ABSTRACT China‘s fast economic growth since 1960s was the result of gradual shift in its economic system, open door policy and its accession to the world trade organization. The institutional reforms and access to foreign markets has been followed by investment strategies expanded 45% of Chinese GDP during last 40 years. The consistent vertical economic growth has no precedent in the economic history of the world. China has increased its share in world trade from 0.5% in 1960 to 10% in 2010 and accumulated foreign exchange reserves of US$3.19 trillion by March 2013. It is not less than a miracle. The objective of this study is to investigate into the Chinese labour productivity and output in the short and long-run perspective to detect the real source of Chinese economic growth. Our study is spread over a period starting from 1962 to 2010 because of political and economic stability with minor crisis. The data was taken from China Bureau of National Statistics, IMF, World Bank and relevant research Journals and books. The variables included in this study are: labour productivity, investment, exports, R&D expenses, capital stock, open door policy, real exchange rate and US GDP. The VAR model proposed by Johansen (1988), Johansen and Juselius (1990,1994) and Hendry and Mizon (1993) was used to measure the nature of relations among the above variables. Different tests including unit root test were applied to test the stability of the model. The Econometric results show that international trade and investment in capital stock and R&D expenses by Chinese Government are the major determinants, which are responsible for enhancing labour productivity and output in the long-run, Similarly, real exchange rate appears as an important determinant to explain change in output in the long-run. US GDP has played no role in explaining Chinese output growth. Key words: China, labour productivity, investment, R&D, Open door policy, exports, Output. JEL Classification Code: F43; O47

INTRODUCTION China‘s economic growth during last 40 years has been miraculous. The GDP growth of China has showed an average growth rate of about 8% for the period 1963-1978, in spite of the negative effects of the‖ Great Leap Forward‖ and the ― The Cultural Revolution‖

Copyright © 2012, Asian Business Consortium | GDEB

Page 9

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Policies. Moreover, this growth has geared up since the start of 1980s and is continued till 2013 when the average annual growth rate was fluctuated between 10 and more than 7 percent.. This development has no comparison with other big economies of the world. The vertical growth in the Chines GDP has substantially contributed into the world GDP because its share in international trade has jumped from less than 0.5% in 1960 to 10 % in 2013. This in turn economic performance has led to more than proportional increase of the market share in major economic regions (Japan, the United States, and European Union). There are many factors that have played pivotal role in the China‘s economic growth. But important among them are: savings and investment, which has increased to around 45% and 35% respectively against 20 percent in 1950s and 1960s. However, capital accumulation has not shown substantial impact on the improvement of total factor productivity (TFP) (Chow, 1993), De Long and summer of 1991, and 1992). However, with the beginning of a series of economic and institutional reforms in 1978, China‘s impressive export performance has initiated debate about the role of exports in Economic growth. Public interventions and institutional reforms were the dynamic process that transform the whole the economic, financial and social systems during 1962-2010 but the reforms process was gradual to consolidate growth momentum particularly in case of the liberalization of the economy and opening it for foreign direct investment. Transition from planned economy to the market economy has brought tremendous impact on the Chinese economy and society. This process reached its peak gradually in 2001 when China joined the World Trade Organization (WTO). It was the major event that shift world trade paradigm. Although the reforms that took place in the Maoist era were not free from some shortcomings, but they have provides basis for transition period. In Maoist period, priority sectors for investment were transport ,infrastructure, and technical Improvements in agriculture. Without that Moist‘s policies, rapid economic growthwas not possible during transition period. Moreover, the industrial growth strategy promoted heavy industry representing 13% of industrial output in 1952. This effect was intensified and reached 33% in 1965, and 42% at the beginning of the reforms. On the other hand, light industry, which represents 52 % in 1952, shrinked to 30% to 20% in 1978. This indicates a high degree of the transformation of China‘s industrial sector in the pre-reform period (Bramall, 2000). The investment process was a prominent feature of Chinese policies before and after reforms periods. Contrary to the pre-reform period both domestic and foreign investment was important, and allowed a steady increase of China‘s productivity, which stimulated international trade particularly exports. But before reform period, no foreign direct investment was allowed and the economy was closed for foreign investment. One of the factors that contributed into the success of Chinese economic reforms was high level of education vis-à-vis least developed countries (Nolan, 1995). China‘s years of schooling in 2010 was 8.16 years as compared to world average years of schooling of 8.12 years. In 1950 about 70 percent population of China was illiterate. To eradicate illiteracy, China initiated a program of mass secondary education in 1955 and it contributed in the industrialization of rural areas (Pepper, 1996). When reforms started in 1978 there was macroeconomic stability, no political and economic crisis and low public debt. (Bramall,2000; Rodrick, 1996; Lardy, 1995).

OBJECTIVE OF THE STUDY The objective of this study is to study the main factors that are responsible for China‘s labor productivity and output in the short and long-run during 1962-2010. For this purpose, we

Copyright © 2012, Asian Business Consortium | GDEB

Page 10

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

have intended to concentrate on two factors: capital accumulation and opening up of the Chinese economy, which are the two main drivers of China‘s productivity growth puzzle. Besides focusing capital accumulation and exports, we will analyze the role of Research and Development (R&D) expenditures which has boosted Chinese economic growth. We will also try to illustrate different aspects of technological Progress in this process. Since the interaction between a large economy, Such as China and the rest of the world is known , we have included two other variables such as the real exchange rate and the level of activity in the United States in this study.

METHODOLOGY OF RESEARCH Data and Source: The secondary data was used in this study. The data was collected mainly from China‘s Bureau of National Statistics, IMF and World Bank database, relevant books and research journals, Robert and Lee database. Study Period: The study period was selected from 1962 to 2010 because it was mostly free of economic and political turmoil. Variables: The selected variables for our study are as under:1. Savings. 2. Investment. 3. Capital Stock accumulation 4. Openness. 5. Research and Development. 6. Technological Progress. 7. Real Exchange Rate. 8. US level of economic activity. Estimation Techniques: The VAR Model was proposed by Johansen (1988), Johansen and Juselius (19990:94) and Hendry and Mizon (1993) was used to measure the strength of relationship among selected variables. Time series data analysis techniques were applied to measure change of in the Chinese GDP during the study period. Hypothesis: We frame the following three hypotheses for our study. (i) The existence of a positive and stable relationship in the long run between these variables is more consistent with the existence of a positive effect on technical progress, (ii) The labor productivity is increasing faster than the capital-labor ratio in the majority of the period considered. (iii) Unlike others studies export exogenously drive output and productivity in the long run.

LITERATURE REVIEW (THEORETICAL BACKGROUND) Classical economists, such as Adam Smith (1776), David Ricardo (1817), Thomas Malthus (1798), Frank Ramsey (1928), Joseph Schumpeter (1934) and Frank Knight (1944) laid foundation of theoretical framework of modern theories of economic growth. Their ideas include the basic approach of competitive behavior and equilibrium dynamics, the role of diminishing returns and its relations to physical and human capital, the interplay between per capita income and the growth rate of population, the effects of technological progress

Copyright © 2012, Asian Business Consortium | GDEB

Page 11

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

in the form of increased specialization of labour and discoveries of new products and methods of production, and the role of monopoly power as an incentive for technological progress. The starting of modern growth theory is the classical article of Ramsey (1928), a work several decades ahead of its time. Ramsey‘s inter-temporally separate utility function is as widely used today as the Coo-Douglas production function. The economists did not accept his approach until the 1960s. Between Ramsey and the late 1950s, Harrod (1939) and Domar (1946) tried to integrate Keynesian analysis with elements of economic growth. They used production functions with little substitutability among the inputs to argue the capitalist system is inherently unstable. The most important contribution was those of Solow (1956) and Swan (1956). The key aspect of the Solow-Swan model is the neoclassical form of the production function, a specification that assumes constant returns to scale, diminishing returns to each input, and some positive and smooth elasticity of substitution between the inputs. This production function is combined with a constant-saving rate to generate an extremely simple general equilibrium model of economy. One prediction from these models is conditional convergence. The lower the starting levels of per capita GDP, relative to the long-run or steady-state position, the faster the growth rate. The economies that have less capital per worker relative their long run capital per worker tend to have higher rates of return and higher growth rates.The convergence is conditional because the steady-state levels of capital and output per worker depend on the saving rate, the growth rate of population and position of the production function-characteristics that might be vary across the countries. Another prediction of Solo-Swan Model is that, in the absence of continuing improvements in technology, per capita growth must eventually cease. This assumption, which resembles those of Malthus and Ricardo, also comes from the assumption of diminishing returns to capital. It has been observed that positive rates of per capita growth can persist over a century or more and that these growth rates have no clear tendency to decline. After the mid-1980s, research on economic growth experienced a boom, beginning with the work of Romer (1986) , Lucas (1988) and Rebelo (1991) built on the work of Arrow (1962), Scheshinski (1967) and Uzawa (1965). In these models, growth may go on indefinitely because the returns to investment in a broad class of capital goods, which include human capital. Spillover the knowledge across producers and external benefits from human capital are parts of this process, but only because they help avoid the tendency for diminishing returns to accumulation of capital. The clear distinction between the growth theory of the 1960s and 1980s is that the recent research pays close attention to empirical implications to the relation between theory and data. However, much of this applied research involved application of empirical hypothesis from the older theory, notably neoclassical growth model of conditional convergence. The cross-country regressions motivated by the neoclassical model surely because a fixture of research in the 1990s. An interesting recent development in this area involves assessment of the robustness of the kinds of estimates. Other empirical analysis apply more directly to the recent theories of endogenous growth, including the role of increasing returns, R&D activity, human capital, and the diffusion of technology.A question arises here is that whether it is possible for an economy to enjoy positive growth rates forever by simply saving and investing in its capital stock.A look at the cross-country data from 1969 to 2000 show that the average annual growth rate of real per capital GDP for 112 countries was 1.8 percent and average ratio of gross investment to GDP was 16 percent. However, for 38 sub-Saharan African countries, the average growth rate was only

Copyright © 2012, Asian Business Consortium | GDEB

Page 12

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

0.6 percent and the average investment ratio was only 10 percent. At the other end, for nine East Asian ―miracle‖ economies, the average growth rate was 4.9 percent and the average investment ratio was 25 percent. These observations suggest that growth and investment rates are positively related (Sala-i-Martin et al,(2004) There is no doubt that investing in equipment and infrastructure, R &D or human capital, and other institutional factors along with more (Such as openness, regulations, property rights, and a mechanism for distribution, etc.), are responsible for the dynamics of the activity and productivity levels observed in most economies. However, very little consensus exists about the preponderance of different factors in these processes. This question will be not greater importance if it were not for the foreseeable differences in relation to the long-term sustainability of growth and its impact on economic development policy. Have policies that encourage savings at the expense of domestic consumption contributed since the long-term growth view? Is the adoption or maintenance of export programs really an appropriate strategy in China? Is there any evidence Integration between the different sources of growth considered to-date , ore there are yet, or is there Certain periods of certain alternation? Therefore, explaining whether the economic growth that the Chinese economy has experience has been caused only by high domestic savings and high investment rates, and the consequent accumulation of capital, or if on the contrary, there is another case of export-led growth due to the open-door policy. The basic issue is re-evaluation of the controversy that emerged in the mid-nineties for sources of economic growth in the Asian economies with high performance (package and Page,(1994) and Young, (1992) and (1994). There is abundant evidence to show that those countries that invest more tend to grow more. However, this effect appears to be transitory and could disappear in the absence of other factors that stimulate growth. In other words, the differences in investment rates do not explain the persistent differences in economic growth. The result will be that the country will have the largest per capita income, and that economic growth has stabilized the price of a "normal" after a certain period of time. From this perspective, investment cannot be considered a source of sustainable economic growth. This target can only be reached by other factors (i.e, openness and human capital accumulation, and investment in research and development, etc.), and to the extent that these factors Increase the total factor productivity, it is likely because it involves a larger effort in the field of investment. On the other hand, defenders of another point of view focus their attention on to the greater importance of capital accumulation as is the main factor of economic growth, and on increase trade as being more consequence than a cause of economic growth process. so than the cause of the process of economic growth. Regardless of what we think in terms of neoclassic growth models, like that by Solow (1956), or in terms of endogenous growth models, the accumulation of the productive factors plays an important role in economic growth in both the initial ―AK‖ models or R&D based models. In the absence of technological progress however, which is widely understood as improved technical skills and management that allow sustained increases of the productivity of these production factors, it is not possible to obtain a maintained positive effect in the dynamics of the output level in the long run. Thus according to the most widespread view, investment only affects the output level in the short run. This is true in the neoclassical growth models, but also in the literature on endogenous growth. However, De Long and Summers (1991 and 1992) argue that equipment investment is apparently associated with higher growth, due to the embodied technological progress,

Copyright © 2012, Asian Business Consortium | GDEB

Page 13

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

and the positive role of government infrastructure investment in improving economic activity and productivity is well-known. Finally, as the Schumpeterian version of endogenous growth models implies, long-run growth and productivity levels are endogenous and depend on innovation and capital accumulation among other factors. In this kind of models, "capital and knowledge are two state variables determining the level of output at any point of time" and "capital accumulation and innovation should be complementary processes, both playing a critical role". In this sense, both investments in equipment and R&D expenditure can interact to reinforce this relationship. It is relevant that this complementary relationship is mainly supported by the existence of the embodied technological progress in equipment investment. However, capital accumulation is not free of certain ambiguity with regard its relationship with the level of GDP or labor productivity. From the perspective of conventional growth models, saving and investment precede and are among the most important determinants of output and economic growth. Nevertheless, the opposite view may be found in the empirical literature. More specifically, if capital investment is driven fundamentally by supply side factors (such as the embodied technological progress), it is expected that investment determines output. In contrast, if demand factors dominate among the determinants of investment, it is not unexpected to find causality relations from output to investment. There is little empirical evidence in the literature on the investment-led growth effect in China. However, any evidence to this effect seems to recognize that capital accumulation has played an important role in the process of economic growth. There is fewer consensuses on the role of capital accumulation as a source of technological progress. For example, Chow (1993) emphasized the role of capital accumulation as the main source of Chinese economic growth since the fifties until the end of the eighties. However, there was no evidence of technological progress during this period. Nonetheless, Yusuf (1994) argued that not only was capital accumulation an important determinant of economic growth, but that technological progress also played a significant role from 1978 to 1993. In addition, Wu (2000) found evidence that investment has been an important stimulus for TFP in Fujian, Guangdong, Taiwan and Hong Kong. Unlike previous studies, Qin et al. (2005) found some recent evidence that output drives investment in the Chinese economy. The evidence found in the literature suggests that capital accumulation has been an important factor of China‘s successful growth. However, there is debate about whether capital accumulation is the only factor to explain the high growth rates in China similar to other planned economies, or if other additional factors intervene together with capital accumulation, which could help explain the dynamics of the Chinese performance. For example, factors such as foreign trade which especially in China has shown spectacular development given its high growth rates. Openness, especially exports expansion, has been considered to be one of the key factors to promote economic growth in developed and developing countries. Among the channels identified in the literature as potential generators of positive effects on output and productivity, the most immediate the most immediate is the possibility that the exposure to trade will induce a self-selection of the firms (Melitz, 2003) being the most productive that finally become in exporters and affecting therefore positively to the aggregated productivity. In addition, access to foreign markets positively affects productivity in the presence of economies of scale. However, the literature on this question emphasizes the existence of positive spillovers associated with the exporting activity. Several channels exist in which these spillovers can affect

Copyright © 2012, Asian Business Consortium | GDEB

Page 14

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

productivity. The interaction with firms from others countries and increased competence tend to improve the competitiveness of the firms operating in the exporting sector. Moreover, there is a learning-by-exporting effect that tends to generate productivity and enhances the effects among exporting firms which, in turn, can generate positive externalities on the rest of the economy since more efficient management and organizational styles, labor training and improved production techniques are adopted. Finally, the exporting activity allows foreign exchange constraints to be relaxed, thus permitting increased imports of capital and intermediate goods. Nevertheless, and in spite of all these arguments, there is certain skepticism as to openness explaining the success in foreign markets, or to exporting firms being more productive than non-exporting ones. Alternatively, we could find the presence of a growth-driven exports hypothesis, according to which, countries with higher incomes engage in more trade, i.e. Helpman (1988). In fact, the endogeneity problem of trade has been a recurrent aspect in the empirical literature on openness and growth, and there are no conclusive results, especially in the time series analysis. The evidence found in the Chinese economy is in agreement with the rest of the empirical literature. Shan and Sun (1998) show a wide selection of empirical studies on the exportled growth hypothesis, and all papers seem to support the hypothesis. However, their results indicate that bidirectional causality exists between exports and output in China. This result coincides with that found by Liu et al. (1997) and (2002), but with different specifications. Finally, in a recent paper, and contrary to the general perception, Hsiao and Hsiao (2006) found that exports do not cause China‘s GDP and consequently its growth. Thus, the current empirical literature on the role that exports play in the Chinese economic development seems inconclusive. Regardless of the controversial aspect of the direction that causality runs between investment and output, an investment-led growth in China should be reconciled with the spectacular growth of Chinese exports. This possibility was underlined by Rodrik (1995) when explaining Korea and Taiwan economic growths in the sixties. According to Rodrik, the outward orientation of these economies was more the result of the investment boom than the consequence of an export-led growth effect. The increase in exports was the result of export-oriented policies that enabled the increase in demand of imported capital goods, a consequence of the investment boom, to be met. However, the opposite point of view is also feasible, as Baldwin and Seghezza (1996) argue; a trade-induced investment-led growth could have taken place, and in line with our results, there is evidence that both exports and investment are determinants that boost output growth (Yu, 1998, and Kwan et al., 1999). The question is not whether it is necessary or not that permanent productivity shocks exist to guarantee a sustained growth in the long run, rather what factors can be the cause of these shocks. Nobody questions that the accumulation of productive factors, especially capital accumulation, has positive effects on output and productivity in the short run. The question is whether that effect is permanent or it affects both variables in the long run. Our objective is not to test alternative specifications of the relationship between the accumulation of productive factors and other sources of economic growth, as found in the empirical literature of economic growth. Indeed, our objective is something more basic, to detect the regularities and interactions between the different sources of growth, and to identify the direction of the causality in the both long and short run in the singular process of the Chinese economic growth. Our analysis consists in a previous step to consistently explain this process, and it is an additional piece in the puzzle that

Copyright © 2012, Asian Business Consortium | GDEB

Page 15

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

politicians and economists attempt to solve.

DISTINCTION OF THE STUDY As compared to previous empirical studies, our study differentiates and contributes to the empirical literature in three ways:i) In our view, capital accumulation and innovation play a complementary role and foreign trade is assumed to be the main channel that stimulates economic activity; ii) Unlike Yu (1998), we have extended sample in the post-reform period until 2010 because investment has played a key role in both pre-reform and post-reform periods. Although the share of export was low in the pre-reform period, presently it is one of the most important channels to accelerate economic growth. iii) The co-integrated VAR model used in this study has facilitated us to carry out a joint modeling in a context in which variables are closely related to each other. This methodology does not impose any restriction upon our analysis and allows the data to reveal real relationships between different variables in the long and short-run.

EMPIRICAL FRAMEWORK Now we initiate empirical analysis with a general and the least possible conditional assumptions, thus allowing the data to reveal the nature of the interactions among them. From these relationships, it is possible to advance with the hypothesis about the nature and causes of the forces that have stimulated the rapid economic growth in China in recent decades.Our empirical analysis basically uses Chinese annual data for the period 1962-2004 derived from the NBS of China which has currently published the latest compilation of the Chinese economy in 2004. Our data set consists of GDP (lgdp), labor productivity - output per worker- (lprod), investment (linv), exports in FOB terms (lexp), R&D expenditure (lrd) of the Chinese economy, the US GDP(lgdpusa) and the real exchange rate (lrer). All variables are in logs and real terms, and have been deflated by the GDP deflator. The real exchange rate has been calculated using the nominal exchange rate between the Chinese currency and the US $ (Renminbi/$) and the consumer price indices (CPIs).Although data are available from China since 1952, we preferred to move to the beginning of the effective sample until 1964 given the difficulty to perform a sufficiently homogenous treatment during such a turbulent period as that between 1958 and 1962, with the Great Leap Forward and the consequent economic collapse that produced abnormally low values of macroeconomic aggregates for the period 1961-1963. However, it is well-known that the period under study is not void of shocks, and this led us to use different level-shift dummies in the empirical analysis. An analysis of the stationary properties of our variables can be seen in the Appendix. It is possible to see from the unit root test (PhillipsPerron and ADF), that all our variables considered are I(1) in the levels, and which also show the rejection of the order of integration equal to two. We focused on the time series evidence in our empirical analysis and we have used the methodology of the cointegrated vector autoregressive (VAR model) proposed by Johansen (1988), Johansen and Juselius (1990), Johansen and Juselius (1994) and Johansen (1996). This methodology is based on the principle of "general to specific" discussed in Juselius(1992) and in Hendry and Mizon(1993). We start the analysis with a broad general specification in which certain restrictions will be imposed both of statistical and economic origins, until the most irreducible form possible is reached. We consider that this methodology is appropriate given the potential interdependence between the different variables

Copyright © 2012, Asian Business Consortium | GDEB

Page 16

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

considered. Furthermore, joint modeling is suggested and the convenience of distinguishing between the short-run and long-run relationships between them, which in our case is the key element of the analysis proposed. The analysis can be seen for the fixed properties26 of our variables in the Appendix. It is It is possible to see the unit root test (Phillips Peron and ADF), that we have all the variables Consider the first (1) levels, which also appear on the system's rejection of integration Equals two. Two types of variables available investment in China: Gross fixed capital formation, as is common in the majority of national accounts and fixed assets. According to the manual OECD (2001) on capital Measures, and a more precise definition in China is a constant in assets. However, this variable is limited, so we have The use of total fixed capital formation in our analysis. In future research, we will try to use fixed assets. To More details on the management of physical capital, see the Halls (2006). We focused on time-series evidence in our analysis and we used the experimental self vector regression methodology (model VAR) co-integrated proposed by Johansen. The methodology is based on the principle of "public to private" discussed in Juselius (1992) and Hendry and Maison (1993). We start with the analysis of the broad general specifications. Some restrictions will be imposed on both statistical and economic assets and even the most form is reached irreducible possible. We consider that this methodology appropriate given the potential correlation between the different variables into account. It is suggested modeling and comfort to distinguish between short-term and long-run Relations between them, which in our case is a key element of the proposed analysis. In particular, we start with the unrestricted VAR model; a linear trend is restricted in Common space of integration and unrestricted constant of dimension RX 1: In this analysis, we have assumed a restricted linear trend in co-integration space, because variables in the model have linear trend during the period of analysis, which appears to be difficult to prove from economic view point. From empirical view, however, the deterministic linear trend may be an alternative to the stochastic trend (Nielson and Christensen,2005).The VAR model considers that residuals are not auto correlated and are distributed normally. To meet this criterion of VAR model, we have chosen an unrestricted permanent dummy variable,Ds89 and two level-shift dummies restricted to co-integration spaces Ds 78 and Ds94.The dummy D89p attempts to capture the political and economic restrictions in 1989 ( a fiscal and monetary policy was enforced by Chinese Government at the end of 1988 to stop sharply rising inflation. This policy effect was noted visible impact on gross fixed capital formation, caused a fall of around 14% on investment and trade. China suffered a significant loss of trade and investment in the late 1980s (Bramall,2000).Conversely, justification of the level shift dummies is immediate. The dummy in 1978 is related the beginning of political and economic reforms process, initiated after Cultural Revolution, whereas dummy in 1994 mainly corresponds to the exchange rate. Unification of exchange dual exchange rate that caused 43 percent depreciation of exchange rate (Adams et al,2006) is still in existence. Apart from this, lifting price restriction in 1994 accelerated efficiency of allocation framework in the Chinese economy. Aunced in1994 precipated the effectiveness of the whole public finance due to decentralization of decision-making process as well as reducing enforcement cost.

PRODUCTIVITY MODEL Primarily, the endogenous variables in this model are: (1) (labour productivity, (2) investment, (3) exports, (4) real exchange rate and (5) Research & Development outlay.

Copyright © 2012, Asian Business Consortium | GDEB

Page 17

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Productivity was corrected by applying methodology suggested by Nielson (2004). In order to measure external influence on the Chinese economy, the level of US economic activity was inducted in the model as a weakly exogenous variable. In sequential analysis of the model, however, exports and R&D outlay were finally assumed to be weakly exogenous variables. Initiating from a four equation system (labour productivity, investment as exogenous variable, showing r=1 P-value 0.90. In this new specific scenario of four endogenous variables (productivity, investment, real exchange rate and R&D outlay), we have intended to used exogenous test to highlight that R&D outlay can also be assume Hannan and Quinn indicated that two lags are sufficient to capture the dynamics effects of model and to remove the possibility of auto correlation. Thus, we have considered a VAR (2) model with three exogenous variables (exports, R&D outlay and US economic activity), with their corresponding deterministic components.Avariety of misspecification tests for residual of the model shown in Table 1, where neither autocorrelation nor normality exists. In this univariate analysis, no ARCH effects are noted while in multivariate analysis, a small ARCH effect is detected. Rahbek et al (2002) and Juselius (2006) suggested that statistical inference, the determination of rank test, in the co-integrated VAR model is robust to a moderate ARCH effect, and that, overall, the model is well behaved.

LONG-RUN RELATIONSHIP Based on a statistical model, we can get a number of long-term relationships (r), and number of common trends (p - r) by the LT test. Given in Table 2 that shows Trace Test where everything indicates that two long-term relationship (R = 2) exist in this Model as well as a common trend (p - r = 1). Moreover, the root of the inverse characteristic Polynomial of this rank is 0.80, less than the unit, which shows that the model is Fixed. The co-integration vectors in the model are as under: The equation (2) describes how both exports and investment account for the level of productivity in the long term. It means that relationship between investment and exports are long-term nature. The equation (3) shows that R & D outlays boosted investment. The coefficients attached with both variables are statistically significant and show expected signs. The restrictions levied in both relationships were accepted with p-value of 0.175. The coefficients of adjustment toward equilibrium are statistically significant and negative, and take a value of -0.36 (-5.55) for first co-integrated vector and -0.66 (-5.86) for the second. The reduced form model is stable in the forward and backward analysis. The findings are consistent with an export-led productivity growth effect and reflects a positive relationship between productivity and exports, where the causality runs unidirectional from exports to productivity in the long-run. Opposite to other empirical analysis, we have not found a bidirectional causality relation as exports become exogenous in our model. However, this relationship is only possible when investment is assumed jointly with exports. The two have positive effect on productivity. We conclude that both exports and capital accumulation contribute to enhance productivity in the long-run. Our results are consistent with existence of an investment-led productivity growth effect. The second co-integrated vector shows that investment and R&D expenses are cointegrated. An interesting result drawn from this analysis is that R&D expenses directly and positively affects investment with moderate co-efficient and it had an indirect effect on productivity through investment.A positive sign in dummy variable Ds78 in the ecm2 means that real investment growth rate was scaled down since 1978. When we compare

Copyright © 2012, Asian Business Consortium | GDEB

Page 18

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

with other countries, however, the growth rate of China was appeared to be spectacular. This was due to four reasons:  The environment in Maoist regime;  Decrease in the growth rate in two sectors such as construction and transportation;  The re-allocation of investment from traditional to more dynamic sectors such as electronic appliances, plastics, pharmaceuticals and chemicals due to fiscal incentives given by Chines Government;(23) =31.669 (0.1072). We can observe in the Appendix that both the null hypotheses of the absence of cointegration and the existence of one co-integration vector are clearly rejected. In our model, therefore, we accepted the null hypothesis of the existence of two long-run relationships ( r = 2 ), and a common trend ( p –r = 1), where both p-values accept the null hypothesis, and the inverse roots of characteristic polynomial for r = 2 is 0.78 less than the unit. This shows that our relationships are stationary and adjust toward equilibrium. In the model we selected, the following co-integration vectors can be found to be expressed as error correction mechanisms (statistics in brackets): The coefficients associated with the variables in both relations are statistically significant and show the expected signs. The restriction imposed in both co-integration vectors are accepted with a p-value0.425. The adjustment coefficients toward equilibrium are also statistically significant and negative, and show a value -0.42 (-7.21) and -0.82(-6.47) for the first and second relationship, respectively (ecm1 and ecm2). Finally, the reduced form model is stable in the forward and backward analysis. Similarly to the previous model however, the complete parameter constancy is difficult to guarantee. In this sense, our estimates should be considered to be average effects. The first relationship corresponding to (4) shows a positive relationship among China‘s output, investment, real exchange rate and exports. Our findings are consistent with the export-led growth hypothesis which predicts that a positive relationship exists between the level of domestic activity and exports, where the direction of the causality unidirectional runs from exports to the GDP in the long run. However, the literature has also emphasized a positive effect of investment on output in the long run. A close relationship remains between investment and technology transfer since capital formation remains obsolete in the absence of technological progress and it would have no effect on economic growth in the long run (Howitt, (2000); Arayama and Miyoshi, ( 2004). New technological advances require an investment that enables its incorporation into the productive process and which favors the output growth in the long run. We observe that investment played a significant role in the first co-integration relationship, and is similar to exports in the output growth of the Chinese economy. Our findings are consistent with Yusuf (1994), who found that capital accumulation is one of the most important factors in the economic growth process in China. Unlike other studies on China, we included the real exchange rate as a proxy variable to measure terms of trade in the analysis given that a close relationship is maintained between the real exchange rate and exports. Unlike the previous productivity model however, the real exchange rate affects output in the long run. The effects of R&D expenditure on investment can be observed in the second relationship (5). This result is interesting in the sense that investment is affected by the innovating effort of the Chinese economy in both the models analyzed as it allows investment to increase and stimulates the accumulation of physical capital, which also favors economic growth. The interpretation of the deterministic components is similar to the productivity model. In the first co-integrated vector however, it is possible to observe that dummy Ds78 has a

Copyright © 2012, Asian Business Consortium | GDEB

Page 19

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

positive effect on the real GDP, showing that the output level had increased after that year, as already pointed out.

SHORT-RUN RELATIONSHIP Table 3 shows the dynamics of short-run structure. Like long-run identification, the starting point consists of a general model in which the restrictions that are imposed on coefficients show a sequential form. Then variables with non-significant coefficient are eliminated until irreducible model is reached. The over-identification restriction LR test is accepted and distributed as χ (23) = 31.669 (0.1072).Table 3 represents the in Annex dynamics of structure in the short term. To determine the long-term, the starting point consists of a model year in which restrictions Levied on transactions show a sequential form. Then, with the variables is large transactions are excluded until access to the form most irreducible. And over identifying LR restrictions are accepted and distributed test as? (23) = 31,669 (0.1072). Productivity adjusts toward equilibrium with the export-led and investment Productive relationship (ECM 1) Investment carriers (ECM 2). Alpha coefficients show speed and direction towards equilibrium. Labor productivity in the equation, it is possible that adjustment relatively slowly, almost every two years, productivity adjusts towards equilibrium, and possibly associated with continuous transformations in the Chinese economy between the various sectors. In addition, we can note in the dynamics of the model that R & D spending has a positive effect on the productivity equation in the short term. This shows that it is not limited to the transfer and absorbforeign technology through the generation of the indirect effects of exports in favor of efficiency and productivity efforts, but this is in the field of innovation play a effective role to improve productivity in the Chinese economy. Moreover, foreign demand, and the measured activity of the United States level, and shows the performance of procyclic, which favors the growth of productivity. Investment also adjusts towards equilibrium with vectors found in the long term. Alpha coefficients in the investment equation that show Similar to the previous equation, the adjustment with the first vector is relatively slow. But with the second adjustment Vector co-integrated (Vector investment) indicates to adapt fairly quickly toward equilibrium almost every year. Moreover, the investment in its own equation shows a minor overreaction given the negative coefficient in the ecm 1. It is difficult to explain the reasons for this effect in a model where the parameters are conditioned in conjunction with each other, and where there is Tankers more than one. However, a positive sign is compensated in an overreaction with higher value and negative in the ECM2. An interesting result in the short term is that the investment. It also accelerates the increase in productivity since the positive productivity shock attracts perhaps through investment expectations for returns in the future. In addition, we note thatboth foreign demand and R & D expenses increase investment. However, one unexpected cause we have found is that exports will have a transient and negative impact on investment Equation. Third equation reveals that the real exchange rate is increased when Investment is less than the steady-state (ECM2). Here real exchange rate has been included into the model as a control variable. This result explains the fact that When the investment is above its value in the long term, it leads to inflationary impact due to the an increase in aggregate demand, and the consequent appreciation of the real exchange rate. In the dynamics of this model we can observe that exports will have a positive impact on the real Exchange rate. In other words,

Copyright © 2012, Asian Business Consortium | GDEB

Page 20

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

increasing exports decreased the value of the real exchange rate. However, the activity level of the United States has a negative impact on the real exchange rate. Table 6 in the Appendix shows the dynamic structure of the output model. Similarly to the previous model, we started with a general specification in which restrictions are imposed on the coefficients of the variables analyzed sequentially, and the non-significant variables are eliminated until the most irreducible model is reached. The over-identifying restrictions LR test is accepted and is distributed as χ (25)=32.606 (0.1412). The Chinese activity level adjusts toward equilibrium with the two co-integrated vectors found. Conversely to the previous model, the alpha coefficients in this model show a reasonable fast adjustment approximately every year and a half, when the first cointegrated vector adjusts toward equilibrium, as does the second vector to a lesser extent. This result is interesting since both the trade-oriented policy and the accumulation of physical capital increase output in the long run. In addition, the technology embodied in investment and exports allows the generation of spillovers that increase the activity level. Moreover, the specific policy regarding the exchange rate that the Chinese government applied has accelerated the activity level through gains in competitiveness. On the other hand, and unlike other studies, a positive effect in investment is noted when the R&D variable is included in the model. In the dynamic model, the US activity level displays a procyclic performance which is similar to the productivity model. Furthermore, R&D expenditure, investment and exports positively affect output in the short run. However, the real exchange rate shows a transitory and negative effect. Similarly to the productivity model, investment adjusts toward equilibrium with the two vectors found. In this equation, it is possible to observe that both vectors show a relatively fast speed of adjustment. The investment vector adjusts approximately every year, and the output vector adjusts every year and a half. Similarly to the productivity model, investment overreacts in its own equation, but is also compensated with the negative coefficient in ecm2. The R&D expenditure, which allows the absorption of knowledge or innovations, has directly favored increased investment in China, and has also allowed the overall growth rate to accelerate in the last two decades. The dynamics of this model shows that investment, R&D expenditure and the real exchange rate has a transitory and negative effect in the short run. The real exchange rate adjusts toward equilibrium with the second co-integrated vector found (ecm2). Unlike the previous model and in relation to the output model in this equation, the alpha coefficient shows a reasonable speed of adjustment toward equilibrium, at approximately a year and a half. When investment is below its steady-state, the real exchange rate is appreciated in the long run. This result is probably similar to the previous model and may be justified by an increase in the aggregate demand owing to investment growth that not only favored pressures on domestic prices, but also the consequent appreciation of the real exchange rate. In the dynamics of this model, we observe that the Chinese activity level has a positive effect on the real exchange rate equation. However, investment shows a negative effect in the short run.

OUTPUT MODEL Like the previous model, our starting point is a simple form that contains the following variables: the level of Chinese activity (GDP), exports and investment and the real exchange rate and the level of activity in the United States. Once relationships were common integration of this new model. If any, will be included variable R &D, and specifications are maintaining the same model. Once more, either the erogeneity or

Copyright © 2012, Asian Business Consortium | GDEB

Page 21

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

endogeneity of the variables considered in the simple model is analyzed under the assumption that the US activity level is weakly exogenous. Similarly to the productivity model, the exogeneity test shows us that exports are exogenous with a p-value of 0.27. Therefore by following the same sequence as the previous model specification, we also found that R&D expenditure is exogenous with a p-value of 0.09. Thus at the end of this process, our model contains three endogenous variables (China‘s GDP, investment, and real exchange rate) and three exogenous variables (exports, R&D expenditure and the US activity level). Finally, the determination of the number of lags in accordance with the criterion of Hannan and Quinn shows that two lags are enough to capture the dynamics effects and to avoid autocorrelation problems. Table 4 in the Appendix shows a battery of misspecification tests for the residuals of our model, where this model does not display autocorrelation and normality problems. Similarly to the productivity model, a slight ARCH effect is observed in the multivariate analysis. Nevertheless, the model is well behaved (Rahbek et al.( 2002); Juselius ( 2006).

FINDINGS & RESULTS In this study, we have examined whether the rapid economic growth process in China since the sixties, especially in labor productivity and output, can be mainly explained by an investment-led growth effect, or export-led growth effect. Unlike others studies, we included investment and exports in our models, together with other relevant factors such as R&D expenditure. The reason for this was that investment has played an important role since the fifties when massive investment in infrastructure was made, which laid foundation for economic growth since 1978. As China is a large economy and it has interactions with other world big economies, we also included the real exchange rate and foreign output in our study. Our empirical evidence shows that an export-led growth effect in the first co-integrated vector can be found in the productivity model. This vector describes a positive relationship among labor productivity, exports and investment in the long run. The second vector shows that R&D encourages investment with a moderate coefficient in the long run. An interesting result in the equilibrium is that exports show a greater effect on productivity than investment, and are likely associated with the economies of scale and the positive effects of spillovers from technology transfer, more efficient reallocation of resources, and competitiveness in the international market. In the dynamics, we found common positive effects of the lag of productivity and the R&D effect on the productivity and investment equations in the short run. Similarly to the productivity model, we found an export-led growth effect in the output model. The first vector describes the relationship among output, exports, investment and the real exchange rate. The second vector shows that an increase in R&D encourages investment. In contrast to the previous model, we found that the real exchange rate played an important role in determining the output level. Our findings are interesting in the sense that trade, exports, and investment all promotes productivity and output. However, exports seem to stimulate more productivity than output, reinforcing their role as a source of technological progress. Additionally, we found that R&D favored an increase in investment in all the models. In the dynamics of the output model, we found that the US GDP, exports and R&D positively and regularly affect to output equation, but only US GDP and R&D have a positive effect on the investment equation in the short run. In contrast, the real exchange rate has a negative and transitory effect in both the aforementioned equations. Although our empirical analysis cannot disentangling whether the positive effect of investment on output and productivity is caused

Copyright © 2012, Asian Business Consortium | GDEB

Page 22

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

by an increase in capital accumulation or by improvements in total factor productivity or both, we can hypothesize that both channels are relevant because:  The existence of a positive and stable relationship in the long run between these variables is more consistent with the existence of a positive effect on technical progress,  The labor productivity is increasing faster than the capital-labor ratio in the majority of the period considered.  Unlike others studies export exogenously drive output and productivity in the long run. This is a precondition to accept the export-led growth hypothesis and we have provided evidence that in both models exports exogenously drive growth. In line with Bramall (2000), however, the existence of some additional preconditions, for example, a rising share of exports in GDP, are needed to completely accept the hypothesis together with the casual linkage between exports and economic growth, and we have shown clear causality between exports and output or productivity. Looking investment and export growth rates and their shares to GDP, there are two clear subperiods along the period considered. Investment is growing faster than exports from 1962 to the end of seventies, and the reverse is true since then until now. Thus, the ratio of exports to GDP is increasing clearly in the second period considered, from the end of seventies until now, while the ratio of investment to GDP is increasing along the two periods. This suggests that investment has been a permanent source of growth along the four decades analyzed, while exports as a source of growth appear to be especially relevant only during the post-reform period, initiated at the end of the seventies in China. In short, our results support the idea that the investment efforts and trade openness have played a significant role in China since the sixties until the present-day, and have encouraged output and productivity. Our findings suggest that investment and openness, especially exports, are jointly the most important determinants of productivity and output in the long run. In addition, R&D expenditure has a positive effect on investment in all the models analyzed. These results are consistent with the theory that both export-led growth effect and an investment-led growth effect are significant in Chinese economic performance, and in accordance with the Schumpeterian version of the endogenous growth model, which suggests that trade and investment- oriented policies play an important role in economic growth process. the investment policy duringTo sum up, the pre-reform period has probably created favorable conditions to gradually and successfully implement the economic reforms made by Chinese government since 1978 while the open-door policy, the progressive deregulations of the market, R&D investment, and greater efficiency in resource allocation, etc, have helped maintain the high growth rates in China for almost four decades.

REFERENCES [1] [2] [3] [4] [5]

Adams F.G, Gangnes B. And Shachmurove Y. (2006), "Why China is so competitive? Measuring and Explaining China‘s competitiveness‖, World Economy. Vol. 29, pp 95-122 Arayama Y. Miyoshi K. (2004) ―Regional diversity and sources of economic growth in China‖, World Economy Volume 27, pp 1583-1608. Aschauer, D.A. (1988), "Government spending and ―Falling rate of "profit", Journal of Economic Perspectives Volume Issue 12, pp 11-17 Aschauer, D.A. (1989) "is Public spending productivity‖, Journal of Monetary Economics vol 23, pp 177 - 200 Aw, B.Y, S.Chung and M,J.Rober (2000) ―Productivity and Turnover in the Export Market: Micro-level Evidnece from the Republic of Korea and Taiwan (China)‖, World Bank Economic Review,Volume 14, pp. 65-90.

Copyright © 2012, Asian Business Consortium | GDEB

Page 23

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[6]

[7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23]

[24] [25] [26] [27] [28]

ISSN 2305-9168

BaharumshahA.Zand Rashid S. (1999) "Exports and imports and economic growth in Malaysia: Empirical Evidence based on multivariate time series. Asian Economic Journal Volume 13, pp389-406. Baldwin R. And Seghezza E. (1996) "Trade-induced investment-led growth ," NBER 5582 Barrow R. (1991) ― Economic Growth in Cross-section of countries‖ Quarterly Journal of Economics vol:. 106 pp. 407-447 Blomstrom M. Lipsey R.E and Zejan M. (1996) "is a fixed investment thekey to economic growth? ― The Quarterly Journal of the economy Volume 111, p 269-276. Bramall C.(2000), " Sources of Chinese Economic Growth 1978 to 1996" Studies in Contemporary China. Oxford University Press. Cameron G. Broadman J. Redding S. (2005) "Technological convergence, R & D, trade and Productivity growth‖ European Economic Review.vol. 49 pp. 775-807 Chow G.(1993) ―Capital formation and Economic Growth in China‖ The Quarterly Journal of Economics, Vol.108 pp 809-842 Chuang Y. (1998) ―Learning by doing, the technology gap, and growth‖ International Economic Review Vol. 39, pp 697-721 COE D.T, Helpman E.And Hoffmaister A.W. (1997) " North-South Spillovers‖ The Economic Journal Vol, 107 pp. 134-149. Connolly, M. (2003), "The dual nature of trade: measuring its impact on imitation and growth," Journal Development Economics, Vol 72, pp 31-55. De Long J.B and Summer LH (1991) "Equipment investment and economic growth," Quarterly Economics Journal Vol 106 pp. 445-502 De Long c. B, Summers LH and Abel A.B. (1992), " Equipment Investment and Economic Growth: how Strong is the nexus‖ Brookings Papers on economic activity vol, 1992 pp. 157-211. Easterly W. And Levine R. (2001), "It‘s Not Factor accumulation : Stylized Facts and Growth Models‖ World Bank Economic Review Volume 15, pp. 117-219. Ezaki M. And the sun L. (1999) "Growth Accounting in China for national, regional and provincial Economies: 1981-1995 "Asian Economic Journal Volume 13, pp 39-71 Frankel J.A and Romer D. (1999) ―Does Trad causes growth‖, American Economic Review Vol. 89 Ppp. 379-394 Gordon,Rober J (2012) ―Macroeconomics‖, New Delhi: PHI Learning Private Ltd. Griffith R., Redding S, and. Renin J.V (2004) ―Mapping the two faces of R & D: productivity growth in Panel of OECD industries ― Review of Economics and Statistics, Vol. 86 pp. 883-895 Grossman G.M. And Helpman E. (1991) "Innovation and Growth in the Global economy,"Cambridge, Massachusetts, the MIT Press. Helpman, E. And P.R Krugman (1985): "Market Structure and Foreign Trade." Massachusetts Institute of Technology Press. Helpman E. (1988), " Growth Technicalogical Progress and Trade‖, Empirical Austrian Economic Papers, Volume 5 Pp. 5-25 Holz, C.A. (2005) ― OECD.-China Governance Project : institutional arrangements for the production of Statistics‖ OECD Statistics working paper, 2005/1, OECD Publishing. Holz, C.A. (2006) ― New capital estimates for China‖, China Economic Review, vol 17, pp. 142-185

[29] Henrique I. And Sadorsky P. (1996) ― Export-led growth or Growth-Driven Export? The Canadian case ― Canadian Journal of Economics Vol. 29, pp. 540-555. [30] Hendry D.F, and Maison GE (1993) " Evaluating econometric models by encompassing the VAR.‖ In PC.B Philips (ed). Models,methods and application of econometrics: Essays in Honor [31] ofA.R.Bergstron MIT Press: Cambridge Mass. [32] Hewitt P. (2000) ―Endogenous Growth and cross-country Income Differences‖,AmericanEconomic Browse. Pp. 829-846

Copyright © 2012, Asian Business Consortium | GDEB

Page 24

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

[33] Hewitt P. And Aghion P. (1998). ―Capital Accumulation and innovation as complementary Factors in Long-term growth‖, Journal of Economic Growth. Volume 3, pp 111-130 [34] Johansen, S. (1988) ―Statistical analysis of co- integration Vector‖ Journal of Economic Dynamics and Control, Vol .12,pp 231-254. [35] Johansen, S. And Juselius K. (1990) ―Maximum Likelihood Estimation and inference on cointegration-with Application to the Demand for money‖ Oxford Bulletin of Economics and Statistics Volume 52,pp.231-254. [36] Johansen S.andJuselius K. (1994) ―Identification of the long-term and short-term structure: An Application to the ISLM Model.‖ Journal of Econometrics Volume 63 pp. 7-36 [37] Jones CH. I. (1995) "Time-series tests of Endogenous growth models," The Quarterly Journal of Economics Vol 110 pp. 495-525 [38] Juselius K. (2007),The co-integrated VAR Model: Econometric methodology and applications‖, Oxford University Press. [39] Kwan CCA, Wu Zhang, Y. And J. (1999) "Fixed investment and Economic Growth in China's economy", Economics of Planning Vol. 32, pp 67-79. [40] Lardy NR (1995) "The role of trade and investment in China‘s economic transformation" China Quarterly vol. 144 pp. 1065-1082 [41] Liu, X., songs, H., and ROMILLY, P. (1997): ― An empirical investigation of the causal relationship between openness and economic growth in China‖.Applied Economics, Vol. 29, pp. 1679-1686 [42] Liu, X. Burridge P. And Sinclair PJN (2002) "Relationship between economic growth and foreign direct Investment and Trade: Evidence from China, " Applied Economics Vol. 34, pp 1433-1440. [43] Lopez, R.A. (2005): ―Trade and growth: Reconciling the Macroeconomics and Microeconomic Evidence‖, Journal of Economic Surveys Vol.19 pp. 623-648. [44] Lucas R. (1988) "On the mechanisms of economic growth," Journal of Monetary Economics Volume 22, pp 3.42. [45] Madsen, J.B (2002) "The causality between investment and economic growth", economic Letters, Vol. 74, pp157-163. [46] Martin Sala-i- et al (2009) ―Economic Growth‖. New Delhi: PHI Learning, India. [47] Melitz, M.J (2003) ―The impact of trade on intra- industry Reallocations and Aggregate Industry Productivity, Econometrica, Vol. 71, pp. 1695-1725 [48] Nielsen H. Christensen A. (2005) "U.S. monetary policy 1988-2004: An empirical analysis" Finance Research Unit, Institute of Economics, University of Copenhagen, WP No. 2005/01. [49] Nolan, P. (1995) "China‘s rise,, Russia Fall" London, Macmillan. [50] Noguer M. And Siscart M. (2005) Trade raises income: a precise and robust‖, Journal of International Economics Vol. 65 pp. 447-460 [51] Pack H.and Page J. (1994) "Accumulation, exports and growth in the high performing Asian economies," Carnegie Rochester conference series on public policy. vol. 40 pp. 199-235. [52] Park S. and Kwon J. (1995) ― Rapid Economic growth with increasing returns to scale and little or no Productivity growth,‖ The Review of Economic and Statistics Vol. 77 pp. 332-351 [53] Perkins, D. (1994) "Completing China‘s move to the market?" Journal of Economic Perspective Vol. 8, pp 23 - 46 [54] Prasad, E.S. And Rajan, R.G. (2006): ―Modernizing China‘s growth Paradigm‖,, American Economic‖ Review, Vol. 96 pp. 331-336. [55] Qin D., Cagas A., Quising P. The X (2005) "How much does Investment Drive Economic Growth in China?" Queen Mary University of London, Department of Economics, Working Paper No. 545. [56] Rahbek, A., Hansen, E. And Dennnis J.G. (2002): "ARCH innovations and their impact on co-integration rank Testing‖, Department of Statistics and Operations, University of Copenhagen. WP No. 22, Centre for analytical Finance.

Copyright © 2012, Asian Business Consortium | GDEB

Page 25

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

[57] Rebelo S. (1991), " Long-run policy Analysis and Long-run Growth,‖ Journal of Political Economy Vol. 99 Pp. 500-521. [58]

Riezman, R.G, Summers, P.M and Whiteman, C.H (1996): ―The engine of Growth and its handmaiden? A time series assessment of export-led growth‖, Empirical Economics, Vol. 21, pp. 77-113.

[59] Roderick D. (1995), "Getting the interventions right: how South Korea and Taiwan grew rich", Economic policy Volume 10 pp. 53-107. [60] Roderick D. (1996), "Understanding Economic Policy Reforms," Journal of Economic Literature, Vol. 34 p 9-41. [61] Romer P. (1986) ―Increasing Returns and Long-Run growth‖, Journal of Economics Perspectives Vol. 8 Pp. 3-22 [62] Shan J. And the sun F. (1998) ― On the Export-led Growth hypothesis: the Economic evidence from China‖, Applied Economics Vol. 30 PP 1055-1065 [63] Wang and Yao (2003) ―Sources of China‘s economic growth 1952 - 1999: Integrating human capital accumulation‖, China Economic Review, vol 14, pp. 32-52. [64] Wolf E.N. (1991) ―Capital Formation and Productivity Convergence over the Long Term‖ , American Economic Review. Vol. 81. Pp. 565-579 [65] Wu, Y. (2000), "productivity, growth and economic integration in the South China region." Asian Economic Journal Vol. 14, p 39-53. [66] Young A. (1991) ―Learning by doing and the dynamics of the effects of international trade‖ The quarterly Journal of Economics, Vol.106 pp. 369-405 [67] Young A. (2003) " Gold into base metals: productivity growth in the People's Republic of China during Reform period," Journal of political and economic vol . 111 pp. 1220-1261 [68] Yu Q (1998) "Cspital investment, international trade and economic growth in China: Evidence in 1980 - 90S", China Economic Review, Volume 9, pp 73-84.

Appendix Unit Root Test

Copyright © 2012, Asian Business Consortium | GDEB

Page 26

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

Copyright © 2012, Asian Business Consortium | GDEB

ISSN 2305-9168

Page 27

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

Copyright © 2012, Asian Business Consortium | GDEB

ISSN 2305-9168

Page 28

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Table (7): China‘s Economic Growth Rates during 1960-2004

Why Open Access ??? “In the traditional publishing model, readers have limited access to scientific papers; authors do not have copyright for their own papers, and cannot post their papers on their own websites, which presents a significant barrier to the sharing of knowledge, as well as being unfair to authors. Open access can overcome the drawbacks of the traditional publishing model and help scholars build on the findings of their colleagues without restriction” Submit your next manuscript at- www.abcjournals.net ABC Journals is a unique forum to offer open access to all of its articles. Now ABC Journal’s portfolio is over nine journals, which publish both online and in print.

Copyright © 2012, Asian Business Consortium | GDEB

Page 29

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Agricultural Adaptation to Climate Change: Issues for Developing Countries Md. Atiqul Islam Assistant Professor, Department of Economics, University of Rajshahi, Rajshahi, Bangladesh

ABSTRACT One of the burning issues of the world is climate change. The objective of this paper is to review the issues of agricultural adaptation to climate change in the context of developing countries. Literature review type methodology is used here. Total 54 numbers of secondary materials comprising journal articles, books, working papers and documents are used for this research. It is found that Climate Change is real but highly uncertain. It poses threat to agricultural sector of developing countries and adaptation would be a possible solution. Apart from the perception of farmers other factors like the farm family characteristics (e.g. farmers‘ education level, farm size, and farm‘s financial health) and government support (e.g. access to extension, credit and climate information) could be the potential factors to influence adaptation. There could also be several barriers to adaptation from farmers‘ perspective in the face of climate change. Lack of awareness, access to credit, information, knowledge and education to evaluate and implement new methods are the major constraint on adaptation. The appropriate science, actions and policy is required to improve the capacity and to facilitate adaptation in developing countries. Key Words: Climate Change, Adaptation, Vulnerability, Agriculture, Developing Country JEL Classification Code: Q02; Q18

1. INTRODUCTION Climate change is one of the burning issues of the world these days. Recent events like the forth assessment report of the IPCC, the documentary ‗An Inconvenient Truth‘ by Al Gore, and the Nobel Peace Prize in 2007 given to IPCC and Al Gore are some big events related to this. Research is expanding into the possible drivers of climate change (natural as well as anthropogenic), the understanding of the climate system, the character and magnitude of changes, their impacts on human living conditions and ecosystems, and the possible approaches to the human responses to climate change. This paper reviews the issues related to those to have a laconic understanding about climate change scenario, it‘s probable effects, and possible solution to that. More focus is given here to agriculture in developing countries.

Copyright © 2012, Asian Business Consortium | GDEB

Page 30

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

1.1 Review of Literature Reports of Intergovernmental panel on climate change are the most widely acceptable documents related with climate change. The first assessment report was published in 1990 and the latest one is the forth assessment report which is published in 2007. The fifth assessment report is in under construction and will be completed in 2013/2014. These reports provide an update of knowledge on the scientific, technical and socio-economic aspects of climate change. Hundreds of experts around the world are involved in writing these reports. These reports are the most complete review paper related with climate change which covers almost all aspects of climate change. The problem is that it is quite a huge volume of text with detail and technical explanation. That is why this present research tried to have a gist of knowledge related to climate change. Moreover, apart from the IPCC‘s report, to the best of my knowledge no other review paper is available related with the issues of agricultural adaptation to climate change for developing countries. The present research is an attempt to fill that gap. 1.2 Objectives of the Research The main aim of this paper is to review the issues of agricultural adaptation to climate change for the developing countries. For the convenience of our analysis we are making some specific objectives for this study as follows:  To discuss the understanding and knowledge about climate change.  To find the effects of climate change and possible responses to that.  To understand about adaptation to climate change.  To find the possible adaptation option on agriculture in the face of climate change.  To find out some pertinent policy implication. 1.3 Methodology and the Data Used This research uses the literature review method where different secondary materials were reviewed. Those secondary materials are journal articles, books, documents and working papers related to our research topic. The text and findings of those materials are reviewed thoroughly to have the findings related to our research objectives. Total 54 materials are used where the numbers of journal articles are 33, the numbers of books are 4, the numbers of documents are 13 and the numbers of working papers are 4. As this is a review type of research so the findings related to the objectives are discussed is textual format with topic headings and to substantiate the findings the proper reference is given during the discussion.

2. RESEARCH FINDINGS Findings of this research are discussed using related topic headings in accordance with the research objectives. First of all the findings related with the climate change understanding and knowledge are discussed as climate change scenario with observed climate change and projected climate change sub-headings. Then findings related with the effects and responses are discussed in the subsequent sections in the name of effects of climate change: especially on agriculture and possible responses to climate change. Findings related with the concepts of adaptation to climate change are discussed later on with development of climate change adaptation agenda, vulnerability and adaptation and concerns of adaptation to climate change subheadings. Then findings related with adaptation options are discussed in the name of agricultural adaptation to climate change with barriers to adaptation.

Copyright © 2012, Asian Business Consortium | GDEB

Page 31

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

2.1 Climate Change Scenario The climate system is a complex and interactive system of atmosphere, land surface, snow and ice, oceans and other bodies of water, and living things. Among all these components the atmospheric component, often referred as weather, mainly characterizes climate. In terms of weather components the climate is usually describe as mean temperature, precipitation and wind over a period of time. The climate change issue thus seen on the basis of those variables. For this issue Intergovernmental Panel on Climate Change (IPCC) was established in 1988 brings together the world‘s top climate scientists to assess the scientific, technical and socioeconomic information relevant for understanding the risk of human induced climate change. Though their previous assessments in 1990, 1995 and 2001 had provided strong indications that by various measures Earth‘s climate are becoming warmer – but with the latest report in 2007 the picture had become clearer. In the following two sections a brief description of the observed and projected climate change is summarized by reviewing the IPCC‘s latest report and recent literature. Observed Climate Change The global mean surface temperature has risen over the last century (1906-2005) and the rate of warming is almost double in the last half than the first half (Trenberth et al., 2007). The largest temperature increases have occurred over the past 30 years, mostly over the continental interiors of Asia, north-western part of North America, and over some midlatitude ocean regions of the Southern Hemisphere. Consistent with this observed increases in temperature, it has also been found an almost worldwide reduction in glacial mass, melting of Greenland Ice sheet, decrease in snow cover in many Northern Hemisphere regions, decrease in sea ice thickness in the Arctic, warming of the oceans, and rising of sea level due to thermal expansion of the oceans and melting of ice. Precipitation trends also have a noticeable change after 1970, significantly wetter in eastern part of North and South America, northern Europe, and northern and central Asia, but drier in the Sahel, the Mediterranean, Southern Africa and parts of southern Asia (Trenberth et al., 2007). Droughts have also become more common, especially in the tropics and subtropics, since the 1970s (Dai et al., 2004). There is a significant upward trend of destructiveness, longer lifetime and greater intensity of tropical cyclones since the mid-1970s (Emanual, 2005). This trend is also found strongly correlated with the higher tropical sea surface temperature and global warming. There also found a large increase in numbers and proportion of hurricanes that reach categories 4 and 5 since 1970 and the largest increase was in the North Pacific, Indian and southwest Pacific Oceans (Trenberth et al., 2007). Projected Climate Change The report of IPCC (2007) has attributed the observed changes as anthropogenic. If the current trends continue then the equilibrium global mean surface air temperature (SAT) is likely to increase by 3°C by 2050 (Meehl et al., 2007). However, warming is projected to be similar to this in Southeast Asia (Cruz et al., 2007) and Latin America (Magrin et al., 2007) but well above in central Asia and Africa (Christensen et al., 2007). Variability of precipitations is projected with reduced rainfall in subtropics and increases at high latitudes and parts of the tropics (Meehl et al., 2007; Christensen et al., 2007; Magrin et al., 2007; Boko et al., 2007; Dai et al., 2005). It is likely to increase tropical cyclones in East Asia, Southeast Asia and South Asia (Christensen et al., 2007) with more destructive power (Emanual, 2005). Moreover, the sea level is projected to rise on an average 0.02 meter by the middle and 0.15 meter by the end of 21 st century.

Copyright © 2012, Asian Business Consortium | GDEB

Page 32

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

In summary, many changes are expected in the global climate system during the 21st century that would even very likely to be larger than those observed during the 20th century (Meehl et al., 2007). Of course, it is difficult to produce a credible projection of climate over the next century but the problems posed by climate change require our immediate attention. 2.2 Effects of Climate Change: Especially on Agriculture The scientific evidence of climate change is now overwhelming (Stern, 2007; Stern, 2009), although some may disagree to some extent because of uncertainty (Lomborg, 2001). The effects of climate changes on natural and human environments are already felt, although many are difficult to discern. The ultimate significance of this issue is related to its global reach, affecting sectors and regions throughout the world in complex and interactive ways. This would affect the world in terms of access to water, food production, health and the environment. Thousands of people would suffer from hunger, water shortages and coastal flooding (Stern, 2007). Although the scientific evidence of anthropogenic causes are associated with mainly rich industrialized and post-industrial countries but the impacts are expected to be felt more severe on the regions of poor developing countries (IPCC, 2007). One of the severe impacts of climate change is expected to be on agriculture (IPCC, 2007; Mendelsohn, 2009). The changes will in turn alter the availability of water resources, productivity of grazing lands and livestock, and the distribution of agricultural pests and diseases (IPCC, 2007). This will not only affect the productivity of crop species but also their geographic distribution (Reilly, 1995). So a changing climate will affect agroecosystems in heterogeneous ways, either benefits or negative consequences, depending on domination of factors in different agricultural regions (Figure 1). The adverse effect of climate change on agricultural production are likely to be felt more on the lower latitude countries where most developing countries are situated (Parry et al., 1999; Mendelsohn, 2009). The empirical evidence shows that the agro-ecological shift is likely to reduce not only the yield but also affect the national income and employment of many developing countries as they rely heavily on agriculture (Zilberman et al., 2004). Therefore, a key challenge is to identify actions to reduce vulnerability of each and every sphere of our life, especially agriculture in developing countries, so that impacts can be avoided or at least reduced.

Figure 1: Effects of Changing Climate on Agro-Ecosystem (Bongaarts, 1994)

Copyright © 2012, Asian Business Consortium | GDEB

Page 33

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Possible Responses to Climate Change Mitigation and Adaptation is the two main responses that we have in our hand in relation to climate change (Stern, 2009; Ayer and Huq, 2009). Mitigation refers to limiting the production of greenhouse gases (GHGs)1 against further anthropogenic climate change. It is mostly related with developed countries as they are the main producers of these GHGs. On the other hand, adaptation simply refers to as the adjustment made in the changed circumstance to reduce the adverse effect. In agricultural sector farmers have to adapt as well as reduce emissions at the farm level. But choosing effective adaptation and mitigation strategies is a key challenge for them. Optimal strategies could be careful management of land, increase the resilience and stability of production systems, and while sequestering soil carbon and reducing emissions from farm activities (Rosenzweig and Tubiello, 2007). Although many positive interactions can be identified but it is important to note that synergies will not be possible under all socio-economic scenarios and regions. Therefore adaptation strategies will likely to take precedence over mitigation, especially in developing countries, to maintain production and livelihood. It is no longer possible to prevent climate change because of its inertia, but possible to minimize the effect through adaptation (Stern, 2007). Moreover, there are nothing much to do in terms of mitigation except adaptation in some sectors and regions especially agriculture in developing world (Tingem and Rivington, 2009). Adaptation strategies are also considering now in line with the poverty reduction strategies in developing countries (Halsuæs and Traerup, 2009). 2.3 Adaptation to Climate Change Scholarly literatures are many those explain the concept of adaptation related to climate change (Burton et al., 2008; Smit et al., 2000; Smit et al., 2001; Smit and Wandel, 2006; Leary et al., 2007; Mitchell and Tanner, 2006; Stern, 2007). Simply, it is the adjustments in ecological, social or economic systems to better cope with or adjust to the conditions, stresses, hazards, or risk associated with climate change. Though the main objective of adaptation is to reduce vulnerability but it will also enhance the capability to capture any benefits of climate change. The forms of adaptation can be technological, economic, legal or institutional. It can also be specific actions, a systemic change or an institutional reform. As specific action farmers may switch from one crop variety to another which is better suited in changed conditions. As a systemic change it can be diversifying rural livelihoods against climatic risks. It even includes learning about risks, evaluating responses, creating the conditions for adaptation, resource mobilization, and continuous revision of choices with new learning. As an institutional reform it can be revising ownership rights of land and water for better resource management. Adaptation can also be autonomous or planned (Smit et al., 2001; Stern, 2007). It is autonomous when done independently, and planned when done with setting policies or taking direct actions through public initiative. Development of Climate Change Adaptation Agenda Adaptation did not get much attention in the early stages where more attention was given to mitigation and impacts (Kates, 2000). When the climate change issues were first addressed by the UN General Assembly in 1988 then the focus was on mitigation. The global campaign on climate change issues then associated with only emissions trajectories and mitigation responsibilities. Adaptation got its recognition in climate change science and policy after A greenhouse gas is a gas that traps heat in the atmosphere. The principal GHGs that enter the atmosphere because of human activities are Carbon Dioxide, Methane, Nitrous Oxide, and other Fluorinated gases. 1

Copyright © 2012, Asian Business Consortium | GDEB

Page 34

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

publishing IPCC‘s third report in 2001. It argued that mitigation efforts would not prevent climate change impacts, particularly in low and middle-income countries. Adaptation began to attach mostly with the developing countries after then. So to assist adaptation in developing countries three new fund2 were created then at the seventh Conference of the Parties to the UNFCCC (COP7) in 2001: 1) fund to support 49 least developed countries (initially finance the design of National Adaptation Programmes of Action – NAPA); 2) fund to support climate change activities; and 3) fund to support concrete adaptation projects. Adaptation gradually gained prominence in climate change literature. Later IPCC‘s Fourth Assessment Report in 2007 also emphasises it. Adaptation now is seen as a legitimate policy option for developing country. Even these days it is considered in development effort (Adger et al., 2002; Ayer and Dobman, 2010). NGO communities have incorporated this in the name of Community Based Adaptation (CBA) into the design and development of their projects to increase resilience of local livelihoods (Reid et al., 2010; Blanco, 2006; Klein et al., 2007). Vulnerability and Adaptation Climate change issues are also now seeing with vulnerability and adaptation. The term vulnerability was coined in development debates from 1990s (Mertz et al., 2009a). Several literature of climate change explains adaptation with relation to vulnerability (Smit and Wandel, 2006; Adger et al., 2007; Schneider et al., 2007). Vulnerability to climate change is the degree to which geophysical, biological and socio-economic systems are susceptible to, and unable to cope with the adverse impacts of climate change. It is very much contextual and linked with specific hazards. Effective adaptation will manage or reduce the vulnerability and even maximise the potential benefit from changes. But the vulnerability of a community not only depends on the magnitude, rate and the impacts of climate change but also on their adaptive capacity which are constrained by a lack of resources, poor institutions and inadequate infrastructure (Adger et al., 2002). The linkage between vulnerability and adaptation are portrayed by Smit and Wandel (2006) in their nested hierarchy model of vulnerability (Figure 2). It argued that generally a community will be more vulnerable if it is more exposed or sensitive to climate stimuli, or hazards. On the other hand a community that has more adaptive capacity will tend to be less vulnerable. This approach is being identified as a key response to climate change by development organizations. That is why it is focuses more on enhancing adaptive capacity by improving access to education, financial resources, and information such as climate forecasts or diversifying livelihood. So adaptations in this sense are nothing but ways of reducing vulnerability.

Figure 2: Nested Hierarchy Model of Vulnerability (Smit and Warden, 2006) Also known as Kyoto Protocol Adaptation Fund, for more information see http://unfccc.int/kyoto_protocol/items/2830.php 2

Copyright © 2012, Asian Business Consortium | GDEB

Page 35

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Concerns of Adaptation to Climate Change Adaptation to climate change is fraught with difficulties and challenges. Several concerns could be identified there in relation to climate change adaptation. Firstly, how it will occur in the grass root level? Because the adaptation decisions are embedded in social processes that depend upon the relationship among individuals, their networks, social capital, risk acceptance attitudes and the state (Adger, 2001; Adger et al., 2009a; Adger et al., 2009b). Secondly, if it occurs then is it correct or not? , mal-adaptation may occur. So the adaptation involves a governance issue through which it can be guided to the society or to the sectors. In this respect the threshold 3 for adaptation is important. Adger and others (2009b) argue that the limits to adaptation depend on social, physical and ecological factors, and so the integration of all these is very much important. In this respect government intervention is expected. Economists called this as the issue of market failure to justify government intervention. There could be three types of market failure which prevent efficient adaptation: uncertainty and imperfect information, missing and misaligned markets, and financial constraints (Aakre and Rubbelko, 2010). Lastly, where and how government intervene? In the climate change literature government‘s adaptation support is predominantly recommended in the areas of education, livelihood assistance, and compensation to catastrophic losses (Aakre and Rubbelko, 2010). At the national level it is necessary to encourage research, training, and communication concerning the most appropriate adaptive measures. Development agencies are pressing to incorporate climate change adaptation into mainstream development assistance and policies. But it is not easy to undertake these policies in an effective and equitable way to design effective adaptation at the local level. Overall, it is recommended to introduce more climate resilience development strategies to support climate change adaptation. 2.4 Agricultural Adaptation to Climate Change Climate change literature on agricultural adaptation shows a wide range of options based on experience, observation, and speculation (Adger et al, 2007; Burton and Lim, 2005; Leary et al., 2007; Bryant et al., 2000; Smit and Skinner, 2002; Maddison, 2007; Yang, 2007; Bryan et al., 2009; Deressa et al., 2009). The list typically includes (1) changes in seasonality of production, dates of sowing, choice of crop varieties or species, and tillage practices, (2) development of new varieties, (3) improved water supply and irrigation systems like construction of water reservoirs and distribution systems, (4) inputs and management adjustments like disaster management and insurance, and (5) improved short-term weather and seasonal climate forecasting. The stakeholders in agricultural adaptations are the farmers, non-governmental organizations, credit organizations, technology dissemination groups and central and local governments. Adaptation done by farmers differs from place to place, availability and need. Several factors could influence farmers‘ adaptation decision at the farm level (Bryant et al., 2000; Maddison, 2007; Yang, 2007; Bryan et al., 2009; Deressa et al., 2009). Farmers‘ perception of climate change could be a factor to influence adaptation, but studies do not found strong relation to them (Bryant et al., 2000; Bryan et al., 2009; Mertz et al., 2009b). It is found that despite having perceived changes in temperature and rainfall, a large percentage of farmers did not make any adjustment to their farming practices. At the same time it is also found that those farmers who perceived about the changes in climate 3

Simply it is the level or point at which something starts or ceases to happen or come into effect.

Copyright © 2012, Asian Business Consortium | GDEB

Page 36

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

variables done at least one changes in their farming practices (Maddison, 2007). Apart from the perception other factors like the farm family characteristics (e.g. farmers‘ education level, farm size, and farm‘s financial health) and government support (e.g. access to extension, credit and climate information) could be the potential positive factors to influence adaptation. Barriers to Agricultural Adaptation There could be several barriers to adaptation from farmers‘ perspective in the face of climate change in developing countries (Leary et al., 2007; Bryan et al., 2009; Maddison, 2007; Croppenstedt et al., 2003; Chauhan et al., 2002; Kaliba et al., 2000; Hintze et al., 2003; Maddison, 2007; Ransom et al., 2003). These barriers could be related to financial, natural, physical, human and social capital. It is also found that sometimes people have knowledge of many traditional practices for coping with climatic stresses, but have little knowledge of new or alternate methods due to poor access to inputs and information. Even some places farmers are reluctant to change their inherited traditional practices. In general lack of awareness, access to credit, information, knowledge and education to evaluate and implement new methods are the major constraint on adaptation. Even from the planning perspective there could be several technical and institutional barriers to adaptation (Bedsworth and Hanak, 2010): (1) uncertain information on climate-related impacts, (2) conflicting goals and tradeoffs, (3) backward-looking regulatory regimes, (4) coordination failures, and (5) limits on institutional authority. Uncertainty about the extent and nature of some climatic impacts pose a significant barrier to decisions on appropriate adaptation measures. Again adaptation planning will face problem because some strategies may cause conflicts among different goals and interests. Then adaptation planning requires to affects a range of future physical conditions, but many current regulatory frameworks are built around historical data. Then adaptation planning will face an inadequate coordination among relevant public entities with overlapping geographic and functional boundaries. Last but not the least, legal limits on institutional authority can prevent agencies that might like to engage in more extensive adaptation planning.

3 POLICY SUGGESTIONS Related to agricultural adaptation certain policy suggestions are presented below: a) Apart from other factors government support is one of the vital factors to influence agricultural adaptation. So government support like extension services, credit facilities and the climate information have to be provided to the agriculturist to facilitate agricultural adaptation. b) Appropriate adaptation measure suitable for particular area is still not certain. Proper science and research is required for deciding appropriate adaptation option. Government has to encourage and facilitate research to find appropriate adaptation options for regions. c) Government has to facilitate the dissemination of the knowledge related to adaptation options. Both knowledge and technology required for appropriate adaptation option should available to the door steps of the farmer. d) Lastly, inadequate coordination among relevant public entities with overlapping geographical and functional boundaries creates a barrier for the successful adaptation. So government should take these into consideration and maintain a more coordinated approach in planning adaptation.

Copyright © 2012, Asian Business Consortium | GDEB

Page 37

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

4. CONCLUSION Developing countries have specific needs for adaptation because of their geographical exposure, low incomes and greater dependence on climate sensitive sectors such as agriculture. Economic and technological capacities are the main limitation for them. In the micro level farmers‘ are the most affected portion of human in relation to climate change. A better understanding of their social and institutional frameworks and demand-side strategies is needed for an effective adaptation. There are significant gaps in understanding the processes by which adaptation is occurring and will occur in the future. But this area is very much important for future policy and action to increase adaptation and adaptive capacity. Though most agricultural adaptation to climate change will ultimately be taken at the local level but their speed and spread depend on national policy. So the appropriate science, actions and policy is required to improve the capacity and to facilitate adaptation.

REFERENCES [1]

[2] [3]

[4]

[5]

[6]

[7] [8] [9] [10] [11]

[12]

Aakre, S., and Rübbelke, D. T. G. (2010) 'Objectives of public economic policy and the adaptation to climate change', Journal of Environmental Planning and Management, 53, (6), 767-791 Adger, W.N. (2001) Social Capital and Climate Change, Working Paper No. 8, Norwich, UK: Tyndall Centre for Climate Change Research Adger, W.N., Agrawala, S., Mirza, M.M.Q., Conde, C., O‘Brien, K., Pulhin, J., Pulwarty, R., Smit, B., & Takahashi, K. (2007) Assessment of adaptation practices, options, constraints and capacity. In Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J., & Hanson, C.E. (Eds.) Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge, UK:Cambridge University Press, pp.717-743 Adger, W.N., Hug, S., Brown, K., Conway, D. & Hulme, M. (2002) Adaptation to climate change: Setting the Agenda for Development Policy and Research, Working Paper No. 16, Norwich, UK: Tyndall Centre for Climate Change Research Adger, W. N., Desai, S., Goulden, M., Hulme, M., Lorenzoni, I., Nelson, D.R., Naess, L.O., Wolf, J., Anita, W. (2009a) ‗Are there social limits to adaptation to climate change?‘ Climatic Change, 90, (3-4), pp.335-354 Adger, W.N., Lorenzoni, I. & O‘Brien, K.L. (2009b) Adaptation now, In: Adger, W.N., Lorenzoni, I. & O‘Brien, K.L. (ed.) Adapting to Climate Change Thresholds, Values, Governace, New York: Cambridge University Press Ayers, J., Dobman, D. (2010) ‗Climate change adaptation and development I: the state of the debate‘, progress in development studies, 10, (2), pp. 161-168 Ayer, J.M. and Huq, S. (2009) ‗The value of linking migration and adaptation: A case study of Bangladesh‘ Environmental Management, 43, (5), pp.753-764 Bedsworth, L.W. & Hanak, E. (2010) ‗Adaptation to Climate Change‘, Journal of American Planning and Association, 76, (4), pp. 477-495 Blanco, A. (2006) ‗Local initiatives and adaptation to climate change‘, Disasters, 30, (1), pp. 140-147 Bryan, E., Deressa,T.T., Gbetibouo, G.A. and Ringler, C. (2009) ‗Adaptation to climate change in Ethiopia and South Africa: options and constraints‘, Environmental Science & Policy, 12, (4), pp.423-426 Bryant, R.C., Smith, B., Brklacich, M., Johnston, R.T., Smithers, J., Chiotti, Q., Singh, B. (2000) ‗Adaptation in Canadian agriculture to climate variability and change‘, Climate Chnage, 45, (1), pp. 181-201

Copyright © 2012, Asian Business Consortium | GDEB

Page 38

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[13]

[14] [15] [16]

[17]

[18]

[19]

[20]

[21]

[22]

[23] [24]

[25] [26]

ISSN 2305-9168

Boko, A., Niang, I., Nyong, A., Vogel, C., Githeko, A., Medany, M., Osman, E.B., Tabo, R. & Yanda, P. (2007) Africa. In: Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J. & Hanson, C.E. (eds) Climate change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the fourth assessment report of the intergovernmental panel on climate change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp 433–467 Bongaarts, J. (1994) ‗Can the growing human population feed itself?‘, Scientific American, 270, (3), pp. 18–24 Burton, I., and Lim, B. (2005) ‗Achieving adequate adaptation in agriculture‘, Climatic Change, 70 (1-2), pp. 191-200 Burton, I., Smith, J.B. and Lenhart, S. (2008) Adaptation to Climate Change: Theory and Assessment. In: Feenstra, J.F., Burton, I., Smith, J.B., Tol, R.S.J., eds. Handbook on Methods for Climate Change Impact Assessment and Adaptation Strategies, Version 2.0, Nairobi: UNEP, pp. 5(1-24) Chauhan, R.S., Rai, K.N. & Chamola, S.D. (2002) ‗Estimation of demand and supply and adoption of quality seed in Haryana‘, Indian Journal of Agricultural Economics, 57, (3), pp. 467-478 Christensen, J.H., Hewitson, B., Busuioc, A., Chen, A., Gao, X., Held, I., Jones, R., Kolli, R.K., Kwon, W-T., Laprise, R., Magaña Rueda, V., Mearns, L., Menéndez, C.G., Räisänen, J., Rinke, A., Sarr, A. & Whetton, P. (2007) Regional climate projections. In: Solomon, S., Qin, D., Manning, M., Chen, Z., Marquis, M., Averyt, K.B., Tignor, M. and Miller, H.L. (eds.) Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp 847–940 Croppenstedt, A., Demeke, M. & Meschi, M.M. (2003) ‗Technology adoption in the presence of constraints: The case of fertilizer demand in Ethiopia‘, Review of Development Economics, 7, (1), pp. 58-70 Cruz, R.V., Harasawa, H., Lal, M., Wu, S., Anokhin, Y., Punsalmaa, B., Honda, Y., Jafari, M., Li, C. & Huu Ninh, N. (2007) Asia. In: Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J. & Hanson, C.E. (eds) Climate change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the fourth assessment report of the intergovernmental panel on climate change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp 469–506 Dai, A., Trenberth, K.E. & Qian, T. (2004) ‗A global dataset of Palmer Drought Severity Index for 1870–2002: relationship with soil moisture and effects of surface warming‘, Journal of Hydrometeorology,5, (6), pp.1117–1130 Deressa, T.T., Hassan, R.M., Ringler, C., Alemu, T. & Yesuf, M. (2009) ‗Determinats of farmers‘ choice of adaptation methods to climate change in the Nile Basin of Ethiopia‘, Global Environmental Change, 19, (2), pp.248-255 Emanuel, K. (2005) ‗Increasing destructiveness of tropical cyclones over the past 30 years‘, Nature, 436, (7051), pp. 686–688 Halsuæs, K., & Traerup, S. (2009) ‗Development and climate change : a mainstreaming approach for assessing economic, social and environmental impacts of adaptation measures‘, Environmental management, 43, (5), pp.765-778 Hintze, L.H., Renkow, M. & Sain, G. (2003) ‗Variety characteristic and maize adoption in Honduras‘, Agricultural Economics, 29, (3), pp. 307-317 IPCC (2007) Summary for Policymakers. In: Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J. & Hanson, C.E. (eds) Climate change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the fourth assessment report of the

Copyright © 2012, Asian Business Consortium | GDEB

Page 39

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[27]

[28] [29]

[30]

[31] [32]

[33]

[34]

[35] [36] [37]

[38]

ISSN 2305-9168

intergovernmental panel on climate change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp. 7-22. Kaliba, A.R.M., Verkuijl, H. & Mwangi, W. (2000) ‗Factors Affecting Adoption of Improved Maize Seeds and Use of Inorganic Fertilizer for Maize Production in the Intermediate and Lowland Zones of Tanzania‘, Journal of Agricultural and Applied Economics, 32, (1), pp. 35-47 Kates, R.W. (2000) ‗Cautionary tales: adaptation and the global poor‘, Climatic Change, 45, (1), pp.5–17 Klein, R.J.T., Eriksen, S.E.H., Næss, L.O., Hammill, A., Tanner, T.M., Robledo, C. & O‘Brien, K.L. (2007) ‗Portfolio screening to support the mainstreaming of adaptation to climate change into development assistance‘, Climatic Change, 84, (1), pp. 23-44 Leary, N., Adejuwon, J., Barros, V., Batimaa, P., Biagini, B., Burton, I., Chinvanno, S., Cruz, R., Dabi, D., Comarmond, A. de, Dougherty, B., Dube, P., Githeko, A., Hadid, A. A., Hellmuth, M., Kangalawe, R., Kulkarni, J., Kumar, M., Lasco, R., Mataki, M., Medany, M., Mohsen, M., Nagy, G., Njie, M., Nkomo, J., Nyong, A., Osman, B., Sanjak, E., Seiler, R., Taylor, M., Travasso, M., Maltitz, G. von, Wandiga, S. and Wehbe, M. (2007) A Stitch in Time: Lessons for Climate Change Adaptation from the AIACC Project, AIACC Working Paper No. 48, Washington, DC USA: Assessments of Impacts and Adaptations to Climate Change (AIACC). Available at: [Accessed 9th February 2013] Lomborg, B. (2001) The Skeptical Environmentalist, Cambridge, UK: Cambridge University Press Maddison, D. (2007) The Perception of and Adaptation to Climate Change in Africa, Policy Research Working Paper 4308, World Bank, Available at: , [Accessed 8th February 2013] Magrin, G., Garcia, C.G., Choque, D.C., Giménez, J.C., Moreno, A.R., Nagy, G.J., Nobre, C. & Villamizar, A. (2007) Latin America. In: Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J. & Hanson, C.E. (eds) Climate change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the fourth assessment report of the intergovernmental panel on climate change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp 581–615 Meehl, G.A., Stocker, T.F., Collins, W.D., Friedlingstein, P., Gaye, A.T., Gregory, J.M., Kitoh, A., Knutti, R., Murphy, J.M., Noda, A., Raper, S.C.B., Watterson, I.G., Weaver, A.J. & Zhao, Z.-C. (2007) Global Climate Projections. In: Solomon, S., Qin, D., Manning, M., Chen, Z., Marquis, M., Averyt, K.B., Tignor, M. and Miller, H.L. (eds.) Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp. 747-886 Mendelsohn, R. (2009) ‗The impact of climate change on agriculture in developing countries‘, Journal of Natural Resource Policy Research, 1, (1), pp. 5-19 Mertz, O., Halsnæs, K., Olesen, J. E. & Rasmussen, K. (2009a) ‗Adaptation to climate change in developing countries‘, Environmental Management, 43, (5), pp.743-752 Mertz, O., Mbow, C., Reenberg, A., & Diouf, A. (2009b) ‗Farmers‘ Perceptions of Climate Change and Agricultural Adaptation Strategies in Rural Sahel‘, Environmental management, 43, (5), pp. 804-816 Mitchell, T. & Tanner, T. (2006) Adapting to climate change challenges and opportunities of development community, Middlesex, UK: Tearfund

Copyright © 2012, Asian Business Consortium | GDEB

Page 40

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[39]

[40] [41] [42] [43]

[44]

[45] [46]

[47] [48] [49] [50] [51]

[52]

[53] [54]

ISSN 2305-9168

Parry, M., Rosenzweig, C., Iglesias, A., Fischer, G. & Livemore, M. (1999) ‗Climate change and world food security: A new assessment‘, Global Environmental Change, 9, (Supplementary 1), pp. S51-S67 Ransom, J.K., Paudyal, K. & Adhikari, K. (2003) ‗Adoption of improved maize varieties in the hills of Nepal‘, Agricultural Economics, 29, (3), pp. 299-305 Reid, H., Huq, S. & Murray, L (2010) Community Champions: Adapting to Climate Challenges, London, UK: International Institute for Environment and Development Reilly, J. (1995) ‗Climate change and global agriculture: Recent findings and issues‘, American Journal of Agricultural Economics, 77, (3), pp. 727–733 Rosenzweig, C. & Tubiello, F.N. (2007) ‗Adaptation and mitigation strategies in agriculture: an analysis of potential synergies‘, Mitigation and Adaptation Strategies for Global Change, 12, (5), pp. 855-873 Schneider, S.H., Semenov, S., Patwardhan, A., Burton, I., Magadza, C.H.D., Oppenheimer, M., Pittock, A.B., Rahman, A., Smith, J.B., Suarez, A., & Yamin, F. (2007) Assessing key vulnerabilities and the risk from climate change. In: Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden, P.J. & Hanson, C.E. (eds) Climate change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the fourth assessment report of the intergovernmental panel on climate change. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. pp. 779-810 Smit, B., Burton, I., Klein, Richad J.T. & Wandel, J.(2000) ‗An anatomy of adaptation to climate change and variability‘, Climate Change, 45, (1), pp.223-251 Smit, B., Pilifosova, O. & others (2001) Adaptation to climate change in the context of sustainable development and equity. In: McCarthy, J. J., Canziani, O., Leary, N. A., Dokken, D. J. and White, K. S. (eds) Climate Change 2001: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Third Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge University Press, pp. 877-912. Smit, B. & Skinner, M. (2002) ‗Adaptation options in agriculture to climate change: a topology‘, Mitigation and Adaptation Strategies for Global Change, 7, (1), pp.85-114. Smit, B. & Wandel J (2006) ‗Adaptation, adaptive capacity and vulnerability‘. Global Environmental Change, 16, (3), pp.282–292 Stern, N. (2007) The Stern Review: the Economics of Climate Change, Cambridge, UK: Cambridge University Press Stern, N. (2009) A Blueprint for a Safer Planet: How to Manage Climate Change and Create a New Era of Progress and Prosperity, London: Bodley Press. Trenberth, K.E., Jones, P.D., Ambenje, P., Bojariu, R., Easterling, D., Klein Tank, A., Parker, D., Rahimzadeh, F., Renwick, J.A., Rusticucci, M., Soden, B. & Zhai, P. (2007) Observations: Surface and Atmospheric Climate Change. In: Solomon, S., Qin, D., Manning, M., Chen, Z., Marquis, M., Averyt, K.B., Tignor, M. and Miller, H.L. (eds.) Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge United Kingdom and New York, NY, USA: Cambridge University Press. pp. 235-336 Tingem, M. & Rivington, M. (2009) ‗Adaptation for crop agriculture to climate change in Cameroon: Turning on the Heat‘, Mitigation and Adaptation Strategies for Global Change, 14, (2), pp.143-168 Yang, X., Lin, E., Ma, S., Tu, H., Guo, L., Xiong, W., Li, Y. & Xu, Y. (2007) ‗Adaptation of agriculture to warming in Northeast China‘, Climate Change, 84, (1), pp.45-58 Zilberman, D., Liu, X., Roland-Host, D. & Sunding, D. (2004) ‗The economics of climate change in agriculture‘, Mitigation and Adaptation Strategies for Global Change, 9, (4), pp. 365-382

Copyright © 2012, Asian Business Consortium | GDEB

Page 41

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Role of Guava to National Economy of Bangladesh: An Empirical Study Sayed Mohibul Hossen Senior Lecturer in Statistics, Department of Business Administration, NUB, Bangladesh

ABSTRACT Guava, which is a very delicious fruit, is rich in vitamin C and contains the appreciable amount of vitamin A too. It is also a good source of pectin –a dietary fiber. Different types of favorite dishes are made from guava such as guava jelly, guava syrup, guava cheese, guava roll, etc. Many countries export these types of foods and earn a lot of foreign money. Although Bangladesh is one of the best producers, there is no industry for preserving this fruit. So, all the production become indeed in consumption.The aim of the research is to know the cultural practices of guava in Bangladesh and how to make sweetened guava dishes which can play a vital role to our economy and to identify the best model that may be used for forecasting purposes. The present study attempts to do a statistical analysis of current guava production and its prospect in Bangladesh by considering the various sources of variations on the time-series data for 23 districts of Bangladesh and over a period of 27 years (1981-82 to 2007-08). The study was considered for whole Bangladesh. Keywords: Guava, Significant, National Economy, Production, Bangladesh JEL Classification Code: E01; E20

INTRODUCTION The long history of guava's use has led modern-day researchers to study guava extracts. Its traditional use for diarrhea, gastroenteritis and other digestive complaints has been validated in numerous clinical studies. A plant drug has even been developed from guava leaves (standardized to its quercetin content) for the treatment of acute diarrhea. Human clinical trials with the drug indicate its effectiveness in treating diarrhea in adults. Guava leaf extracts and fruit juice has also been clinically studied for infantile diarrhea. In a clinical study with 62 infants with infantile rotavirus enteritis, the recovery rate was 3 days (87.1%) in those treated with guava, and diarrhea ceased in a shorter time period than controls. It was concluded in the study that guava has "good curative effect on infantile rotavirus enteritis." In a recent study with guinea pigs (in 2003) Brazilian researchers reported that guava leaf extracts have numerous effects on the cardiovascular system which might be beneficial in treating irregular heart beat (arrhythmia). Previous research indicated guava leaf provided antioxidant effects beneficial to the heart, heart protective properties, and improved myocardial function. In two randomized human studies, the

Copyright © 2012, Asian Business Consortium | GDEB

Page 42

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

consumption of guava fruit for 12 weeks was shown to reduce blood pressure by an average 8 points, decrease total cholesterol levels by 9%, decrease triglycerides by almost 8%, and increase "good" HDL cholesterol by 8%. The effects were attributed to the high potassium and soluble fiber content of the fruit (however 1-2 pounds of fruit was consumed daily by the study subjects to obtain these results!). In other animal studies guava leaf extracts have evidenced analgesic, sedative, and central nervous system (CNS) depressant activity, as well as a cough suppressant actions. The fruit or fruit juice has been documented to lower blood sugar levels in normal and diabetic animals and humans. Most of these studies confirm the plant's many uses in tropical herbal medicine systems.(Conde Gracia,E,et al2003) Scientific classification Psidium Guava . L Kingdom : plantae Division :magnoliophyta Class :magnoliopsida Sub class :rosidae Order :myrtales Family :Myrtaceae Sub family :myrtoideae Genus :Psidium Species :Guava Guavas are plants in the myrtle family (Myrtaceae) genus Psidium, which contains about 100 species of tropical shrubs and small trees. Native to Mexico and Central America, northern South Africa, parts of the Caribbean and some parts North Africa. Guava are now cultivated naturalized throughout the tropics and are also grown in some subtropical regions. (Jimmy Wales, 2008)

WORLD-WIDE DISTRIBUTION AND PRODUCTION OF GUAVA Today, the fruit can be found growing in more than fifty countries throughout the tropics and subtropics, including some of the Mediterranean areas. In Europe guava is grown in Spain, Portugal, Southern France and Israel. In the United States, guava can be found in California, Florida and Hawaii. In its native habitat of central and northern South America. Well in Mexico, Panama, El Salvador, Costarica, Nicaragua, Bolivia and Brazil.The major producers of guava in the world are India, Brazil and Mexico. Other leading countries are South Africa, Jamica, Kenya, Cuba, the USA (Mainly Florida and Hawaii), Egypt, Columbia and the Philipines.(Mathew Montoya) Country Amount grown ( in Metric tons) India 200,000 Mexico 175,000 Cuba 90,714 Egypt 34,000 South Africa 13,000 Bangladesh 146,077 It is palpable from the chart below that the Production of guava in Bangladesh is increasing year to year. From the chart we can say that the maximum and minimum production of guava in India and South Africa respectively. It is also clear that Bangladesh has the 3rd position in the world for its guava production.

Copyright © 2012, Asian Business Consortium | GDEB

Page 43

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

250,000 200,000 150,000 100,000 50,000 0

Different kinds of Guava In Bangladesh Mainly two types of guava are cultivated in our country commercially. 1. Kazi Peara (guava) 2. Bari Peara Kazi Peara : Year round high yielding variety fruit weight 445.5 gm, shape pear to round length 9.37 cm, breadth 9.66 cm, skin colour yellowish green flesh colour whitish texture crispy taste slightly sour TSS 8.2-13.2% vitamin c content 202.4 mg/100 g fruit. Shelf life 7-10 days. Yield 84 kg/plant. Released from the horticulture research centre Joydebpur, Gazipur.(BARI, 2003) Bari Peara- 2: Year round high yielding variety fruit weight 240 gm shape roundish length 6.4 cm breadth 7.4 cm skin colour greenish yellow flesh colour whitish texture crispy taste sweet TSS 7.8-12.8%. Shelf life 7 days. Yielding 90kg/plant. Released from the regional horticulture research station Akbarpur , Moulovibazar.(BARI, 2003) Total cultivated area of guava in six divisions The graphic representation given below, it is observed that the cultivated area of guava in six divisions is increasing year to year. From the year 2004-05 area is considered only fruit bearing garden so the line represents decreasing from 2004-05. The chart also represents that the highest cultivated division is Dhaka and Chittagong. 14000 12000 10000

x1=Chittagong x2=Sylhet

8000 6000

x3=Dhaka x4=Barisal x5=Khulna

4000

x6=Rajshahi

2000

19 81 19 82 83 19 84 85 19 86 87 19 88 89 19 90 91 19 92 93 19 94 95 19 96 9 19 7-9 99 8 -2 0 20 00 01 20 02 03 20 04 05 20 06 07 -0 8

0

Area wise Production of guava in Bangladesh

Copyright © 2012, Asian Business Consortium | GDEB

Page 44

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

It is observed from the graph below that the area wise production of guava is increasing year to year. The highest increase in the area wise production of guava is in the year 200405 and for the next three years, the areas increase gradually and also the production. 160000 140000 120000 100000 Area

80000

Production

60000 40000 20000

19 81 19 82 83 19 84 85 19 86 87 19 88 89 19 90 91 19 92 93 19 94 95 19 96 9 19 7 -9 99 8 -2 0 20 00 01 20 02 03 20 04 05 20 06 07 -0 8

0

MATERIALS AND METHODS Regression analysis Regression analysis is a branch of statistical theory that is widely used in almost all the scientific disciplines. In economics it is the basic technique for measuring or estimating the relationship among economic variables that constitute the essence of economic theory and economic life. for example, if we know that two variables price (x) and demand (y) are closely related we can find out the most probable value of x for a given value of y or the most probable value of y for a given value of x. similarly, if we know that the amount of tax and the rise in the price of a commodity are closely related, we can find out the expected price for a certain amount of tax levy. With the help of regression analysis, we are in position to find out the average probable change in one variable given a certain amount of change in another.(Shil & Nath, 2008) The Log-Linear model Let us consider the following regression model;

Yi   1 X i 2 e ui

…………….(1)

This may be expressed as,

ln Yi  ln 1   2 ln X i  u i ………(2)

Where ln=natural log (i.e., log to the base e, and where e=2.718) If we write as ln Yi     2 ln X i  u i …………(3) Where 

 ln 1

This model is linear in the parameters  and  2 , linear in the logarithms of the variables Y and X, and can be estimated by OLS regression. Because of this linearity, such models are called log-log, double-log, or log-linear models. If the assumptions of the classical regression model are fulfilled, the parameters can be estimated by the OLS method by letting

Copyright © 2012, Asian Business Consortium | GDEB

Page 45

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Yi     2 X  u i *

* i

Where

Yi *  ln Yi

and



X i*  ln X i . The OLS estimators 

and

  2 , respectively.

Feature of the log-linear model Two special features of the log-linear may be noted: 1. One attractive feature of the log-linear model, which has made it popular in applied work, is that the slope coefficient  2 measures the elasticity of Y with respect to X. which means that the percentage change in Y for a given (small) percentage change in X.

2.

Another feature of the model is that although







and

 2

are unbiased estimates

 1 (the parameter entering the original model) when estimated as  1  anti log( ) is itself a biased estimator

of



and  2 ,

RESULTS AND DISCUSSION 2

The coefficient of determination R of the equation is 0.55, which indicates that 55% of the total variation Of the Dependent variable has been explained by the Independent variable. It can be said that the goodness of fit is good on the average. This result also suggests that, if the cultivated area increases thousand hector then production/supply will increases on the average by 1.15 thousand metric ton.

Finally we have concluded that the production of guava in Bangladesh is increasing day by day. The soil and weather condition of our country is excellent for guava cultivation.

Copyright © 2012, Asian Business Consortium | GDEB

Page 46

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

From this study it is clear that the production is responsive to its area. That is, as expected area rises, the corresponding supply rises. This indicates that there is a direct relationship between expected production of guava and the cultivated area Favorite guava Dishes & medical uses: Guava is very delicious fruit. Many favorite and tasty items are made from guava and these products are imported by many country. Such as, guava jelly, guava syrup, guava cheese, guava roll, etc. (K.Y. and M.G. Brown, 1980) Preparation of guava jelly Item Quantity Clear fruit juice 1 liter Sugar 1 kg Citric acid 10 gm Sodium benzoate 1 gm Color/flavor To taste Procedure 1. Extract juice from fruit of good quantity and keep for a day or two for the co are particles to settle down. 2. Filter/siphon clear juice. 3. Mix juice and sugar in a kettle and start boiling with continuous string. 4. When total soluble solid reaches 68* c stop boiling. 5. Add Sodium Benzoate, CS and flavor according to the formula. 6. Mix thoroughly fill in clean sterilized jars. 7. Cap, cool, wash, label store in a cool and dark place. Preparation of guava syrup Item Quantity Juice 1 liter Water 1 liter Sugar 4 kg Citric acid 30 gm Potassium Metabisulphite 4 gm Procedure 1. Select healthy white fleshed fruit 2. Wash thoroughly with tap water 3. Sort carefully, discard diseased, wormy and undesirable fruit 4. Cut into pies 5. Beat with about 20% of water and extract pulp passing it through juices/pulped of muslin cloth 6. Boil sugar and water according to the formula 7. Add pulp (juice) as per formula and stir well 8. Add citric acid and KMS as usual and mix thoroughly 9. Fill in clean, sterilized glass bottles, cap, wash, label and store in a dark, cool place. Guava cheese Guava cheese can be prepared from fresh fruit slices or from the puree extract.

Copyright © 2012, Asian Business Consortium | GDEB

Page 47

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Procedure 1. To 1 kg of puree extract 2. Add 1.5 kg of sugar 3. Add 2.5 g of butter 4. Heat until thick 5. Add 2g citric acid 6. One tb of salt 7. Pour into buttered trays in 0.5 cm layers. Guava Roll A cookie-like pastry is rolled around sweet guava paste into a loop shape. Guava rolls are only moderately sweet .compared to some other Cuban-style pastries. Masa Real Another guava pastry, masa real comes in two forms; both are made with the same dough and filling. One looks like a giant thumbprint cookie, round with a patch of guava in the center. The other is like a very large guava-cookie sand-witch, with the guava filling between two layers of the cookie-like pastry. Brazo de Gitano These jelly roll style cakes, fancifully named ―gypsy‘s arm‖ (presumably because of their shape) are doused with rum syrup and then filled with custard or guava filling. Worldwide Ethno-medical uses

(Leslie Taylor, 2005)

Copyright © 2012, Asian Business Consortium | GDEB

Page 48

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

POLICY IMPLICATIONS While the production of guava is increasing and it has a great opportunity to play vital role in our economy but there is no technique has been taken for its preservation. So, all the production become indeed in consumption. To improve our economy government needs to take some necessary steps. 1. Since the production of guava is responsive to area, by increasing cultivated area of guava it is possible to raise its production. 2. By preserving and manufacturing different guava dishes we can fulfill our food requirement (nutrition) all the year round and can improve our economy by importing its sweetened dishes.

REFERENCES [1] BADC: Directorate [2] [3] [4] [5] [6] [7] [8]

of agriculture marketing, Bangladesh Agriculture Develop Council, Khamar Bari, Farm-gate, Dhaka. BARI,(2003) Joydebpur, Gazipur-1701, Bangladesh Conde Garcia, E. A., et al. ―Inotropic effects of extracts of Psidium guajava L. (guava) leaves on the guinea pig atrium.‖ Braz. J. of Med. & Biol. Res. 2003; 36: 661-668. Jimmy Wales, Wikipedia Founder.Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a U.S. registered 501(c)(3)tax-deductiblenonprofitcharity. K.Y. and M. G. Brown [1980], ―economic effectiveness of brand advertising programmes for u.s.orange juice in the European market. An statistical analysis‖.journal of agricultural economics, 37,pp.385-395. Leslie Taylor,‖The Healing Power of Rainforest Herbs‖ [email protected] Shil & Nath (2008): ―An introduction to the theory of STATISTICS‖

GDEB!!!

“Speedy publication service, Online archives, Paperless, web-based peer review system, Open access policy, Indexing in world known citation databases, Global circulation, Broad international readership and authorship, Online submission system, Minimum publication charge”

Copyright © 2012, Asian Business Consortium | GDEB

Page 49

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Current Account Dynamics, Adjustment and Capital Mobility in Bangladesh Mohammad Masud Alam1; Rezai Karim Khondker2; & Mohammad Shahansha Molla3 1

Assistant Professor of Economics, Shahjalal University of Science & Technology, Sylhet, Bangladesh Professor, Dhaka School of Economics, Dhaka, Bangladesh 3 Assistant Professor of Finance, Leading University, Sylhet, Bangladesh 2

ABSTRACT This paper examines current account (CA) dynamics, its relationship with the degree of capital mobility and the state of integration of the Bangladesh capital market with the global capital market. For the period 1976-2012, findings of AR (1) process shows a rigid CA position along with its slow adjustment and its inflexibility against real shocks, lower degree of capital mobility and a slow progress of capital market integration with the rest of the world. Compared to the period of fixed exchange rate regime, lesser degree of rigidity has been observed during the flexible exchange rate period suggesting a smooth and flexible current account position; but shows an increased degree of rigidity and capital immobility for the overall time period under consideration. These findings reveal some important policy implications in respects of current and capital account liberalization, deregulation of domestic markets and removing entry barriers on the part of Bangladesh to boost up FDI and remittance inflows. Key words: current account dynamics, capital mobility, Bangladesh JEL Classification Code: F32; E22

INTRODUCTION The scenario of persistent inflation, slow improvement of balance of payments (BoP) condition and a moderate but steady growth rate of GDP while an ongoing global slowdown, has been the focus of a lively debate among policymakers and economists in Bangladesh. Much of the debate has concentrated on the large current account (CA) surplus along with sustained sizable trade deficits and an incessantly increasing trend in remittance inflows during the last three decades. One of the leading issues confronting policy makers in Bangladesh is the pattern of CA dynamics and the adjustment process i.e., whether CA would be back towards its equilibrium or the ‗steady-state‘ value following an adverse shock or not. There are wide-ranging views on Bangladesh‘s CA position of a surplus in excess of 1.77% of GDP (WDI, 2012). The question of CA dynamics and post-shock adjustment is certainly an important issue for Bangladesh which is increasingly in the focus of global investors. For, a CA surplus (deficit) of an economy may indeed be a superb (disturbing) sign for the future economic growth; or whether there would be any possibility to undergo severe external shocks (Lane & Milesi-Ferretti 2004,

Copyright © 2012, Asian Business Consortium | GDEB

Page 50

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Freund 2000). In fact, some literatures present evidences (Mann, 1999, Freund, 2000 & Chinn and Prasad, 2003) concerning the threshold level of CA deficit as a fraction of GDP and the timing of adjustment, which show that on average CA tended to adjust when it approached levels around 4–5% of domestic GDP. Seen from this perspective, first objective of this paper is to deal with the issue of dynamics of the Bangladesh‘s CA position. Secondly, applying the Autoregressive (AR 1) process this paper will examine the adjustment speed of CA that can tell us a great deal about capital mobility (Bulut 2013, Taylor 2002). The previous studies focus mainly on the CA sustainability, CA dynamics and capital mobility in developed countries especially in the U.S. and for the EU countries. Considering the recognized information of huge differences between Bangladesh and most developed countries, not only on policy making institutions but also on planner‘s views in various macroeconomic and trade problems, it is worthwhile and necessary to study the CA dynamics and capital mobility in this country. However, there has been no literature published to date that has examined this issue on Bangladesh. This gap of previous literature must be filled. The main purpose of the analysis of CA is to inform the government about the global competitive position of the nation, both future and current economic trends and to help in formulating country‘s monetary, fiscal and trade policies in a more prudent way. Some policymakers and economists argue that the balance of payments no longer matters as a noteworthy policy on globalization and, because globally integrated capital markets along with financial liberalization can assist a country to diminish their trade and current account deficits (Feldstein & Horioka 1980). Trade openness, international capital mobility and easier access to global financial markets has allowed open economies to increase their domestic investment further than what could be financed by a country‘s own savings and reducing the cost of current account adjustments (Clower & Ito 2012, Faruqee & Lee 2009). Considering country‘s monetary and trade policy, how smooth the adjustment speed of current account balances (CABs) in Bangladesh would be and how the global capital mobility and financial flows can play a significant role in the adjustment process? This paper examines these questions by using AR (1) process of current account dynamics and the associated degree of capital mobility in Bangladesh over the past four decades. The remainder of this paper is as follows. Section II provides a theoretical framework on the model of AR (1) process of current account dynamics. This section also outlines how an econometric parameter can depict dynamics, adjustment process and can explain real shocks of an open economy resulting from a variety of sources. In Section III we present our data and conduct stationary tests employing conventional unit root and Dickey-Fuller test. Section IV builds on the analysis of results to examine the current account dynamics and degree of capital mobility. We present concluding remarks in section V along with some policy recommendations.

METHODOLOGY Econometric framework A number of approaches have been employed to investigate the CA dynamics and the adjustment process of CAB and its relationship to gauge the degree of capital mobility. While the AR (1) approach to the current account is a standard and parsimonious framework (Obstfeld & Taylor, 2005) for analysis of dynamics and capital mobility, it is not particularly well corroborated by others (Bulut 2012, Raybaudi et. al. 2004, Calderon et al , 2002) for assessing current account dynamics. The AR (1) is the simplest but significant

Copyright © 2012, Asian Business Consortium | GDEB

Page 51

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

linear time-series process which captures dynamics. It indicates the notion that what we know about the future depends on realizations from today, yesterday, and so on (Hamilton 1994). In this section we model the dynamics of CA/Y that can give us inkling about capital mobility. Using simple AR (1) process we can also investigate the adjustment speed of CA/Y to check whether it will eventually move back towards its equilibrium or ‗steady-state‘ value after an adverse shock (Bulut 2013, Taylor 2002). Following Brockwell, Peter and Davis (1987), Hamilton (1994) and Gunnip (2006), let time be indexed with t and let t ∈ {− ∞….− 1, 0, 1, 2 ...∞}. Let

 t ~N (0, 1) be an identically and

independently distributed (or i.i.d. shock). This means that, no matter what the date is, the distribution of

t

follows the standard normal distribution. The random variable Xt

follows an AR(1) if we can write it as

X t  (1   )  X t 1   t …………………..(1) If we consider the stationary assumption of – 1    1 and let time t→∞ then 

X t      j t j

…………………………..(2)

j 0

where ρ, ɸ and ѱ are fixed scalars, or the parameters of the process. Equation (2) is the infiniteorder moving average. Using equation (2), the AR (1) variable, Xt can be presented as an infinite sum of past shocks, where more distant shocks get smaller and smaller weights. It is because the coefficients in equation (2) are geometrically declining since



 1.

The dynamics of the AR (1) are summarized by its ‗autocorrelation parameter ρ. It is a measure of the linear dependence of today‘s value X t on previous time value Xt-1. It is defined as:

Corr ( X t , X t 1 )  where,

Cov( X t , X t 1 )

Var( X t )

………………… (3)

Cov( X t , X t 1 )  Cov( (1   )  X t 1   t , X t 1  Cov( X t 1 , X t 1 )

(4)

 Var( X t 1 ) Since these are unconditional moments of a stationary time series process, we must have that

Var ( X t 1 )  Var ( X t )

Therefore,

Corr ( X t )   …………………………………………………

(5)

If ρ = 0 then there are no dynamics and showing Xt is i.i.d., follow normal distribution. If | ρ | < 1 then the process is said to be stationary and the distant past is matters. If ρ = 1 then the process is called a ―unit-root process‖ and its memory is infinite. If | ρ | > 1 then the process is ‗explosive.‘ Thus, for |ρ| < 1, the system is considered stable, or the further

Copyright © 2012, Asian Business Consortium | GDEB

Page 52

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

back in time a given change occurs, the less it will affect the present. The given change eventually dies down over time. For |ρ| > 1, the system blows up. A given change in the past time period increasingly affects the future as time goes on. Under this framework, to investigate the current account dynamics and its relationship with capital mobility we used simple AR (1) regression of the following form:

(CA

)     (CA )  U t ………………………(6) GDP t GDP t 1

Where, CA= current account GDP= Country‘s gross domestic product t= Time period U= Random error term ∆ = First difference operator The main task is to examine the convergence speed β and error variance σ2 . How should we interpret the model parameters? If β is small (close to zero) we would infer that the country has a flexible current account and the capacity to run persistent deficits. Conversely, if β is high (close to one) the country has a rigid current account where deviations from balance are hard to sustain. In this framework, we might consider the former to be an evidence of higher degree of capital mobility as compared to the latter. We can estimate the adjustment speed of CA/Y to know whether it will return toward its equilibrium or ‗steady-state‘ value or not. Using dynamic version of our above mentioned AR (1) model of the current account we can write down a long run or asymptotic variance of CA/Y, as it is

 Var (CA )  Y 1  2 2

………………………………(7)

Y= GDP, Country‘s gross domestic product Where ρ = 1 − β.05) The perception about job nature and job environment: The second construct measures and compare the perception of employees of public and private commercial bank about job nature and environment that is so called higher order needs/ motivational factors. Table 3: Difference in the perception about job nature and job environment Public Statements 1. 2.

―My job is interesting‖ ―I work in a comfortable physical environment‖ 3. ―I work in an environment of mutual cooperation among the employees‖ 4. ―There is a good interpersonal relationship among all levels of employees in my organization‖ 5. ―There is good employees management relationship in my organization‖ Average Score:



X

Private

X



Comparison F p

2.78 3.10

1.330 1.033

3.35 4.23

.921 .920

5.053 26.475

.027 .000

4.00

.751

4.20

.823

1.289

.260

3.83

.844

3.95

.815

.454

.502

3.43

1.152

3.65

.921

.930

.338

3.428

1.022

3.876

0.88

6.8402

0.2254

As shown above table, employees of private commercial bank score higher in all the statements, which obviously make their overall score higher in this construct. It also reveals that respondents of private commercial bank have low variability of all case. As indicated by the average values of p as a whole are statistically insignificant, which is higher than 0.05 in three cases. so we can conclude that 2 nd hypothesis‖ There is significant difference between the employees of public and private commercial banks in their perceptions about job nature and job environment‖ is rejected (p>.05).

7. CONCLUSION AND RECOMMENDATION The study reveals that the employee of private commercial bank is slightly more motivate that of public commercial bank. It also suggested that there is a difference observed between perception of employees on existing motivational factors on public and private commercial bank. Perception of employees on benefits received from the jobs and perception about job nature and job environment are statistically proved same in this study. Although above mentioned measures theoretically confirm there is a difference in perceptions on benefits received from the job and job nature and environment, this study contradicts with some previous researchers found in literature survey. However his study can be useful for academicians and decision makers of both types of organizations. It provides massage to top management of both organizations that motivation is key secret of organizational effectiveness. To keep the people working efficiently, they need to consistently motivate. Money is not sole motivating factor. Besides money, there are many other financial and non-financial factors that can keep people happy, hardworking and ambitious for organizational success. Good interpersonal relations, prestige and social dignity, open communication, training and development, job security, reward and recognition, security for future, growth/promotion are perceived as key motivating factors

Copyright © 2012, Asian Business Consortium | GDEB

Page 90

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

in commercial banks in Bangladesh. Management should recognize that employees and their behavior represent strong forces that can diminish or enhance effectiveness of every organization. Motivated employees are most distinctive resource in competitive business environment. So it is regular program of management to keep motivation as an integral diver for managing diverse employees in banking organization.

REFERENCE [1]

Khan Mohiuddin, ―Job Satisfaction of the Public Sector Industrial Managers in Bangladesh: A Case Study of Rajshahi Jute Mills‖, Rajshahi University Journal of Social Science and Business Studies, Vol. 16, pp. 165. [2] Marinakis A E (1994). ―Private Sector Employment In Developing Countries: An Overview of Past and Present Trends”. International Journal of Public Sector Management. Vol. 7, No.2, pp. 50-68. [3] Rowly, J (1998) ―Quality Management in Public Sector: Some Perspective from Service‖. Total Quality Management. Vol. 9, No. 2-3, pp. 321-333. [4] Uddin, Nobi and Hasan ―Employees’ Motivation in Public and Commercial Banks in Bangladesh: A study on Need-based Approach‖ The Business Review, Vol. 4, Number 1 & 2, July to December, 2004. [5] Luthans F., Organizational Behavior, Eighth Edition, Irwin -McGraw Hill, India, 1998, pp.161. [6] Robbins, Stephen P. & Coulter, Mary, Management, Prentice-Hall of India, New Delhi, 2006. [7] Maslow, A.H., ‗A Theory of Human Motivation‘, Psychological Review, July 1943, pp. 370-396. [8] Herzberg, F.I., 'One more time: How do you motivate employees?', Harvard Business Review, Sep/Oct 1987, Vol. 65 Issue 5, pp.109-120. [9] Alderfer, C.P., ‗Existence, Relatedness and Growth: Human Need in Organizational Settings‘. The Free Press, N.Y., 1972. [10] McClelland, David C. ―The Achieving Society‖, Princeton, NJ, 1961. [11] Kumar, op.cit.,pp.34-36. [12] Cronbach L.J (1951) ―Coefficient Alpha and Internal Structure of Test‖. Psychometrika. Vol. 16, pp.297-334.

GDEB adopt a blinded review policy. Authors are blind to reviewers. Typically, the review period is within 6 weeks. If authors do not receive a decision letter by email in 8 weeks after the submission, the corresponding author may send an email to inquire the status of their submission. If you need a shorter review period due to special circumstances, you may request such along with your explanation of the situation by email; however, GDEB cannot guarantee granting the request because high quality judgment of scientific work in short time is a challenge.

Copyright © 2012, Asian Business Consortium | GDEB

Page 91

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

Goodness of Cloud Bangladesh ready for it

Computing:

ISSN 2305-9168

does

Md. Ahsan ul Hasan Lecturer, MIS, ASA University Bangladesh

ABSTRACT Technology is playing a vital role in all aspect of our lives. Last decade has seen information and communication technologies dramatically transforming the world, enabling innovation and productivity increases, connecting people and communities, and improving standards of living and opportunities across the world. Even though global economy has been turbulent during last several years, governments and organizations trying to keep the momentum going and last couple of years ―Cloud Computing‖ becoming fast-growing technology phenomenon. Cloud Computing can provide fundamental contribution to efficiency in public and private sectors as well as it can also promote growth, competition and business creation. The purpose of this study is to portrait whether developing countries like Bangladesh can be benefited from cloud computing, and also finds out Bangladesh‘s readiness to take full advantage of it. Key Words: Cloud Computing, Clouds, Internet, Virtual desktop. JEL Classification Code: L86; C89

INTRODUCTION The IT services, which are known as cloud computing these days, have been around for decades. But they never grew beyond a small fraction of total industry revenue. But the scenario changes last couple of years; a dizzying array of hardware and software available for services over the Internet has emerged. Consumers and businesses have embraced a multitude of cloud services, from large sales force management services to email and photo editing to the latest smart phone applications and the entire social networking phenomenon. Research firm International Data Corporation (IDC) calls cloud computing the foundation for the technology industry‘s next 20 years of growth, saying ―it is nothing less than the complete transformation of the industry‘s core offering and business models. According to IDC, cloud computing will grow at a compound annual rate of about 26% for the next couple of year which is roughly five times the growth rate of the technology industry as a whole. In addition, 80% of all new software offerings in the upcoming years will be available as cloud services (Global Technology Industry, 2011). Giant technology companies like Google, Microsoft, Amazon, HP, IBM are investing heavily for this technology.

Copyright © 2012, Asian Business Consortium | GDEB

Page 92

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Even though cloud computing around us for years, In Bangladesh it is still a new concept. At the moment there is pretty little awareness about cloud computing. However, this situation is changing bit by bit. Bangladesh‘s software and IT service industry has crossed long road over the last decade and started to contribute to the country‘s economy. One of the distinctive features of Bangladesh‘s IT industry is the presence of young entrepreneurs. Despite various local and global challenges, these young entrepreneurs have done remarkably well in building sustainable business organization through their dedication and passion for this field. These passionate IT professionals and clouds promises to lower cost and faster deployment than traditional IT makes Bangladesh a potential country to compete in cloud computing services with developed countries.

OBJECTIVES OF THE STUDY Cloud computing and virtualization promises lower cost and faster deployment than traditional IT, and developing countries like Bangladesh can be benefited from it. The main focuses of this study are as follows:  To understand cloud computing  To identify the benefits that Bangladesh will get by implementing Cloud Computing  To examine Bangladesh‘s current IT industry and find out its readiness to get full advantage of cloud computing.

METHODOLOGY OF THE STUDY This study is mainly based on secondary data. These data have been collected from different published materials like the publication of World Economic Forum, Bangladesh Association of Software and Information Services (BASIS), Bangladesh Bureau of Statistics, Bangladesh Computer Council and relevant writings from different scholars.

LIMITATIONS OF THE STUDY Although this research was carefully prepared, there are some limitations and shortcomings. The major limitation of this study is resource constrains as cloud computing is still a new concept Even though all data has been taken from reliable sources yet lack of up-to-date data on Information Technology in Bangladesh was a great drawback of this study.

OVERVIEW OF CLOUD COMPUTING The term cloud has been used as a metaphor for the Internet. Cloud computing is the use of computing resources that are delivered as a service over a network. This technology provides service to the customer to access large scale of data. Cloud computing entrusts remote services with user‘s data, software and computation. According to the US National Institute of standards and Technology (NIST)(Mell & Grance, 2011) ―cloud computing is a model for enabling convenient, on-demand network access to shared pool of configurable computing resources (e.g., networks, web servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction‖. A cloud computing platform dynamically provisions, configures, reconfigures, and depravations servers as needed. Servers in the cloud can be physically machines or virtual machines. Advanced clouds can also include other computing

Copyright © 2012, Asian Business Consortium | GDEB

Page 93

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

resources such as Storage Area Network4 (SANs), Network Equipment, Firewall and other security devices. Anyone with a suitable internet connection and standard browser can access a cloud application. Depending on services cloud computing can be divided into four types (Amies et al., 2012), and they are:  Infrastructure as a service (IaaS) also referred to as Resource Clouds, provide resources as services to the user. This type of cloud provides enhanced virtualization capabilities. To deploy this application, cloud users install operating-system images and their application software on the cloud infrastructure. In this model, the cloud user patches and maintains the operating systems and the application software.  Platform as a Service (PaaS) provide computational resources via a platform upon which applications and services can be developed and hosted. PaaS typically makes use of dedicated Application Programming Interface (API) to control the behavior of a serverhosting engine, which executes and replicates the execution according to user requests.  Software as a Service (SaaS) also known as Service Cloud or Application Cloud, offers specific business functions and business processes with specific cloud capabilities. It provides applications/services using a cloud infrastructure or platform, rather than providing cloud features themselves. Clouds may be hosted and employed in different fashions, depending on the use case or business model of the provider. There has been a tendency of clouds to evolve from internal solutions to manage the local infrastructure and the amount of requests. Depending on usages there are several types of cloud available and each bringing its own specific implications for its users (The European Union, 2010). The main variants are:  Private Clouds is cloud infrastructure operated solely for a single organization, whether managed internally or by a third-party and internally or externally. Private clouds functionalities may not directly exposed to the customer, but sometimes services with cloud enhanced features may be offered.  Public Clouds provides applications, storage, and other resources available to the general public by a service provider. These services are mostly free or offered on a pay-per-use model. Generally public cloud providers offer access to their user via internet.  Community Cloud shares infrastructure between several organizations with common concerns like security, compliance, jurisdiction, etc from specific community. Community cloud can be managed internally or by a third-party. It can also be hosted internally or externally.  Hybrid Cloud is a composition of two or more clouds that remain unique entities but are bound together and offering the benefits of multiple deployment models. Hybrid clouds are able to obtain degrees of fault tolerance combined with locally immediate usability without dependency on connectivity.

BENEFITS THAT CLOUD COMPUTING CAN OFFER TO A COUNTRY LIKE BANGLADESH Despite an unfavorable global economy, Bangladesh is rapidly developing market-based economy. Bangladesh manages to grown its economy at the rate of 6-7% per annum over the past few years and is expected to reach 6 percent in fiscal 2013(The World Bank, 2012). 4Storage

Area Network (SAN) is a dedicated network that provides access to consolidated, block level data storage. SANs are primarily used to make storage devices, such as disk arrays, tape libraries, and optical jukeboxes, accessible to servers so that the devices appear like locally attached devices to the operating system.

Copyright © 2012, Asian Business Consortium | GDEB

Page 94

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

According to the International Monetary Fund (IMF), Bangladesh ranked 44th largest economy in the world in PPP terms and 57th largest in normal terms. More than half of the GDP is generated by the service sector (Wikipedia, 2013). According to the GDP data of Bangladesh Bureau of Statistics (BBS) in FY 2010-11, the contribution of the manufacturing sector to GDP at the constant price is 18.41 percent (Economic Adviser's Wing, 2012). Bangladesh government wants to be consistent with the imperative and they are creating favorable policy for the promotion of cottage, small and medium industries (SMEs) along with large-scale industries. To this end, Cloud Computing can help government in this cause as cloud computing promises lower cost and faster deployment than traditional IT. Moreover, developing countries like Bangladesh, where labor-intensive industries are more suited than capital-intensive industries, have little money to spend on and no time to lose. To grow SME as well as largescale industry in Bangladesh, cloud computing can provide following benefits:  Cost Savings: as most businesses in Bangladesh are fall short of providing proper resources to meet growing business needs and in this current economic situation companies are forced to shrink their IT budgets. Therefore, businesses are forced to focus on optimizing every resource within their infrastructure. The beauty of cloud services is that they inspire businesses to not to spend out on hardware, software and even license fee as all the heavy lifting is done by the cloud application developer. Moreover, businesses do not need to employ additional IT staff to deal with any problems which might arise as services are completely managed by the service providers.  Greater Business Agility: revolution in communication technology means that business now can be done anywhere where there is Internet. Cloud computing allows businesses to take full advantage of this opportunity. Cloud based mobility solutions enable its customer to take their business into the audience effectively and also permit to access their files and applications regardless where they are.  Subscription-based pricing: one of the key feature of cloud computing is its services are customize able and they offer the option to pay monthly. Subscription-based pricing helps businesses to access incredibly sophisticated software with no upfront fees with no lock-in periods. As a result, businesses in Bangladesh mainly SMEs can access powerful software and services for a fraction of the cost of buying or developing it in-house.  Keeping Up-To-Date: to survive cloud business, cloud services constantly upgrade its services. There are hardly any interruptions to service and businesses don‘t have to search for new versions of the software every few years.  Speedy Implementation: with cloud computing services there is no need to purchase hardware or software, which means systems can be up and running in the time it takes to enter the business information and payment details.  Safe and Security: A reputable cloud provider always try to make sure that its customers data is encrypted and backed up, which takes the pressure and costs associated with data back-up away from businesses. It also takes away the worry of the businesses having to consider in-house data security as this is passed to the cloud provider.  Increasing Efficiency: Cloud services can enable businesses to significantly streamline the way in which they work, from sharing resources in one place to having the ability to collaborate in ways previously not possible.  Environmentally friendly: Recent studies show cloud technology could reduce company carbon emissions by up to 50%, which is great news and as it reduces the reliance on outmoded On-premise systems as everything is done via the cloud.(Accenture, 2011)

Copyright © 2012, Asian Business Consortium | GDEB

Page 95

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Businesses, especially in countries like Bangladesh face a tough challenge of meeting growing demands with very limited resources. And it is evident that Cloud Computing has something to offer every business from cottage to heavy industries. Right from application delivery to mobility solutions, cloud computing offers an intuitive methodology to leverage resources and improve business performance. Therefore, there is no doubt that implementing cloud computing will help Bangladesh‘s cause to create ―Digital Bangladesh‖ sooner than later.

BANGLADESH’S READINESS TO ADOPT CLOUD As it is proven that implementing cloud will help grow developing economy, question arises when a developing country like Bangladesh tries to implement a new technology is whether they have enough resources or skills to develop or maintain. Generally there are two ways, a) developing own cloud, b) subscribing from others. Almost all the powerhouses of IT companies are heavily investing on cloud computing. Government agencies in developing economies like India, china are also focusing on cloud computing regarding the potential and impact. Either way it requires skilled IT personnel and a good ICT infrastructure. To determine Bangladesh‘s readiness following factors are considered:  IT Industries of Bangladesh: IT industries in Bangladesh started to grow around 2000 and it has matured over the past few years. According to the survey of Bangladesh Association of Software And Information Services (BASIS), there are over 800registered software (BASIS, 2012) and IT Enabled Service (ITES) companies in Bangladesh. There are another few hundred of unregistered small and home-based software and IT ventures doing business for both local and international markets and about 70% of the companies involved in development and maintenance of software for their clients. Bangladesh Association of Software and Information Services (BASIS) survey also show that almost half of the companies are involved in providing range of IT enabled services. Another survey (Shinkai & Hossain, 2011) says that more than 20 per cent are exporting their products and services to over 30 countries. Among these, over 20 per cent companies have obtained ISO certification and a number of companies are in the process of acquiring CMMI (Capability Maturity Model Integration)5 certification and at least six companies have achieved CMMI level 3. As cloud computing depend on Internet, one of the most encouraging recent trends in the Bangladeshi IT industry is that, around 45% are focusing or diversifying on different web based services that include specialized portals, listing services, eCommerce etc. Moreover, in today‘s challenging economic conditions, Bangladesh has positioned itself as a key location for consideration by enhancing delivery capability and skill availability, lower costs of operations.

5Capability

Maturity Model Integration (CMMI) is a process improvement training and certification program and service administered and marketed by Carnegie Mellon University. There are five maturity levels, and Level 5 being the height.

Copyright © 2012, Asian Business Consortium | GDEB

Page 96

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Chart: Business Specialization of BASIS Member Companies

Reseller/Value Added reseller

2.80%

IT Infrastructure Management

3.20%

R&D Services

6.60%

System Integration

11.40%

Mobile Application/Content Provider

16.70%

Product Development

18.30%

E-commerce/Web Services

45.40%

IT Enable Services

49.80%

Customized application development & maintenance

76.30%

Source: Bangladesh Association of Software and Information Services (BASIS) survey



Skilled professionals: Bangladesh has a huge source of skilled human resources with its cultural adoption capability, English language skills, and a large number of educated and energetic youths with bright aptitude, and natural ability in software development. It also offers relatively low cost. Study shows that the costs are almost 40% lower than established destinations like India or Philippines (KPMG Bangladesh, 2012). Moreover, depending on theoretical and experimental evidence, skill level is closely associated with the performance of firms. An important prerequisite for the development of IT sector depends on the availability of skilled workforce with cheaper wage rate. Table: Skill level for Particular Activity

90 80 70 60 50 40 30 20 10 0 MySQL .NET

PHP

MS SQL

ASP

Flash

VB

Ajax Oracle Java C/C++

Source: Bangladesh Association of Software and Information Services Survey 2012

Copyright © 2012, Asian Business Consortium | GDEB

Page 97

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)



ISSN 2305-9168

According to BASIS survey approximately 30,000 professionals are employed in the industry. Even though the contribution for overall employment creation is not significantly high, it is creating high quality employment with average monthly compensation over Tk. 15,000 per month, which making software and IT service industry one of the top graduate employment sectors in the country. Almost all top institutes offer Computer Science or IT related program and it has been one of the favorite programs among students. These tech savvy, spirited young graduates are continuously participating international programming contest and performing relatively well. As a result many global players like Samsung, AMD, VizRT, WorldBridge Global and most recently Google – setting up operations in Bangladesh. All this evidence proves that Bangladesh have the skilled personnel to tackle IT challenges. Infrastructure readiness: Cloud Computing is 100 percent relay on Internet. The cloud model for computing storage and network resource management require distributed computing architecture and also require strong and fast network to handle increasing volume of data traffic. Bangladesh straggles in this area. The Networked Readiness Index published in Global Information Technology report 2012 by World Economic Forum, Bangladesh placed 113 out of 142 countries scoring 3.20 suggest Bangladesh‘s weakness. However, ICT has been declared as the thrust sector by the Government and situation is changing. The table shows the slow but increasing tendency of the development of ICT in Bangladesh over past few years. Table: ICT Development Indicators In Bangladesh Internet users (per 100 people) Secure Internet Servers (per 1 million people) Mobile phone subscriptions (per 100 people) Broadband internet subscriptions (per 100 people) Int’l Internet bandwidth (mbps per user) Electricity production (kWh per capita) Broadband internet tariffs (PPP$/min) Mobile cellular Tariffs (PPP$/min) Mobile network coverage, (per 100 people)

2009 0.32 0.4 21.66 0.0 0.09 147.72 1028.74 0.31 --

2010 0.35 0.9 27.90 0.03 0.4 156.03 155.06 0.08 --

2011 0.4 0.2 32.3 0.04 1.2 154.5 128.8 0.07 90

2012 3.7 0.3 46.2 0.06 2.8 240.3 36.28 0.03 90

Source: Global Information Technology Report, 2009 to 2012

All these evidence proves that, even though Bangladesh‘s software and IT services came long way from where it was a decade ago, yet it still have long way to go. The IT industries in Bangladesh are more than capable to develop and provide cloud services as it has skilled, energetic and relatively inexpensive IT professional. However, it is evident (from above table) that current IT infrastructure is not ideal for deploying cloud computing in Bangladesh as the internet service in Bangladesh is expensive and also it is not adequate enough to take the heavy load that cloud requires.

CONCLUDING REMARK The rapid changes that the ICT industry has experienced in the last decade have brought about deep transformations in the way our economic activity and society are organized. There is a sense of immediateness and constant accessibility is redefining the relationships

Copyright © 2012, Asian Business Consortium | GDEB

Page 98

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

between and across individuals, business, and governments. It has been predicted that the IT and telecommunications industries will converge for cloud services. In addition to providing bandwidths for cloud services, telecommunications carriers will gradually move their IT systems, value-added services, and internet data centers into the cloud to provide services to a variety of industries. This study proves that cloud computing will make sizable contribution to countries economy, even small developing economies like Bangladesh. However, this study also point out that Bangladesh lacks financial power as well as proper infrastructure for a wide and deep adoption of cloud. Another problem that has been point out is Bangladesh‘s approach towards Internet use. According to the Global Information Technology report, 2012 only 3.7% of its population use Internet services. Yet, the situation in Bangladesh is improving, slowly but surely. Few IT Pioneers of Bangladesh joined the Oracle CloudWorld to look for new solutions to serve their clients more efficiently and sustain in the competitive business. Bangladesh government also have identified the prospect of cloud computing. Bangladesh Computer Council (BCC), an agency dedicated to improving the state of the Information Technology in the country taking initiatives to move toward cloud computing. It would be unreasonable to expect that the cloud would help small economy like Bangladesh to catch up with the advanced economy. However, if the Bangladesh government properly undertakes policies to create a ―Digital Bangladesh‖ as laid down in its perspective plan, the Cloud Computing certainly holds a promise to minimize the divide.

REFERENCES [1]

[2] [3] [4] [5] [6] [7] [8]

[9]

Accenture, 2011. Cloud Computing and Sustainability: The Environmental Benefits of Moving to the cloud. [Online] Available at: http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Sustainabili ty_Cloud_Computing_TheEnvironmentalBenefitsofMovingtotheCloud.pdf [Accessed 05 April 2013]. Amies, A., Sluiman, H., Tong, Q.G. & Liu, G.N., 2012. Developing and Hosting Applications on the Cloud. Indiana: IBM Press. BASIS, 2012. Bangladesh Association of Software & Information Services. [Online] Available at: http://www.basis.org.bd/index.php/resource [Accessed 05 May 2013]. Dutta, S. & Bilbao-Osorio, B., 2012. Global Information Technology Report 2012. Insight Report. Geneva: World Economic Forum World Economic Forum and INSEAD. Dutta, S. & Mia, I., 2009. Global Information Technology Report 2008-2009. Insight Report. Geneva: World Economic Forum World Economic Forum And INSEAD. Dutta, S. & Mia, I., 2010. Global Information Technology Report 2009-2010. Insight Report. Geneva: World Economic Forum World Economic Forum and INSEAD. Dutta, S. & Mia, I., 2011. Global Information Technology Report 2010-2011. Insight Report. Geneva: World Economic Forum World Economic Forum and INSEAD. Economic Adviser's Wing, 2012. Bangladesh Economic Review - Finance Division. [Online] Available at: http://www.mof.gov.bd/en/index.php?option=com_content&view=article&id=211 &Itemid=1 [Accessed 05 April 2013]. Edwards, J., 2012. Cloud computing for SMEs. [Online] Available at: http://www.bmmagazine.co.uk/in-business/advice/13552/cloud-computing-forsmes/ [Accessed 02 April 2013].

Copyright © 2012, Asian Business Consortium | GDEB

Page 99

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

[10] Evans, P., 2012. Bangladesh - Internet Market and Forecasts. [Online] Available at: http://www.internetworldstats.com/asia/bd.htm [Accessed 03 April 2013]. [11] Global Technology Industry, 2011. Cloud Computing Issues and Impacts. UK: Ernst & Young IT Organization. [12] Hossain , M. & Shinkai, N., 2011. Integration of ICT Industries and Its Impact on Market Access and Trade: the Case of Bangladesh and India. South Asia Network of Economic Institutes, pp.11-16. [13] KPMG Bangladesh, 2012. Bangladesh Beckons, An emerging destination for IT/ITeS Outsourcing. Amstelveen: KPMG International. [14] Mell, P. & Grance, T., 2011. The NIST Definition of Cloud. Gaithersburg: National Institute of Standards and Technology. [15] Richards, J., 2013. Benefits of Cloud Computing for SMEs. [Online] Available at: http://www.techbubbles.co.uk/blog/10-benefits-of-cloud-computing-for-smes/ [Accessed 02 April 2013]. [16] Shinkai, N. & Hossain, M., 2011. Productivity and Performance of IT Sector in Bangladesh: Evidence from the Firm Level Data. Bangladesh Development Studies Vol. June 2011, No.2 , XXXIV(2), pp.1-12. [17] The European Union, 2010. The Future of Cloud Computing- Opportunities for Europeran Cloud Computing Beyond 2010. EU: The Publications Office of the European Union. [18] The World Bank, 2012. Bangladesh Economic Update. [Online] Available at: http://documents.worldbank.org/curated/en/2012/10/16847978/bangladesheconomic-update [Accessed 05 April 2013]. [19] Wikipedia, 2013. Economy of Bangladesh. [Online] Available at: http://en.wikipedia.org/wiki/Economy_of_Bangladesh [Accessed 05 April 2013]. [20] World Bank , 2012. INTERNET USERS IN BANGLADESH. [Online] Available at: http://www.tradingeconomics.com/bangladesh/internet-users-wb-data.html [Accessed 03 April 2013].

Asian Business Consortium is an independent research house committed to publishing and delivering superior, Peer-reviewed standard research

GDEB? www.gdeb.weebly.com    

High quality editorial board Rigorous and rapid peer review Open Access & high citation rate Will apply for ISI track in the near future

Copyright © 2012, Asian Business Consortium | GDEB

Page 100

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Consumers’ Perception and Performance Appraisal of Mobile Phone Companies in Bangladesh Tajul Islam1; Rajidul Hoque2; & Md.Ashraful Alam3 1

Assistant Professor, Department of Business Administration, Metropolitan University, Bangladesh Lecturer, Department of Business Administration, Metropolitan University, Bangladesh

2&3

ABSTRACT In recent times telecommunication industry like mobile phone, radio link device have made revolution in the world. For the last few years mobile phone has become part and parcel of our daily life. It has become an essential part of business, commerce and society. Mobile phone provide great assistance to users by giving the opportunity to access to the anywhere of the world. Moreover, with the continuous diversification, the use of mobile is not only limited to talking but its use ranges from using internet, sending messages, listening to music, to organizing various works are comfortably completed in time. The use of mobile phone was introduced in Bangladesh at the middle of 1989 by the CityCell Company. Now with the change of time another five operators have introduced in the market. The function of mobile in Bangladesh with its communicative use also spread with value added service like mobile banking, railway ticket purchasing, health services, news update, and examination results and so on. But there are a lot of complain about these operators services. Descriptive analysis, Z-test, Chi-square test and Multiple Regression Analysis were used to test the collected data and hypotheses of the research study. Through this research we have tried to find out consumers perception which impact may be very bad in near future on those operators. Most of the respondents think that mobile operators are charging higher terrify in which customers are deprived from pulse system. Slow internet service, and lack of coverage hamper to the access of information. By conducting this research we have found that except those complain, the overall services of mobile phone are moderately well. Key Words: Mobile Phone, Consumers‘ Perception, Mobile Operators, Telecommunication Industry, Value Added Services. JEL Classification Code: D18; D91

INTRODUCTION Mobile phone is playing vital role in our daily life. It has changed people‘s life style. For mobile phone we can now connect with each other within few seconds. It has been

Copyright © 2012, Asian Business Consortium | GDEB

Page 101

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

possible only for Bell Labs from 1947 to 1967, who is the inventor of cell phone. Bangladesh ranks among the most densely populated countries in the globe, but it‘s fixed; line tele density remains the lowest in South Asia. Mobile penetration rates in Bangladesh have reached 56% at the end of 2011, a study conducted by Business Monitor International (BMI). Bangladesh Telecommunication Company Limited (BTCL) which is a Government owns company is providing the fixed line services while six operators provide mobile phone services. Among them except TeleTalk, GrameenPhone holding 44%, Banglalink holding 34%, Robi holding 18%, Airtel holding 7% and CityCell holding 4% of market share. Now in Bangladesh mobile phone operators are more mature and people are well known about their services. Customers‘ expect value added services from the mobile operators. Customers perceived value can be defined from the perspective of money, quality, benefit, etc. The monetary perspective indicates that value is generated when less is paid (such as by using coupons or promotions) for goods (Bishop, 1984). In other words, it is the concept of consumer‘s surplus in economics; perceived value is the difference between the highest price that consumers are willing to pay for a product or a service and the amount practically paid. According to the quality perspective, value is the difference between the money paid for a certain product and the quality of the product (Bishop, 1984). The benefit perspective indicates that perceived value is customers‘ overall evaluation of the utility of perceived benefits and perceived sacrifices (Zeithaml, 1988). To survive in the competitive market mobile operators should provide value added services to meet customer‘s satisfaction. Johnson et al. (1991) have pointed out that service quality positively influences customer satisfaction.

OBJECTIVES OF THE STUDY The main objective of the study is to identify consumers‘ perception and performance appraisal of mobile phone companies in Bangladesh. To emerge the objective some other supporting objectives are: (i) To investigate the customer service management procedures of mobile phone operators in Bangladesh. (ii) To appraise the performance of operators‘ services such as overall network facilities, railway ticket booking system, tariff charged by operators, high speed internet services. (iii) To depict the relationship between pulse system and consumers‘ perception. (iv) To draw the relationship among the customers‘ and employees of the mobile phone operators in Bangladesh.

LITERATURE REVIEW Parasuraman et al. (1988) defined service quality as the degree and direction of discrepancy between the consumer‘s perceptions and expectations, or the extent to which a service meets or exceeds customer expectations. The definitions of service quality vary only in wording but typically involve determining whither perceived service delivery meets, exceed or fail to meet customer expectations (Cronin & Taylor, 1992; Oliver, 1993; Zeithaml, Berry & Parasuraman, 1994). Among the studies of customer‘s satisfaction in the information industry, Lin & Wang (2006) revealed that customer satisfaction of mobile commerce is consumer‘s total response to the purchase experiences in a mobile commerce environment. Therefore, in this study, customer satisfaction is defined as the total consumption perception of consumers when using mobile value-added services. As to the

Copyright © 2012, Asian Business Consortium | GDEB

Page 102

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

quality of mobile communication services, Chae et al. (2002) used connection quality, content quality, interaction quality, and contextual quality to measure the information quality of mobile networking services. There are a number of benefits for a long term relationships between a company and the customers, such benefits include fellowship, personal recognition, reduction in anxiety and credit, discount and time saving and customer management (Berry, 1995; Peterson, 1995). Customer satisfaction is defined as an ―evaluation of the perceived discrepancy between prior expectations and the actual performance of the product‖ (Tse and Wilton, 1988, Oliver, 1999). Satisfaction of customers with products and services of a company is considered as most important factor leading toward competitiveness and success (Hennig-Thurau & Klee, 1997).

METHODOLOGY OF THE STUDY Semi structured method has been taken in preparing the outline of the study. Necessary information based on personal discussion and conversation is made with undergraduate students of different Universities and professional bodies of different mobile phone operators in Bangladesh through a structured questionnaire has been highlighted with emphasize. Both primary and secondary data were used to conduct the study.

RESEARCH DESIGN FORMULATION This was a two stage research. In the first stage, an expiatory research has been conducted to identify factors affecting the consumer‘s perception. Then a descriptive research has been conducted for the purpose of understanding consumer‘s perception about the mobile phone operators. The questionnaire was developed in a way that reveals the respondents responses related to each of the independent variables. A single statement is prepared for a single independent variable as well as researchers considered consumers perception as dependent variable and 10 (ten) independent variables, such as people‘s life style, all kinds of services, overall network facilities, introduction of mobile banking, tariff charged by mobile operators, high speed internet services, introduction of railway ticket booking system, social responsibilities, pulse system and negative impact of mobile phone. A structured questionnaire has been used to collect data in the Sylhet City in Bangladesh. The questionnaire was formed as five point Likert scale and 110 questionnaires were distributed among the mobile phone users (both male and female) selected on random sample basis. Multiple choice questions (MCQ), dichotomous questions and open ended questions have been used to develop structured questionnaire. Data required for this study to identify the present situation of the mobile phone operators in different segment of the companies which has been conducted by the researchers. Then survey has been conducted on factors affecting to determine consumers‘ perception about the mobile phone operators. Here the respondents were asked some questions from a preplanned questionnaire.

APPROACHES TO THE PROBLEM: THEORETICAL FRAMEWORK The research study in concerned with the degree of selecting factors related to determine the consumers‘ perception regarding the mobile operators in Bangladesh. The study has completed with selecting the most influencing factors to understand the condition of the mobile operators in Bangladesh.

Copyright © 2012, Asian Business Consortium | GDEB

Page 103

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

MULTIPLE REGRESSION ANALYSIS To determine the relationship between factors and the consumer‘s perception of mobile phone operators in Bangladesh has been analyzed by using the following Multiple Regression Analysis: Y= α+β1X1+β2X2+β3X3+β4X4+β5X5+µi Here, Y = Consumer‘s perception α = Intercept X1 = Overall network facilities of operators X2 = Tariff charged by mobile phone operators X3 = High speed internet service X4 = Railway ticket booking system reduces harassment X5 = Start pulse system again β1, β2, β3, β4, β5 = regression coefficient

HYPOTHESES OF THE STUDY Hypothesis 1: There is no difference among factors affecting consumer‘s perception regarding mobile phone operators. (ANOVA) Hypothesis 2: There is no relationship between Operator‘s SIM and Railway Ticket Booking system. (Chi-Square Test) Hypothesis 3: There is no relationship between performance of mobile phone operators and all kinds of services. (Chi-Square Test) Hypothesis 4: There is no relationship between overall network facilities of operators and consumer‘s perception. Hypothesis 5: There is no relationship between tariff charged by operators and consumer‘s perception. Hypothesis 6: There is no relationship between high speed internet service and consumer‘s perception. Hypothesis 7: There is no relationship between railway ticket booking system reduces harassment and consumer‘s perception. Hypothesis 8: There is no relationship between start pulse system again and consumer‘s perception.

PRESENT STATUS OF MOBILE PHONE OPERATORS IN BANGLADESH Bangladesh ranks among the most densely populated countries in the world but its fixed line tele density remains the lowest in the South Asia. A mobile penetration rate in Bangladesh has to reach 56% at the end of 2011. A study conducted by Business Monitor International (BMI) recently. Bangladesh has some of the most underdeveloped telecommunication infrastructure in the world. For its 150 million populations, the country has limited capacity to support telecom services on any scale. But the scenario is changing day by day. In June 2011 BTCL have 693 exchanges in Bangladesh with telephone capacity of 3.065 million and connection of 0.99 million. At present BTCL has exchanged in 456 Upazillas and 25 growth centers. Activities are going on to bring 27 Upazillas including 22 Hill-tracts Upazillas under digital system. There are six mobile operators are providing services in Bangladesh. Bangladesh telecom market constitutes approximately 86.45 million phone lines (fixed plus mobile) of this about 85.45

Copyright © 2012, Asian Business Consortium | GDEB

Page 104

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

million are mobiles. The number of mobile subscribers grew 65 million in December 2010 to 85.45 million in 2011. Table 1 shows the list of telecom operators in Bangladesh. Table 1: List of authorized Telecom Operators in Bangladesh SL No. 1. 2. 3. 4. 5. 6.

Name of the Telecom Operators Pacific Bangladesh Telecom Limited (CityCell) Grameen Phone Limited Robi Axiata Limited Orascom Telecom Bangladesh Limited Tele Talk Bangladesh Limited Airtel Bangladesh Limited

DATA ANALYSIS AND SURVEY FINDINGS

No. of User's

Graph 1: Usage of Operator’s SIM

80 70 60 50 40 30 20 10 0

61%

23% 11% 3%

2%

0%

Graph 1 shows usage of operators SIM by the users. It reveals that 61% users usage Grameen Phone, 11% users usage Banglalink, 23% users usage Airtel and only 3%, 2% and 0% users usage Robi, Citycell and Teletalk respectively. It has found that most of the users prefer Grameen Phone as their operators. Table 1: Longibity of Using Mobile Phone Valid

Year Frequency Percent Valid Percent Cumulative Percent Less than 1 Year 1 .9 .9 .9 1 Year 1 .9 .9 1.8 2 Years 4 3.6 3.6 5.5 3 Years 10 9.1 9.1 14.5 4 Years 16 14.5 14.5 29.1 5 Years 31 28.2 28.2 57.3 More than 6 Years 47 42.7 42.7 100.0 Total 110 100.0 100.0

Copyright © 2012, Asian Business Consortium | GDEB

Page 105

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Table 1 reveals when users has started to use mobile phone. It also represents that 42.7%, 28.2%, 14.5% started to usage of mobile before more than 6 years, 5 years and 4 years respectively. On the other hand, only 9.1%, 3.6%, 9% and 9% has started to usage of mobile phone before 3 years, 2 years, 1 year and less than 1 year respectively. It has found that almost 85.4% users have started to usage of mobile phone more than 4 years ago. Graph 2: Monthly Total Time Spend

(f) 100 Minutes (g) Less 1% than 50 Minutes (e) 150 2%

(d) 200 Minutes 16%

Minutes 10%

(c) 250 Minutes 13%

(a) More than 300 Minutes 39% (b) 300 Minutes 19%

Graph 2 express monthly total time spend on the phone by the correspondence. It shows that 39%, 19%, 13%, 16% users monthly total time spent on the mobile phone more than 300 minutes, 300 minutes, 250 minutes and 200 minutes respectively. The remaining 10%, 1% and 2% users spent 150 minutes, 100 minutes and less than 50 minutes respectively on mobile phone each month. It has found that almost 71% users spent more than 250 minutes on mobile phone each month. Graph 3: Impact of Mobile Phone to Change the People‘s Life Style

(g) Strongly disagree

1%

(f) Moderately disagree

0%

(e) Disagree

0%

(d) Neither agree nor disagree

3%

27%

(c) Agree

31%

(b) Moderately agree

38%

(a) Strongly agree

Rate of changed in people's life style Graph 3 shows that mobile phone has changed the people‘s life in Bangladesh. It shows

Copyright © 2012, Asian Business Consortium | GDEB

Page 106

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

that 38%, 31% and 27% correspondences are strongly agree, moderately agree and agree respectively that mobile phone has changed the people‘s life style. Graph 4: Services of Customer Care Center

(g) Strongly disagree

2

(f) Moderately disagree

1 20

(e) Disagree

16

(d) Neither agree nor disagree

51

(c) Agree 17

(b) Moderately agree 3

(a) Strongly agree 0

20

40

60

No. of Respondent's Graph 4 represents services of customer care center of mobile phone operators. It also shows that 3, 17, 51 respondent‘s believes that customer care center provides all kinds of services smoothly. In contrary, 20,1 and 2 respondent‘s are disagree, moderately disagree and strongly disagree respectively and 16 respondent‘s are neither disagree nor disagree.

No. of Respondent's

Graph 5: Overall Network Facilities

55

60 50 40 30

21

21

19%

19%

20 10 0

50%

8 7%

5 5%

0 0%

0 0%

Graph 5 shows overall network facilities of mobile phone opearators. It also shows 21 or 19%, 21 or 19%, and 55 or 50% respondent‘s are strongly agree, moderately agree and agree respectively that overall network facilities of mobile phone operators are better than past. Almost 88% respondent‘s believes that overall network facilities has improved than before.

Copyright © 2012, Asian Business Consortium | GDEB

Page 107

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Graph 6: Impact of Mobile Banking in Saving Time

(e) Disagree 3% (d) Neither agree nor disagree 22%

(g) Strongly (f) disagree Moderately 1% disagree 0% (a) Strongly agree 24%

(c) Agree 30%

(b) Moderately agree 20%

Graph 6 reveals the recent introduction of, mobile banking has saved time. About 24%, 20%, 30%, respondent‘s are strongly agree, moderately agree and agree respectively that mobile banking has saved time. On the other hand, only 3%, 0% 1% respondent‘s are disagree, moderately disagree and strongly disagree respectively. The above analysis revealed almost 74% respondent‘s believes that introduction of mobile banking saves time. Graph 7: Tarrif Charged by Mobile Operators

(g) Strongly(a) Strongly disagree agree (f) (b) Moderately 5% 6% Moderately disagree agree 11% 13%

(e) Disagree 24% (d) Neither agree nor disagree 12%

(c) Agree 29%

Graph 7 represents tariff charged by mobile operators. It shows 6%, 13% and 29% respondent‘s are strongly agree, moderately agree and agree respectively that tariff charged by mobile operators is fair. On the other hand, 24%,11% and 5% respondent‘s are disagree, moderately disagree and strongly disagree respectively regarding tariff charged by mobile operators. It is mentioned that 12% respondent‘s are neither agree nor disagree regarding tariff charged by operators . It has found that around 48% respondent‘s believes

Copyright © 2012, Asian Business Consortium | GDEB

Page 108

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

that tariff charged by mobile operators is fair. On the other hand, almost 52% respondent‘s thinks that tariff chagred is not fair. Graph 8: High Speed Internet Services

6%

(g) Strongly disagree

0%

(f) Moderately disagree

28%

(e) Disagree 17%

(d) Neither agree nor…

30%

(c) Agree 15%

(b) Moderately agree 5%

(a) Strongly agree 0

20 Responses (%)

40

Graph 8 shows relevance of high speed internet services of mobile phone operators. It represents 5%, 15% and 30% respondent‘s are strongly agree, moderately agree and agree respectively that mobile operators are providing high speed internet service and about 34% respondent‘s are disagree on high speed internet service. Graph 9: Mobile Phone Provides Railway Ticket Booking Service

No. of Respondent's & %

39 40 35 30 25 20 15 10 5 0

25 14

9 8%

13%

35%

23%

19 17% 3 3%

1 1%

Graph 9 represents recent introduction of, Railway ticket booking system in mobile phone has reduced harassment to their customer‘s. It reveals about 9 or 8%, 14 or 18%, and 39 or 35% respondent‘s are strongly agree, moderately agree and agree respectively that mobile phone has reduced users harassment regarding Railway ticket booking. In contrast, 19 or 17%, 3 or 3% and 1 or 1% respondent‘s believes that Railway ticket booking service didn‘t

Copyright © 2012, Asian Business Consortium | GDEB

Page 109

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

reduce harassment of consumer‘s and 25 or 28% respondent‘s are neither agree nor disagree regarding reduced harassment of consumer‘s. Graph 10: Social Responsibilities

Graph 10 shows the involvement of social responsibilities done by mobile phone companies in Bangladesh. It represent‘s 11%, 28% and 50% respondent‘s are strongly agree, moderately agree and agree respectively believes that mobile operators involved in social responsibilities (i.e. boat race, passer hunts and sponsorship in various development project). Almost 89% consumer‘s thinks that mobile operators performs various types of social activities in Bangladesh.

No. of Respondent's

Graph 11: Pules Rate

24

24

35 13

14 0

0

Graph 11 represents pulse system of mobile phone operators. Almost 83 respondent‘s out of 110 thinks that mobile operators should start pulse system again.

Copyright © 2012, Asian Business Consortium | GDEB

Page 110

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Graph 12: Negative Impcat of Mobile Phone

(d) Neither (e) Disagree agree nor 3% disagree 3%

(f) Moderately disagree 2%

(c) Agree 23%

(g) Strongly disagree 1%

(a) Strongly agree 52%

(b) Moderately agree 16%

Graph 12 elucidate the negative impact of usage of mobile phone. It also represent‘s 52%, 16% and 23% respondent‘s are strongly agree, moderately agree and agree respectively with the negative impact of mobile phone usage. Almost 91% of total respondent‘s thinks that usages of mobile phone has massive negative impact such as misuse, increase smuggling and harmful of sound health.

TEST OF HYPOTHESES Hypothesis 1 Ho: There is no difference among factors affecting consumer‘s perception regarding mobile phone operators. Ha: There is difference among factors affecting consumer‘s perception regarding mobile phone operators. Table 5: ANOVA Source of Variation Between Groups Within Groups

SS 1569.814 2238.391

df 13 1526

MS 120.7549 1.466835

F 82.32341

P-value 1.6E-165

F crit 1.726566

Table 5 shows that calculated F value is 82.3234 which are much greater than the F-critical value of 1.7265 as well as the p-value of 1.6E-165 at 5% level of significance. So therefore, based on the above ANOVA Null Hypothesis (Ho) must be rejected and Alternative Hypothesis (Ha) is accepted. In conclude it can be said that, there is difference among factors affecting consumer‘s perception regarding mobile phone operators. Hypothesis 2 Ho: There is no relationship between operator‘s SIM and railway ticket booking system. Ha: There is relationship between operator‘s SIM and railway ticket booking system.

Copyright © 2012, Asian Business Consortium | GDEB

Page 111

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Table 6: Chi-Square Tests Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value 29.560(a) 32.237 1.304 110

df 24 24 1

Asymp. Sig.(2-sided) .200 .121

a 28 cells (80.0%) have expected count less than 5. The minimum expected count is .02. Table 6 represents Pearson chi-square test value is 29.560 (a) at 24 degrees of freedom. Critical value is 36.415 at 24 df of 5% level of significance, which is greater than calculated value. Therefore, based on the above Chi-Square Test Null Hypothesis (Ho) must be accepted and Alternative Hypothesis (Ha) is rejected. Consequently, it can be said that, there is no relationship between operator‘s SIM and railway ticket booking system. Hypothesis 3 Ho: There is no relationship between performance of mobile phone operators and all kinds of services. Ha: There is relationship between performance of mobile phone operators and all kinds of services. Table 7: Chi-Square Tests Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value 16.757(a) 20.029 .008 110

df 24 24 1

Asymp. Sig.(2-sided) .859 .695 .929

a 29 cells (82.9%) have expected count less than 5. The minimum expected count is .02.

The null hypothesis (H0) of no association between two variables will be rejected only when the calculated value of test statistic is greater than the critical value. Table 7 shows Pearson chi-square test value is 16.757(a) at 24 degrees of freedom. Critical value is 36.415 at 24 df of 5% level of significance, which is greater than calculated value. So there is no relation exist between two variables. That‘s why, accepted the Null Hypothesis (Ho) and must be rejected Alternative Hypothesis (Ha). Table 8: Results of Regression Analysis Item Constant=4.3393 H4 = Overall network facilities of operators H5= Tariff charged by mobile phone operators H6 = High speed internet service H7= Railway ticket booking system reduces harassment X8 = Start pulse system again R√ = 0.2845, F = 3.5420 Significance = 3.5420 N = 110

Proposed Effect

Path Coefficient

Standard Error

t-value

Significance level

+

0.0514

0.1261

0.4074

0.6846

-

0.0637

0.0801

0.7955

0.4282

+

-0.0967

0.0922

-1.0494

0.2966

-

-0.1813

0.0999

-1.8148

0.0726*

+

0.1008

0.1003

1.0045

0.3176

Copyright © 2012, Asian Business Consortium | GDEB

Page 112

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

ANALYSIS OF RESULTS OF REGRESSION The results of multiple regression as shown in the table 8 shows that there is no relationship between overall network facilities of operators and consumer‘s perception is not significant at 0.05 significance level (Beta = 0.0514, t-value = 0.4074, p = 0.6846). So therefore, H4 must be rejected that means there is positive and significant relationship between overall network facilities of operators and consumer‘s perception. According to the H5 which states that there is no relationship between tariff charged by operators and consumer‘s perception is not supported at the 0.05 significance level (Beta = 0.0637, t-value = 0.7955, p = 0.4282). Henceforth, H5 is rejected and alternative hypothesis is accepted that means there is a positive and significant relationship between tariff charged by operators and consumer‘s perception. In respect to H6, that states there is no relationship between high speed internet service and consumer‘s perception also rejected at the 0.05 significance level (Beta = -0.0967, t-value = 0.0922, p = 0.2966). This result indicates that positive and significant relationship between high speed internet service and consumer‘s perception. Accordingly, H7 is significant at the 0.10 level of significance (Beta = -0.1813, t-value = 1.8148, p = 0.0726*). This states that railway ticket booking systems by mobile operators reduces harassment of consumer‘s. In respect to H8 which states there is no relationship between start pulse system again and consumer‘s perception is not significant at the 0.05 significant level (Beta = 0.1008, t-value = 1.0045, p = 0.3176). So therefore, H8 is rejected and it indicates that mobile operators should start pulse systems again.

LIMITATIONS OF THE STUDY The current research study has some limitations. One of the limitations of the study is that primary data has collected only in the Sylhet City in Bangladesh. All kinds of services, overall network facilities, tariff charged by mobile operators, high speed internet services, introduction of railway ticket booking system, pulse system are not the only determining factor of consumers perception and performance of mobile phone operators. The other factors, for instances, introduction of mobile banking, social responsibilities, people‘s life style and negative impact of mobile phone are disregarded in this study which may have important effect on the consumers‘ perception and performance of mobile phone. This is clear from the value of R√ (28.45%).

FUTURE RESEARCH This study focused on consumers‘ perception and performance of mobile phone operators by considering some important factors. Thus, the study unlocks many opportunities for future studies to study consumers‘ perception and to make out the factors that may affect performance of mobile phone operators in Bangladesh and other developing countries in the world. The sample of current study covered only the Sylhet City in Bangladesh. Therefore, future study may have an opportunity to cover the whole regions of Bangladesh.

FINDINGS & RECOMMENDATIONS Based on the previous analysis following explanation can be drawn : (i) Almost 61% users usage Grameen Phone and only 39% users usage Banglalink, Airtel, Robi, Citycell and Teletalk. It has found that most of the users prefer Grameen Phone as their operator. To survive in the competitive market other

Copyright © 2012, Asian Business Consortium | GDEB

Page 113

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

mobile operators (i.e. Banglalink, Airtel, Robi, Citycell and Teletalk) should provide better services to their consumers. (ii) It has found about 96% correspondences are agreed that mobile phone has changed people‘s life style. With the advancement of telecommunication sector people‘s perceived that mobile phone has great users style. (iii) About 71 respondent‘s believes that customer care center provides all kinds of services smoothly. In contrary, 29 respondent‘s believes that customer care center are not providing all kinds of services smoothly. So therefore, customer care center services should be improved. (iv) The Analysis has shown that almost 88% respondent‘s believes overall network facilities has improved than past. Therefore, mobile phone operators should enforce on upgradation consistency of network facilities. (v) Only 48% respondent‘s are agree that tariff charged by mobile operators is fair. On the other hand, almost 52% respondent‘s believes that tariff charged by mobile operators is not fair. So it can be identified that tariff charged by mobile phone operators is not rationale. Therefore, mobile operators should implement different types of fair tariff strategy to fulfill the consumer‘s perception. (vi) It has shown that about 50% respondent‘s are satisfied with high speed internet service provided by mobile phone operators and about 34% respondent‘s are dissatisfied on high speed internet service. So it can be said that, mobile phone operators providing moderate speed internet services. That‘s why, mobile phone companies should facilitate the technology regardingspeedy internet services. (vii) About 61% respondent‘s are agree that mobile phone has reduced users harassment regarding Railway ticket booking. In contrast, 39% respondent‘s believes that Railway ticket booking service didn‘t reduce harassment of consumer‘s. (viii) Almost 89% respondent‘s believes that mobile phone operators involved in social responsibilities (i.e. boat race, passer hunts and sponsorship in various development project). (ix) Most of the respondent‘s (i.e. 83 out of 110) thinks that mobile operators should start pulse system again. (x) Almost 91% of total respondent‘s recommend that usages of mobile phone has massive negative impact such as misuse, increase smuggling and harmful of sound health.

CONCLUSION For connecting people mobile phone is one of the greatest inventions of the science. It conquered time, it conquered place. People from any part of the world at any time can communicate with each other through mobile phone. With the advance of time mobile operators could introduce different services to make people‘s life easier. The operators should also focus on the smooth flow of network coverage, customer care services, speed of internet services as well as corporate social responsibilities. They should aware about the abuses of mobile phone. The operators themselves may generate new ideas, initiatives by which they can delight the customers.

REFERENCES [1] [2]

Berry, L., L. (1995). Relationship Marketing of Services: Growing Interest, Emerging Perspectives, Journal of the Academic of Marketing Service, 23(4), 236-245. Bishop, W., R., Jr. (1984). Competitive Intelligence. Progressive Grocer, 63(3), 19-20.

Copyright © 2012, Asian Business Consortium | GDEB

Page 114

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

[3]

Chae, M., Kim, J., Kim, H., & Ryu, H. (2002). Information Quality for Mobile Internet Services: A theoretical model with empirical validation, Electronic Markets, 12(1), 38-46. [4] Cronin, J., J. & Taylor, S., A. (1992). Measuring Service Quality: A Reexamination and Extension, Journal of Marketing, 56(3), 55-68. [5] Hennig-Thurau, T., & Klee, A. (1997). The Impact of Customer Satisfaction and Relationship Quality on Customer Retention: A Critical Reassessment and Model Development, Psychology and Marketing, Vol.14, Issue 8, pp.737-764. [6] Johnson, M., D., & Fornell, C. (1991). A Frame Work for Comparing Customer Satisfaction across Individuals and Product Categories, Journal of Economic Psychology, 12(2), 267-286. [7] Lin, H., H. & Wang, Y., S. (2006). An Examination of the Determinants of Customer Loyalty in Mobile Commerce Contexts, Information and Management, 43(3), 271-282. [8] Parasuraman, A., Zeithaml, V., A. & Berry, L., L. (1988). SERVQUAL: A Multi-Item Scale for Measuring Consumer Perceptions of SQ, Journal of Retailing, 64(1), 12-40. [9] Parasuraman, A., Zeithaml, V., A. & Berry, L., L. (1994). Reassessment of Expectations as Compassion in Service Quality: Implications for further research, Journal of Marketing, 58(1), 111-124. [10] Peterson, R., A. (1995). Relationship Marketing and Consumer, Journal of the Academy of Marketing Science, 23(fall), 278-281. [11] Oliver, R., L. (1993). Cognitive, Affective, and Attribute Bases of the Satisfaction Response, Journal of Consumer Research, 20, 418-430. [12] Zeithaml, V., A. (1988). Consumer Perceptions of Price, Quality and Value: A means-end model synthesis of evidence, Journal of Marketing, 52(3), 2-22.

Important!!! If the responses and the revised manuscript are not submitted by the deadline, submission is deemed to have been abandoned. The rejection of the manuscript will be conveyed to the Authors.

Submit your next manuscript at- www.abcjournals.weebly.com ABC Journals is a unique forum to offer open access to all of its articles. Now ABC Journal‘s portfolio is over nine journals, which publish both online and in print.

Copyright © 2012, Asian Business Consortium | GDEB

Page 115

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Employee-Organization Congruence and Job Performance: Development of a Conceptual Model Perera, G.D.N.1; Prof. Dr. Khatibi, A.2; & Dr. Navaratna, N.N.J.3 1

PhD Researcher, Management & Science University, Malaysia; and Lecturer, Department of Human Resource Management, University of Sri Jayewardenepura, Sri Lanka 2 Prof and Dean, Faculty of Business Management and Professional Studies, Management & Science University, Malaysia, 3 Senior lecturer, Department of Human Resource Management, Faculty of Management and Finance, University of Colombo

ABSTRACT Research on Employee-Organization Congruence (EOC) has focused on the effect of EOC on individual performances. However EOC and job performance relationship and its contextual validity have not been explored in Sri Lankan apparel sector. This paper has explored the specific factors specially related to the Sri Lankan apparel sector work environment. Among these variables EOC considered as independent variable, job performance as a dependent variable. The conceptual model of this study investigates job related attitudes, namely job satisfaction and organizational commitment as two potential mediating factors for the EOC and job performance relationship. Further organizational climate has been cited as possible moderating factor on EOC and job performance relationship. This paper makes a significant contribution to the body of knowledge with the proposed conceptual framework so that it can be used as a basis for the future research in this context. Key words: Employee-organization congruence, Job performance, Job satisfaction, Organizational commitment, Organizational climate JEL Classification Code: J53; J58

INTRODUCTION With hot winds of competition blowing across the apparel industry, developing a close symbiotic relationship with employees has become highly important than ever before. When, achieving organizational ultimate objectives, organizations need to understand how people interact with organizational settings and how organizational and individual performance can be improved. Therefore, Person-Environment (P-E) congruence is a general framework that was developed to promote an understanding of how people‘s characteristics and psychological characteristics interact with the organizational contexts. EOC is one of the major concepts in P-E congruence area (Edwards and Cable, 2009). EOC is the compatibility of employees skills, attitudes and work values with an organizational entity (Edwards and Cable, 2009; Kristof-Brown et al. 2005). Muchinsky

Copyright © 2012, Asian Business Consortium | GDEB

Page 116

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

(2003) explained job performance is the set of worker's behaviors that can be monitored, measured, and assessed achievement in individual level. Few researchers (Mackinnon et al.2007; Meglino and Ravlin, 1998 and Meglino et al.1989) revealed the relationship between EOC and job performance, which include the potential mediators and moderators. As a result this study mediates the relationship between EOC and job performance through job related attitudes, namely job satisfaction and organizational commitment. Organizational climate act as a moderator role between EOC and job performance relationship as well as attitudes. Therefore the purpose of this paper is to propose a theoretical framework so that a future study can explore how job satisfaction, organizational commitment and organizational climate affect to the relationship between EOC and job performance.

SUMMARY OF THE LITERATURE REVIEW Person – environment congruence The concept Person–Environment (P-E) congruence is grounded in the interactions‘ theory of behavior (Ambrose et al.2008; Edward and Cable, 2009), beginning with Lewin‘s (1951) propositions that the human behavior is a function of the person and environment. Chatman, (1989) and Kristoff (1996) have shown that the P-E congruence will have a greater interaction with the individual characteristics (psychological needs, personality traits, person factors) and the organizational or situational characteristics (nature of rewards, cultural value and environmental condition). P-E congruence can be conceptualized with various congruence dimensions including an individual‘s congruence with a job (person-job), congruence with a group (person-group), congruence with a vocation (person-vocation) and congruence with an organization (person-organization)(Caldwell et al. 2004; Cooper et al. 2004; Jansen and Kristof,2006). Employee–organization congruence Employee–organization congruence is embedded in the broader concept of personenvironment congruence. Therefore, the present study provides more attention to the employee -organization congruence.EOC is the compatibility of employees skills, attitudes and work values with an organizational entity (Edwards and Cable, 2009; Kristof-Brown et al. 2005). EOC is generally defined as the ―compatibility between individuals and the organizations where they work‖ (Sekiguchi,2003). There are three approaches to measuring of the EOC; subjective congruence, perceived congruence and objective congruence (Cable and Judge, 1996; O‘Reilly et al.1991). This paper mainly focuses on perceived congruence. Reason is many researchers (Bowen et al.1991; Chatman, 1989; Edward et al.2008; Hamdan, 2011) pay more attention on values between organization and individual. Perceived congruence is an indirect measure where employees are asked to describe both their own personal values and their organizational values (Hamdan, 2011; Meyer et al.2010; O‘ Reilly et al.1991; Shar et al.2009).

JOB PERFORMANCE Muchinsky (2003) explained job performance (JP) is the set of worker's behaviors that can be monitored, measured, and assessed achievement in individual level. Employee‘s job performance is important factor to push forward to be excellent organization. Job performance refers to the effectiveness of individual behaviors that contribute to organizational objectives (McCloy et al.1994; Motowidlo,2003).

Copyright © 2012, Asian Business Consortium | GDEB

Page 117

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Employee–organization congruence and job performance Few studies have examined the relationship between the EOC and job performance (Becker et al.1996; Meglino et al.1989; Poon, 2004; Rod, 2008).All these studies conclude negative relationships between EOC and job performance. However, one researcher identified the positive relationship between EOC and JP (Shin and Holland, 2004).According to Kristof‘s (1996) summary of empirical results, support the positive effects of EOC on employee extra–role behaviors (citizenship performance) and work performance (task performance) (Ambrose et al.2008; Liu et al.2010).In addition, EOC confirms that culture and ideological congruence can affect performance of the organization (Tridball,1988). EOC has an important implication not only for the employee‘s affective reactions to organizational life, but also their performance (Kotter and Haskett, 1992).According to Kristof-Brown (2002), perceived EOC is a better predictor of job performance and investigated how employee integrates their perceptions of EOC when forming work attitudes. Further he explained EOC has a unique impact on job performance.EOC related research emphasizes the antecedents and consequences of congruence between employee and entire organization. This congruence is vital in maintaining a flexible and committed workforce that is necessary in today‘s competitive business environment to achieve goals (Westerman and Cyr, 2004). Arthur, et al. (2006) have used meta-analysis procedure to estimate the criterion related validity of EOC as a predictor of job performance and turnover. Also compared the relationship with EOC and work attitudes. Analysis data explained the relations of EOC with job performance and turnover were partially mediated by work attitudes including job satisfaction, organizational commitment, and turnover intentions. Nevertheless, Meta-analyses resulted in estimated true criterion related for EOC as a predictor of job performance. Hoffman and Woehr (2006) extend the meta-analyses of Verquer,et al. (2003) providing a meta-analyses review of the relationship between EOC and behavioral criteria of job performance. They identified 24 studies (conducted between 19672003) between EOC and JP .The results indicated that EOC is weakly related to JP. However, better EOC will result in higher JP in Taiwanese organizations (Silverthorne, 2004).Some empirical studies explained, EOC have a stronger relationship with behavioral outcome of job performance (Ambrose et al. 2008;Cooper et al.2004;Greguras and Diefendorff,2009;Liu et al.2010;Van et al.2007). EOC affects employee performance (Li, 2006). This study concerned job satisfaction and organizational commitment as mediator variables and organizational climate as a moderator variable. According to Sekaran and Bougie, (2010,p77) a mediator ―is one that surfaces between the time, the independent variables start operating to influence the dependent variable and the time their impact is felt on it‖ Moderating variable is a―presence of third variable modifies the original relationship between the independent and dependent variable‖(Sekaran and Bougie, 2010, p73).

JOB SATISFACTION Job satisfaction refers to ―an evaluative judgment about the degree of pleasure an employee derives from his or her job that consists of both the affective and cognitive components‖ (Edwards et al.2008.p442). Aamodt, (2009) defines job satisfaction as ―the attitude an employee has toward his job.‖ Most studies focus on the direct relationship between EOC and JP (Chatman, 1989; Lauver et al. 2001; O‘Reilly et al, 1991),

Copyright © 2012, Asian Business Consortium | GDEB

Page 118

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Organizational commitment Organizational commitment is the employee‘s willingness to extend effort in order to achieve the organizational goals and the degree of alignment between the organization goals and values of the employee (Mowday et al.1982). Organizational commitment consists of different types and each type influences on the job behavior differently (Meyer and Allen, 1991).They identified 3 types of commitment, namely affective, normative and continuous commitment. But this study mainly focused on affective and continuous commitment. Organizational climate Organizational climate refers to how the organization‘s culture – its values, beliefs, and assumptions–are translated into organizational practices, policies, and procedures (Ostroff et al., 2003; Schneider et al., 2000). Bowen and Ostroff (2004) stated that an organization‘s climate ―can act as a strong situation when employees develop a shared interpretation of the organization‘s policies, practices, procedures, and goals and develop shared perceptions about what behaviors are expected and rewarded in the organization‖ (p. 207). Litwin and Stringer (1968), who conceptualized the organizational climate in relation to its influence on motivation and behavior. They stated that organizational climate is: ―a set of measurable properties of the work environment, perceived directly or indirectly by people who live and work in this environment and assumed to influence their motivation and behavior‖ (Litwin and Stringer, 1968: p 81). Mediator and moderator effects on employee–organization congruence and job performance Few researchers (Mackinnon et al.2007; Meglino et al.1989) revealed the relationship between EOC and job performance, which include the role conflict and the cognitive style as the potential mediators. They described the several theoretical explanations how or why EOC affect for JP and mediators role.In literature, psychological need fulfillment variable has been used as a mediator of EOC (Edwards and Cable, 2009).According to their view, effect of congruence is indirect, and organizational values affect the supplies. As a result, employees were to accept and retain their jobs. Results of the study explained that the indirect effects of value congruence on the outcome were less and further emphasized, the future research will investigate the value congruence effects. Edwards and Cable (2009) explained the effects of EOC on job satisfaction with mediating variables He founded the relationship with four mediators (communication, predictability, attraction, and trust) and job satisfaction. Further he shown there is no any importance of mediators except of predictability. Hamdan (2011) investigates role conflict, cognitive style, and industrial justice as three potential mediating mechanisms in the relationship between EOC and individual outcomes. A survey of 558 mid level managers from seven Brunei public sector organizations provided the data. Based on his result, P-O fit and outcome was partially mediated by organizational justice and cognitive style and role conflict has not any mediating effect. According to Morewitz (2009), job satisfaction did not mediate the relationships with EOC and JP. Further he explained, organizational commitment was significantly mediate and organizational climate is not moderate the EOC and JP relationship.

Copyright © 2012, Asian Business Consortium | GDEB

Page 119

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

METHODOLOGY This study involves a development of conceptual model for empirical exploration of a phenomenon. Therefore it reviews the existing literature for identifying concepts and relationships relating to the phenomenon. Basically 300 abstracts of articles were scrutinized to check their relevance to the phenomena under consideration. Finally, 200 articles were selected and reviewed for identifying the concepts and relationships involved.

GAPS IN EMPLOYEE-ORGANIZATION CONGRUENCE AND JOB PERFORMANCE After reviewing the existing literature, there are three gaps in employee-organization congruence and job performance research as follows. Gap one EOC related researches are very significant and diverse in organizational context. Different studies have been carried out in different organizational setting, different methodology and with different cultural settings. According to the literature review, EOC and JP relationship is not generalized (see relationship of EOC and JP section).Many researchers have found, that there is a relationship between EOC and job performance (Ambrose et al. 2008; Liu et al. 2010; Hamdan, 2011; Rod, 2008), but have not identified as to why better EOC results in better JP, or why better EOC results in lower JP and how low EOC results in lower JP(see figure 1). Gap two As earlier mentioned few studies investigated the mediating effect of EOC and JP. The research question of job related attitudes mediate the relationship between EOC and JP is very vital, because it opens new insight in to the understand of the mediating affect of EOC to the JP in Sri Lankan Apparel Industry. According to the previous sections seems that there is a gap in the empirical knowledge available about the mediating variables role of job satisfaction and organizational commitment to the EOC and JP from the perspective of factory workers in the Sri Lankan apparel sector. The purpose of this study is to find how mediating variables affect to the perceived EOC and JP relationship in the Sri Lankan context (refer figure 3). Gap three As above explained, few studies investigate the moderating effect of EOC and JP. But not finalized how organizational climate moderates the relationship between EOC and JP. Moreover, as there are no previous studies carried out in this area in apparel sector, there is a knowledge gap that could be attempted to address. The literature available to the researcher reveals that there is a wide gap between theoretical as well as empirical explanations of the previous studies. The findings of this study may help to fill this gap to a considerable extent.

DEVELOPMENT OF THE CONCEPTUAL FRAMEWORK The proposed conceptual framework was developed based on the identified variables and relations through the literature review pertaining to the research problem of the study. The following contains a brief description of reviewed literature so that it may provide a threshold for the theoretical framework. Central focuses of the EOC studies are examine the individual outcome, especially job performance (Ambrose et al.2008; Liu et al.2010). Among the EOC studies perceived congruence is the mostly used researched areas (Bowen et al.1991; Edward et al.2008; Hamdan,2011;Meyer et al.2010;O‘Reilly et al.1991;Shar et al.2009;Van et al.2007, p.1737).Therefore, relationship between EOC and job performance explained in figure 1.

Copyright © 2012, Asian Business Consortium | GDEB

Page 120

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Figure 1 Relationship between EOC and job performance

Job performance

Perceived Congruence

(Source: Adapted by researchers) Some specific EOC and job performance relationships provide factors which may operate as mediators. This study considers job related attitudes, such as job satisfaction (JS), and organizational commitment (OC) as mediators (refer figure 2). Figure 2 Relationship between EOC and job performance mediated by attitudes

Attitudes Job performance

EOC (Source: Adapted by researchers)

Job satisfaction acts as a significant mediator between EOC and JP, because values fit create the strongest situation for the people to satisfy their personal and organizational values. This leads to higher level of satisfaction of the worker to enhance JP.EO incongruence leads to development of the lower satisfaction of a worker that represents the tradeoff between the individual and the organization (Ambrose et al. 2008; Cools et al. 2009; Erdogan and Bauer, 2005). According to the Morewitz (2009) organizational commitment acts as a mediator between the EOC and job performance. EOC meets employees‘ personal and organizational values to achieve the organizational commitment. This leads to higher level of organizational commitment to the worker with more positive values (individual and organizational) to enhance JP. Figure 3 described job satisfaction and organizational commitment mediate the EOC and job performance relationship. Figure 3 JS and OC mediate the EOC and job performance relationship

Job satisfaction Organizational commitment

Job performance EOC (Source: Adapted by researchers) One study (Morewitz, 2009) has been conducted to test the moderating effect between the EOC and job performance by organizational climate. The results indicate that EOC and job performance relationship did not have any significant relationships with the study

Copyright © 2012, Asian Business Consortium | GDEB

Page 121

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

variables (Morewitz, 2009).However, this study wants to identify results are similar or not in Sri Lankan apparel sector. Figure 4 explained the conceptual framework of this study Figure 4 Conceptual framework

Job satisfaction Organizational Commitment

EmployeeOrganiza tion Congruence Job Perfor mance

Organizatio nal Climate (Source: Developed by researchers)

CONCLUSION AND IMPLICATIONS This paper proposes a conceptual framework for exploring the effect of job satisfaction, organizational commitment and organizational climate in the EOC and job performance relationship of the factory workers in large apparel sector. Even though the proposed framework is yet to be tested empirically, the description of the interactions between variables will add significant value to the body of knowledge on both human resource management and organizational behavior literature. First, this paper has offered an extension of the body of knowledge on attitudes by identification of the mediating effect of the job satisfaction and organizational commitment. This paper addresses the knowledge gap of mediating variable effect with EOC and job performance relationship. Next identify how moderator variable effect for the EOC, job related attitudes and job performance relationship. This has not been explored previously. This paper points out this knowledge gap and stress the importance of addressing it empirically. Also identify moderator variable effect for the EOC and job performance relationship. Therefore, proposed conceptual framework of this paper will set a new direction for future research to understand the mediator and moderator effects on EOC and job performance relationship.

Copyright © 2012, Asian Business Consortium | GDEB

Page 122

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

REFERENCES [1]

Arthur, B., Bell, S T., Villado, A. J. & Doverspike, D.(2006). The Use of PersonOrganization Fit in Employment Decision Making: An Assessment of Its CriterionRelated Validity. Journal of Applied Psychology. 91 (4). p.786.

[2]

Ambrose, M. L., Arnaud, A. & Schminke, M.(2008). Moral Development and Ethical Climate: The influence of Person-Organization Fit on Job Attitudes. Journal of Business Ethics, 77, 323-333.

[3]

Becker, T. E., Billings, R. S., Eveleth, D. M. & Gilbert N. L. (1996). Foci and bases of employee commitment: Implications of job performance. Academy of Management Journal, 39, 464-482. Bowen, D. E., Ledford, G. E. & Nathan, B. R. (1991).Hiring for the organization, not the job. Academy of Management Executive, 5(4), 35–51. Cable, D.M. & Judge, T.A. (1996). Person-Organization Fit, Job Choice Decisions, and Organizational Entry. Organizational Behavior and Human Decision Processes,67, pp294-311. Caldwell, D.F. O'Reilly, C.A. & Chatman, J. (2004). People and organizational culture: A profile comparison approach to assessing person-organization fit. Academy of Management Journal, 34, 487-516. Chatman,J.(1989).Improving interactional organizational research: A model of personorganization fit .Academy of Management Review,14:333-349. Cools,E.,Broeck,H.V. & Bouckenooghe, D.(2009).Cognitive styles and personenvironment fit: investigating the consequences of cognitive (mis) fit. European Journal Of Work and Organizational Psychology,18(2),167-198. Cooper,T.H.D,Van,V.A &Anderson,N.(2004).Changes in Person-Environment fit:The impact of socialization tactics on perceived and actual P-O fit. European journal of Work and Psychology,13.52-78. Edwards, B.D., Bell.S.T.,Arthur. W. & Decuir.A.D.(2008).Relationships between facets job satisfaction, task, and contextual performance. Applied Psychology. An International Review, 57, 3, 441-465. Edwards, J.R. & Cable, D.M.(2009).The value of value congruence. Journal of Applied Psychology.94 (3).654-677. Greguras, G.J. Diefendorff, J.M. & James. M.(2009).Different fits satisfy different needs: Linking person-environment fit to employee commitment and performance using self determination theory.Journal of Applied Psychology,94(2),465-477. Hackett, R. D., Lapierre, L. M. & Hausdorf, P. A. (2001). Understanding the links between work commitment constructs. Journal of Vocational Behavior, 58: 392-413.

[4] [5] [6]

[7] [8]

[9]

[10]

[11] [12]

[13] [14]

Hamdan,M.H.,2011.Mediators of the relationship between person-organization fit and outcome. School of Mgt, Faculty of Business, Queensland University of Technology, Australia.

[15]

Hoffman, B. J. & Woehr, D. J. (2006). A quantitative review of the relationship between person–organization fit and behavioral outcomes. Journal of Vocational Behavior, 68, 389–399. Jansen,K. & Kristof-Brown.A.(2006).Toward a multi dimensional theory of personenvironment fit. Journal of Managerial Issues.28.193-212.

[16] [17]

Kanungo, R.N. (1982). Work alienation: An integrative approach. New York: Praeger Publishers.

[18]

Kristof,A.L.(1996), Person-organization fit: an integrative review of its conceptualizations, measurement, and implications. Personnel Psychology, 39, pp1-49. Kristof-Brown. A.L,Zimmerman. R.D. & Johnson, E.C. (2005).Consequences of individuals fit at work: A meta analysis of person-job, person-organization, persongroup-person supervisor fit: Personnel psychology 58, 281-342. Lawler, E.E. (1986). High-Involvement Management, Jossey Bass, SanFrancisco, CA. Management Journal,Vol.33, Pp.692-724. Lewin.K.(1951).Dynamic theory of personality, New York: McGraw -Hill. LI, J. (2006). The interactions between person-organization fit and leadership styles in Asian firms, an empirical testing. International journal of HRM. , vol. 17, no. 10, p. 1689-1706.

[19]

[20] [21] [22]

Copyright © 2012, Asian Business Consortium | GDEB

Page 123

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[23] [24] [25] [26] [27] [28]

[29] [30] [31] [32] [33] [34] [35]

[36] [37]

[38] [39]

[40]

ISSN 2305-9168

Litwin, G. H., & Stringer, R. A. (1968). Motivation and organizational climate. Boston: Division of Research, Graduate School of Business Administration, Harvard University. Lodahl, M. K.(1965) The definition and measurement of job involvement Journal of Applied Psychology, 49 . pp. 24–33. Mackinnon,D.P.,Fairchild.A.J. & Fritz, M.Z.(2007).Mediation analysis. Annual review of Psychology, 58.593-614. McCloy, R. A., Campbell, J. P. & Cudeck, R. (1994). A confirmatory test of a model of performance determinants. Journal of Applied Psychology,79, 493–505. Meglino, B.M. & Ravlin,E.C.,(1998).Individual values in organizations. Concepts. Controversies and research. Journal of Management,24. 351-359. Meglino, B.M., Ravlin, E.C. & Adkins, C.L. (1989).A Work Values Approach To Corporate Culture: ATest of The Values Congruence Process and Its Relationship To Individual Outcomes. Journal of Applied Psychology, 74 (3), pp.424-432. Meyer, J. P. & Allen, N. J. (1991). A three component conceptualization of organizational commitment. Human Resource Management Review, 1, 61-89. Morewitz,C.L.(2009). Climate strength as a moderator of the relationship between person-organization fit and job performance. Motowidlo, S. (2003). Comprehensive Handbook of Psychology, Vol. 12 (pp.39-53). NewYork, NY:Wiley. Mowday; R. T. Steers, R. M. & Porter, L. W.(1982) ―The Measurement of Organizational Commitment‖, Journal of Vocational Behavior, Vol.14, pp.224-227. Muchinsky, P. M. (2003). Psychology Applied to Work (7th ed.). Belmont, CA:Wadsworth. O'Reilly III, C.A, Chatman, J. & Caldwell, D.F. (1991). People and organizational culture: A profile comparison approach to assessing person-organization fit. Academy of Management Journal, 34, 487-516. Ostroff, C., Kinicki, A.J. & Tamkins, M.M., 2003. Organizational culture and climate. Handbook of Psychology: Industrial and Organizational Psychology, 12. John Wiley, New York, NY, pp. 565–593. Poon,J.M.L.(2004).Effects of performance appraisal politics on job satisfaction and turnover intention. Personnel review 33(3).322-334. Rod,M., Ashill, N.J. & Carruthers,J.(2008).The relationship between job demand stressors,service recovery performance and job outcome in a state-owned enterprise. Journal of Retailing and Consumer Services.15(1),22-31. Schneider, B.(2001).Fits about fit .Applied Psychology: An International Review,50,141-152. Schneider,B.,Goldstein,H.W. & Smith.D. B.(2000).Attraction-selection attrition. Toward a person-environment psychology of organizations, Person Environment Psychology: New directions and perspectives (pp 61-82) Sekaran,U. & Bougie,R.,2011.Research methods for business: A skill building approach,5th edition, Printed in Great Britain by TJ International Ltd,Padstow,Cornwall.

[41]

Sekiguchi, T.(2003). A contingency perspective on the importance of P-J fit and P-O fit in employee selection. Paper presented at the Annual Conference of Academy of Management, Seattle, WA.

[42]

Tidball, K. H. (1988). Creating a culture that builds your bottom line. Cornell Hotel and Restaurant Administration Quarterly, 29 (1), 63-69. Van,V.A.E.M, De Pater,I.E. & Van,D.F.(2007).Work value fit and turnover intention: Same source or different source fit. Journal of managerial psychology,22(2),188-202. Westerman, J.W. & Cyr, L. A. (2004). An integrative analysis of person-organization fit theories. International Journal of Selection and Assessment, 12 (3), 252-261.

[43] [44]

Copyright © 2012, Asian Business Consortium | GDEB

Page 124

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

HRM Practices and its Impact on Employee Performance: A Study of the Cement Industry in Bangladesh Mst. Momena Akhter1; Md. Nur-E-Alam Siddique2; Md. Asraful Alam3 1

Lecturer, Faculty of Business, ASA University Bangladesh Senior Lecturer, Faculty of Business, ASA University Bangladesh 3 Senior Administrative Officer, ASA University Bangladesh 2

ABSTRACT In present situation, companies can gain strong competitive advantage through applying effective and efficient human resource practices. If the human resources are managed properly, they can contribute to the success for the company. The effective management of human resource is possible through the implementation of sound HRM practices. . The main objective of this research is studying the impact of HRM practices on employee performance in the context of cement industry in Bangladesh. For this purpose the researchers have tried to investigate impact of the various components of HRM practices on employee performance of a sample of 160 employees from seven cement companies listed in the Dhaka Stock Exchange. The data were analyzed by a regression analysis to determine the impact of HRM practices on employee performance. The result shows that training & development and opportunity for career development have a significant positive impact on employee performances. On the other hand, Performance appraisal, Compensation & Benefits, and Leadership Practices have a positive impact on employee performance but the impact is not significant in the context of cement industry in Bangladesh. Moreover, work life balance has a negative impact on employee‘s performance. Furthermore, efficient management of human resources can increase the performance of the employees of the cement companies in Bangladesh. Key-Words: Employees performance, HRM Practices, Performance Appraisal, work life balance, Training and Development, leadership practices, career development etc. JEL Classification Code: M12; J53

1. INTRODUCTION Human resource of the organization is the source of achieving competitive advantage because of its competency to convert the other resources (money, machine, methods & material) into output (product/service). They are one of the most important factors providing flexibility and adaptability to organization (Khatri, 1999). Further, Rundle (1997)

Copyright © 2012, Asian Business Consortium | GDEB

Page 125

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

said that one needs to bear in mind that people (managers), not the firm, is the adaptive mechanism in determining how the firm will respond to the competitive environment. The competitors can imitate other resources like technology, capital, raw material but it is quite impossible to imitate the human resources. All these factors made them a unique resource and necessitate their effective management. Impact of human resource management practices on employee performance has been a widely researched area for years. Several Scholars have noted that managing people is more difficult than managing technology or capital (Barney, 1991; Lado and Wilson, 1994). However those firms that have learnt how to manage their human resources well would have an edge over others for a long time to come because acquiring and deploying human resources effectively is cumbersome and takes much longer time (Wright et al.,2003). Cement industry of Bangladesh is closely associated with the building and construction activities wherein it is used as bonding agent to unite particles. In Bangladesh out of the total cement supply to the market around 20% is consumed by the public sector and the rest is consumed by the private sector. In a recent statistics of demand and supply position of cement in our country, it was reported that during the year 2010 the demand of cement was around 12.5 million MT per annum whereas the supply of cement was almost 1.5 times higher than its demand. However it is predicted that the demand of cement will likely to be increased within the next few years as some big national projects are under active consideration of the government. This would create a good demand for cement in the coming years creating more opportunities for consumption of products of this sector and human resource would be the corner stone for the sustainable growth of the companies through satisfying their goals and objectives. Therefore, the management of the companies should view their employees as assets for their steady and sustained development and maintaining of the competitive advantage in business. The companies should maintained a uniform and effective human resource management policies and practices in order to motivate and develop their employees and executives and ensure their optimum utilization in achieving the corporate goals. Results of studies, from developed to developing countries have been time and again showing that HR practices have significant impact on organizational performance. (Delaney & Huselid, 1996; Katou & Budhwar, 2007; Sing, 2004; Tzafrir, 2006). But unfortunately, very insufficient numbers of studies have been conducted in this area in the context of Bangladesh and other developing countries. There is no research on the human resource practice in the cement industry of Bangladesh. Hence, it becomes pertinent to measure the impact of HR practices on employee performance of the cement industry in Bangladesh and to augment the contemporary knowledge base of HR practices of the cement industry, this study has been undertaken. The remainder of the paper is organized as follows. Section two reviews the literature on impact of human resource management practices and policies on employee and organizational performance followed by the objectives and conceptual framework of the study. The next section discusses the methodology used in the study and section six discusses the empirical findings and section five concludes.

2. REVIEW OF RELATED LITERATURE In a rapidly changing market worldwide, regulators, managers, and investors are concerned about how efficiently transform their expensive inputs into various products and services. This transformation of input into output depends on the efficient & effective

Copyright © 2012, Asian Business Consortium | GDEB

Page 126

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

use of human resources. As the study focuses on the impact of HRM practices on employee‘s performance, the researchers have reviewed the important studies available on the impact of HRM practices on organizational performance as well as on employee‘s performance. The review of these studies is as follows: Birdi et al, (2008) examined the impact of human resource and operational management practices on company productivity and concluded that performance benefits from employee empowerment and extensive training. In contrast, none of the operational practices were directly related to productivity nor did they interact with other practices in ways fully consistent with the notions of integrated manufacturing or lean production. Khan, (2010) evaluated the effects of human resource management practices on organizational performance in Oil and Gas Industry in Pakistan and found a significant association of HRM practices with organizational performance. In another study, Shahzad et al., (2008) conducted a study among university teachers in Pakistan. The results of the study indicate a positive relationship between compensation and, promotion practices and employee perceived performance while performance evaluations practices are not significantly correlated with perceived employee performance. Collins et al., (2005) investigated the small businesses and found that effective HR practices impact employee outcomes significantly. Guest, (2002) has argued that the Impact of HRM on performance depends upon worker‘s response to HRM practices, so the impact will move in direction of the perception of HRM practices by the employee. If the perception is positive the impact will be positive and if the perception is negative the impact will be negative. Wright et al., (2003) were of the view that an employee will exert discretionary effort if proper Performance management system is in place and is supported by compensation system linked with the performance management system. Marwat et al., (2009) explored contribution of human resource management practices in telecom sector on perceived employee performance in telecom sector in Pakistan. Results highlighted that all the tested variables are positively correlated but correlation of compensation and training are highest respectively. In a recent study, Baloch et al., (2010) measured the impact of three HR practices which are compensation practices, promotion practices and performance evaluation practices on perceived employee performance. The results of correlation indicated a significant relationship between compensation practices and perceived employee performance, promotion practice and perceived employee performance and performance evaluation practices and perceived employee performance. As far as the topic of the study is concerned, many studies have been conducted on particular topic in different sectors but no such study has been conducted in cement industry in Bangladesh. Now-a-days, the environment has become very competitive and they compete for quality of human resources. So this study will help the companies to know the perception of employees about HRM practices.

3. OBJECTIVES OF THE STUDY  

To find out the perception of employees about HRM practices. To find out the impact of HRM Practices (performance appraisal, training and development, career development, work life balance, compensation & benefits and leadership practices) on employees performance of the cement industry in Bangladesh.

Copyright © 2012, Asian Business Consortium | GDEB

Page 127

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

4. CONCEPTUAL FRAMEWORK On the basis of the literature reviewed, it is clear that HRM practices affect the performance of the organization as well as performance of the employees. Now onwards the researcher has only talked about the impact of HRM practices on Employees performance which is the main theme of the study. A theoretical framework has been developed to understand the impact of HRM practices on Employees performance.

Independent Variable

Dependent Variable

Training & Development

H R M P R A C T I C E

Career Development

Performance Appraisal

Employee Performance

Compensation & Benefits

Work Life balance

S Leadership practice

Figure 1: Schematic Diagram of the Conceptual Framework The framework demonstrates that the employee‘s performance is influenced by HRM practices (Training & Development, Performance appraisal, Career development, Compensation & benefits, Work life balance and Leadership practices).

5. RESEARCH METHODOLOGY The present paper is an empirical study based on exploratory research design followed by causal study to find out the impact of HRM practices on employees performance in cement industry of Bangladesh. So, the population of the study includes employees of the cement industry of Bangladesh. However, the sample was consisting of 160 employees of different cement companies located in Bangladesh. The researchers have used the convenience sampling technique for the selection of the respondents. A self-administered questionnaire was applied to measure the impact of HRM practices on employee performance. At first, the questionnaires have been distributed to 200 employees of cement companies, out of that employees have returned 170 questionnaires. 10 questionnaires were rejected due to incompleteness. Finally, 160 questionnaires have been used for the study. The data were tabulated and analyzed with the help of regression analysis using SPSS software. For measuring the impact of HRM practices on employee performance the independent variable includes various HRM practices like Training and development practices,

Copyright © 2012, Asian Business Consortium | GDEB

Page 128

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Performance appraisal practices, Career development practices, Work life Balance Practices, Compensation and Benefits practices, Leadership Practices, and dependent variable includes Employees Performance. The secondary data were collected from various documents, reports, articles, case studies, books, and internet and so on. The collected data were analyzed keeping in mind the objective of the study. The period of study is July 2012 to December 2012.

6. FINDINGS 6.1 Reliability of the Data Before applying statistical tools, testing of the reliability of the scale is very much important as it shows the extent to which a scale produces consistent result if measurements were made repeatedly. This is done by determining the association in between scores obtained from different administrations of the scales. If the association is high, the scale yields consistent results, thus it is reliable. Cronbach‘s alpha is the most widely used method. It may be mentioned that its value varies from 0 to 1 but the satisfactory value is required to be more than 0.6 for the scale to be reliable (Malhotra, 2002; Cronbach, 1951). In the present study, we, therefore, used Cronbach‘s alpha scale as a measure of reliability. Table 1: Reliability Statistics Questionnaire Performance Appraisal Training & Development Career Development Compensation & Benefits Work Life balance Leadership Practices Employee performance Source: Primary

Items 04 05 06 05 06 04 05

Cronbach’s Alpha .891 .774 .827 .736 .799 .825 .901

Table 1 shows the Cronbach‘s Alpha for HRM practices and EP questionnaire. The scores suggest that internal consistency of the questionnaire is satisfactory. 6.2 Regression Analysis To find out the impact of HRM practices on Employees performance (EP) a regression analysis has been used and the results have been presented in table 2 & 3. Table 2: Model summary R R2 Adjusted R2 .701 .487 .453 Source: Primary

Std. error of the estimate .519

F- Value 13.22

Significance .000

The table 2 shows that the value of adjusted R2 is 0.453 which means that 45.30% of variance in employee performance is explained by the six independent variables and 55.70% of the fraction of the variation in the dependent variable is unexplained. This is probably due to the fact that the number of variables used in the analysis was not sufficient enough to deliver a better value of R-Square. There are many other factors such as internal conflict, personality, work environment, internal communication etc. that influence employee performance. The f value is

Copyright © 2012, Asian Business Consortium | GDEB

Page 129

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

13.22 and the level of significance is 0.000 which means that there is a significant impact of HRM practices on employee performance it is supported by the findings of the study conducted by Ichniowski et al., (1995). In their study they found that complementary HR practice system effects workers performance. The strengths of impact that each of the independent variable had on the dependent variable. i.e. employee performance was determined by the use of multiple regression coefficients of the independent variables. The impact of each independent variable is shown in Table 3. Table3: Impact of the Individual Variables of HRM Practices on employee performance Variable Std. error Standard beta t Significance Performance Appraisal .117 0.102 0.896 0.378 Training & Development .130 .297 2.891 0.005 Career Development .088 .373 3.493 0.001 Compensation & Benefits .119 .112 .952 0.346 Work Life balance .078 -.037 -.388 0.700 Leadership Practices .166 .202 1.492 0.135 Source: Primary From the analytical table 3 it is exposed that all the measures of HRM practices have a positive impact on employee performance excepting work life balance. Training and development and career development have a significant positive impact on employee performance. On the other hand performance appraisal, leadership practices, and compensation & benefits do not have significant impact on employee performance. Training and development facilitates the employees to learn the new skills and competencies so that they can perform well on their job. The results of the study have shown the significant impact of T & D on employee‘s performance with standard beta (0.297) and it is in line with the results of the study conducted by Marwat et al., (2009) in which they have found the highest correlation between Training and employee‘s performance. In present situation employees give proper importance to their career and they want to work for such institution which provides better career development policy and the result of the study has shown that the career development has a significant impact on employee‘s performance with highest standard beta (0.373). As shown in table 3, the performance appraisal practices do not have significant impact on employee‘s performance and it is also confirmed by the findings of the study conducted by Shahzad et al., (2008) in which they have found that performance evaluations practices are not significantly correlated with perceived employee performance. The result also shows that compensation and benefits have a positive impact on employee‘s performance of the cement industry in Bangladesh. Finally, the findings indicate that work life balance do not have any impact on employee‘s performance. The reason may be that in cement companies the work is carried out in shifts and employees keep moving from one shift to another so they think differently from employers about work life balance and this is the dim where there is a need to conduct further research. Furthermore, supportive and participative leadership style can increase the performance of the employees but on the other hand autocratic style of leadership can decrease the performance of the employees but the results of the study have shown that the leadership practices do not have significant impact on the performance of the employees.

Copyright © 2012, Asian Business Consortium | GDEB

Page 130

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

7. CONCLUSION The regression model suggests that 45.30 percent of the total variance in employee‘s performance is explained by these HRM practices which mean that these aggregate HRM practices affects the performance of the employees of the cement companies to a greater extent. Hence it is very clear that HRM practices play a very important role in improving the performance of the employees As far as the individual HRM practices are concerned the researchers have found that the HRM practices like career development & training and development have a significant impact on employees performance but the other practices like performance appraisal, work life balance, leadership practices and compensation & benefits practices do not have a significant impact on employees performance. Now this is very important for the cement companies to update the existing HRM practice and implement new innovative HRM practices. The survey should be conducted among the employees from time to time to know their satisfaction with the current practices and line managers should be involved in the process of designing or modifying the HRM practices. The new performance appraisal techniques like 360O should be implemented which will help the organization to collect the information about the employee‘s performance from variety of sources. Training and development should be strongly enforced in the culture of the organization. Organization should organize training programs for employees so that they can increase their skills and expertise. Training may be technical and behavioral. Such training programs should be conducted by experts. Organizations should encourage the culture of innovations. The techniques like mentoring, coaching should be used. Competency mapping should be done on regular basis. Career Development practices should be more strengthened in the organization because in present scenario the employees are more educated and are career conscious. Existing opportunities should be clearly communicated to the employees. The succession planning should be done on regular basis which will result in the availability of right talent for future vacancies at higher posts. Compensation should be updated from time to time and it should be at par with the industry. Organization should have clear compensation policies and employees should be aware of the compensation policies. Competitive benefits such as medical, transportation, ESI (Employees State Insurance), PF (Provident Fund), LTC (Leave Travel Concession), rewards should be provided to the employees. As far as the leadership is concerned it should be supportive and participative. Leaders should be available to the employees as and when required. Leaders should take initiative to motivate the employees and encourage them to come up with new ideas. Besides these the companies should provide additional facilities like vegetable shops, provision stores medical stores, transport facilities to the nearest city on regular basis so that family members should not depend on the employees for small things. They can purchase the routine items from these shops. Recreational centers, yoga facilities should also be provided so that they can refresh themselves after the work.

REFERENCES [1]

[2]

Baloch, B.Q, Ali, N., Kiani, S.T, & Ahsan, A. (2010). Relationship between HR Practices and Perceived Employees‘ Performance of Bankers in NWFP, Pakistan: An Empirical Evidence. European Journal of Social Sciences – Vol. 18, No. 2. Barney, Jay. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, Vol.17, pp.99-120.

Copyright © 2012, Asian Business Consortium | GDEB

Page 131

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[3]

ISSN 2305-9168

Birdi, K., Clegg, C., Patterson, M., Robinson, A., Stride, B.C.,Wall, D.T., & Wood, J.S.(2008). The Impact of Human Resource and Operational Management Practices on Company Productivity: A Longitudinal Study. Personnel Psychology, Vol. 61, pp. 467–501. Collins, C., Ericksen, J., Allen, M. (2005). Human Resource Management Practices and firm performance in small business. Cornell University/ Gevity Institute pp. 10. C r o n b a c h , L.J. (1951). Coefficient alpha and the internal structure of tests, Psychometrika, Vol.6, No.3, pp.297-334.

[4] [5] [6]

Delaney, J.T., and Huselid, M.A. (1996). The impact of Human Resource management on Perceptions of Organizational Performance. The Academy of Management Journal, Vol. 39, No.4, 44. 949-969.

[7]

Guest, D. (2002). Human Resource Management, Corporate Performance and Employee wellbeing: Building the worker into HRM. The Journal of Industrial Relations 44:3 335-358. Katou, A. A., and Budwar, P. S. (2007). The Effects of Human Resource Management Policies On Organizational Performance In Greek Manufacturing Firms. Thunderbird International Business Review, Vol.49, No.1, pp.1-35. Khan, A.M. (2010). Effects of Human Resource Management Practices on Organizational Performance – An Empirical Study of Oil and Gas Industry in Pakistan. European Journal of Economics, Finance and Administrative Sciences, Issue 24. Khatri, N. (1999). Emerging issues in Strategic HRM IN Singapore. International Journal of Manpower, Vol.20,No.8,pp.516-529. Khurram, S., Sajid, B., & Ramay, M. I. (2008). Impact of HRM Practices on Perceived performance of University Teachers in Pakistan. International Review of Business Research Papers,Vol.4,No.2, pp.302-315. Lado .Augustine, A., and Mary, C.W. (1994). Human Resource Systems and Sustained Competitive Advantages: A Competency Based Perspective. Academy of Management Review, Vol.19, pp 699-727. M a l h o t r a , N.K. (2002). Marketing research: an applied orientation (3rd ed.). New Delhi, India: Pearson Education Asia. Marwat, A.Z., Qureshi, M.T., & Ramay, M.I. (2009). Impact of Human Resource Management (HRM) Practices on Employees Performance: A Case of Pakistani Telecom Sector. Unpublished Paper. Practices on Productivity. National Bureau of Economic Research Working Paper no 5333. Rundle, S.J.(1997). Flexibility , adaptiveness and responsiveness (FAR-ness) as the key success factors in market entry in the south east Asian growth wedge. PhD thesis, Department of Management, Monash University,Victoria. Shahzad, K., Bashir, S., & Ramay, M. (2008). Impact of HR Practices on Perceived Performance of University Teachers in Pakistan. International Review of Business Research Papers, Vol. 4 No.2 March 2008 Pp.302-315. Singh, K. (2004). Impact of HR Practices on Perceived Firm Performance in India. Asia Pacific Journal of Human Resources, Vol. 42, No.3, pp.301-317. Tzafrir, S. S. (2006). A Universalistic Perspective for Explaining the Relationship between HRM Practices and Firm Performance At Different Points In Time. Journal of Managerial Psychology, Vol. 21, No.2, pp. 109-130. Wright, P. M., Garden, T. M., and Moynihan, L. M. (2003). The impact of HR practices on the performance of business units. Human Resource Management Journal, 13(3), 21-36.

[8]

[9]

[10] [11]

[12]

[13] [14] [15] [16]

[17]

[18] [19]

[20]

ASIAN BUSINESS CONSORTIUM IS AN INDEPENDENT RESEARCH HOUSE COMMITTED TO PUBLISHING AND DELIVERING SUPERIOR, PEER-REVIEWED STANDARD RESEARCH

Copyright © 2012, Asian Business Consortium | GDEB

Page 132

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

A Study on SWOT Analysis of Pharmaceutical Industry: The Bangladesh Context Meem Rafiul Hoq1; Md. Ali Ahsan2; & Tanim – A – Tabassum3 1

Lecturer, School of Business, UITS, Bangladesh Lecturer, School of Liberal Arts & Science, UITS, Bangladesh 3 BBA, Asian University of Bangladesh, Dhaka, Bangladesh 2

ABSTRACT Pharmaceutical industry is one of the most important sector in Bangladesh. It is the only industry, which has its own strong manufacturing capabilities to produce the pharmaceuticals product. In this study it is tried to find out what types of strengths, weaknesses, opportunities and threats the pharmaceuticals companies face in Bangladesh. There are about 250 pharmaceuticals firms in Bangladesh. Among them some companies are the large size and more sophisticated. Some companies are small sizes and traditional qualities. A few companies dominate the whole medicine market. So they have to face severe competition in pharmaceuticals market. SOWT (Strength, Opportunity, Weakness, and Threat) analysis of any industry sector investigates the important factors that are possibility of the industry and influencing the companies operating in that sector. The purpose of this study is to analyze the pharmaceutical sector of Bangladesh using the framework of SWOT. This paper brings to light on the SWOT analysis of pharmaceuticals industry in Bangladesh and provided some valuables suggestions to overcome the weaknesses and threats, there are some suggestions to utilize the strengths and opportunities properly. Through this study the researchers try to discuss the affect of various macroeconomic factors of strength, opportunity, weakness, and threat aspect on the industry and its related problems and prospects for the future. Key Words: Pharmaceutical Industry, SWOT, Economic Factor JEL Classification Code: O25; O25

INTRODUCTION Pharmaceutical is the core of Bangladesh‘s healthcare sector and serves as one of the most important manufacturing industry. With a history since 1950s, the industry has now turned one of the most successful pharmaceuticals manufacturing industry among the developing countries. Presently, the industry meets 97% of local demand and exports to more than 80 countries. The industry has been experiencing robust growth over the last few years. A local industry supporting drug policy and effective regulatory framework, along with TRIPS (Trade Related Intellectual Property Rights) relaxations are the key reasons for success of the industry. While the industry is achieving self sufficiency, it yet

Copyright © 2012, Asian Business Consortium | GDEB

Page 133

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

procures 70% of raw materials from abroad. But developments are already taking place, with a number of firms now manufacturing raw materials locally. In addition, an API (Active Pharmaceutical Ingredient) project has already been undertaken to accelerate the vertical integration within the industry. The industry has been expanding locally and internationally. Local market grew at 23% in 2010, while import reached USD 50 Million landmark. A number of firms got accreditations from USA, UK, and Australia etc. 1

OBJECTIVES OF THE STUDY The study is aimed to fulfill the following specific objectives To key out the major achievements of the Pharmaceutical Industry of Bangladesh.  To critically analyze the SWOT analysis of the Pharmaceutical Industry of Bangladesh.

METHODOLOGY OF THE STUDY This article is mainly based on secondary data collected from several reliable sources. For secondary data collection, Pharmaceutical Industries‘ annual reports, exiting files and documents, statements, brochures, manuals and publications were collected and analyzed. An intensive study on the relevant field was conducted through browsing internet and searching in library.

JUSTIFICATION OF THE STUDY In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors within the country's economy. After the promulgation of Drug Control Ordinance - 1982, the development of this sector was accelerated. The professional knowledge, thoughts and innovative ideas of the pharmaceutical professionals working in this sector are the key factors for these developments. Due to recent development of this sector it is exporting medicines to global market including European market. This sector is also providing 97% of the total medicine requirement of the local market. Leading pharmaceutical companies are expanding their business with the aim to expand export market. Recently few new industries have been established with high tech equipments and professionals which will enhance the strength of this sector2. As a promising sector for a developing country like Bangladesh, pharmaceutical industry is one of the key issues of the country. This field really needs some empirical study like this for the future development.

LIMITATIONS OF THE STUDY   

It was not possible to study all the relevant literatures. Limited time frame was the major constraint to carry out the research smoothly. Insufficient previous research works in this field is one of the major limitations of the study.

REVIEW OF LITERATURE Habib et al. (2011) reported through their paper that the aim of the study is to present the current scenario of the pharmaceutical industry in Bangladesh. Since inception, there was little consensus on the development of pharmaceutical policies best suited in a developing country such as Bangladesh. Here, the pharmaceutical industry developed rapidly from the 1980s after the introduction of Drug (Control) Ordinance-1982. Adequate infrastructure and use of trained manpower were two essential requisites for

Copyright © 2012, Asian Business Consortium | GDEB

Page 134

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

implementation of national pharmaceutical policies in Bangladesh. The country was importing significant amount of medicine and also raw materials for the industry from abroad. But the industry has started to export its products in foreign market, especially in the Middle East and Europe with great success. This study tries to identify the major problems of marketing, exporting, production and operations, quality control in the pharmaceutical sector and proposes strategies to overcome these problems; it also identifies the prospects of pharmaceutical industry in Bangladesh.3 Bhuiyan et al. (2011) in an article named ―Analysis of Pharmaceuticals Industry of Bangladesh: It‘s Challenges and Critical Success Factors‖ stated that the pharmaceutical industry is globally known as the fastest growing industry in the world. With revenues of USD 518 billion and 9% of global GDP in the year 2007, pharmaceuticals have a reputation for having the highest profit margin in the world. Bangladesh processes a sizeable pharmaceutical industry that has the potential to live up the global standards. The country can expand it‘s economic growth by investing in their fast growing pharmaceutical industry which has an annual average growth rate of 16% and a market size of BDT 30 billion 2007 according to Industrial Management System (IMS). It employees around 75,000 skilled and unskilled employees and is considered to be the second largest contributor to country‘s national revenue (Bangladesh Gazette). This sector is the second largest contributor to the Government exchequer, employing around 75,000 skilled and unskilled employees. With huge demand-supply gap, major players see basic chemicals as the greatest opportunity for expansion and better control over formulation industry force.4

RESULTS AND DISCUSSION There are great opportunities for pharmaceutical industry in Bangladesh. Among the LDCs, Bangladesh is the only country that has its manufacturing capabilities to manufacture the pharmaceuticals products. It is found that some manufacturing companies export medicines and earn enough foreign currency. Some companies have world-class pharmaceuticals productions units. Some companies produce world-renowned products in Bangladesh. Some company introduces mattered dose inhalation aerosols by commissioning of its state of the art MDI plant. The MDI plant has been designed in a way to ensure highest possible quality at every stage of manufacturing and quality control. It is found that there are great demands for the pharmaceuticals products in Bangladesh. Increased market complexity now a day‘s places great demand on the sales and marketing operations of pharmaceutical companies, making it even more difficult to manage. Some of the major achievements of Bangladesh Pharmaceutical Industry so far are: 1. Affordability of medicines to the majority of the population: Major epidemics of Bangladesh are Malaria including Dengue, Cholera and Typhoid. Morbidity and mortality from these scourges also reduced substantially over the years in Bangladesh. Increased affordability and availability of medicines has contributed towards this achievement. Bangladesh now has an average life expectancy of 61 years, which is at the top end in the Indian sub-continent. 2. Near Self Sufficiency in Pharmaceuticals manufacturing: Among the LDC's, Bangladesh is the only country which can boast a local pharmaceutical industry which caters to 97% of the countries need. Over the years role of import has diminished substantially and now is not more than 3% covering mainly Insulin, Vaccines and anti-cancer drugs.

Copyright © 2012, Asian Business Consortium | GDEB

Page 135

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

3.

Strong footing of the local Industry: In 1982 there were about 10 multinational companies availing about 80% of the domestic market. The situation is reverse now. Local companies cater to about 80% of the market now and the rest by the multinational. Local companies continued their expansions and up gradation of their facilities conforming to cGMP prescribed by WHO and by some leading companies to US FDA and UK MHRA standards. 4. Export of Pharmaceuticals: After catering to the country's need pharmaceutical products from Bangladesh are now being exported to over 62 countries in Asia, Africa and Europe. 5. Quality Assurance: A few of the top-level pharmaceutical companies are going beyond WHO and cGMP. With an aim to get into the regulated markets like US, EU countries etc, they are putting up Government of Bangladesh is very supportive to the industry and is in the process of implementing a new law to face the present and future challenges of the industry. Pharmaceuticals export has a bright future for Bangladesh and local companies are already competing with the pharmaceuticals from developing countries in Africa and South East Asia. Government is very supportive to these efforts and is planning to set up an Industrial park for Active Pharmaceutical Ingredients (API) to strengthen its position in this area. Bangladesh pharmaceutical industry's progress so far is praise worthy. It has made the country near self sufficient in pharmaceuticals, became the 2nd largest contributor to government exchequer and is now a major employer of the knowledge based workers. Made pharmaceuticals accessible & affordable to the majority of the population and forayed into export markets with successful manufacturing facilities of US FDA and UK MHRA standards. Pharmaceutical Industry of Bangladesh is a unique example of private sector success in the country. After the laudable role it played in domestic market, it is now poised to play its role in the international arena. With its continued development and experience in manufacturing and marketing, it is sure to repeat its success in the international market as well.5

MAJOR FINDINGS The SWOT analysis of the industry reveals the position of the Bangladesh pharmaceutical industry in respect to its internal and external environment. Strengths 1. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers. This opens a huge market for lifestyle drugs, which has a very low contribution in the Bangladesh market. 2. Bangladesh pharmaceutical manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labor force, Bangladesh manufacturers can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%. 3. Most of the companies have own premises, so most companies can save their expenses; most pharmaceutical companies have a large size of factory. 4. Excellent transport-link the ease of access to / from the company. 5. Some companies have a good reputation in the market. Some companies have strong brand reputation in the market, these industries have well known brand in the market. 6. Bangladeshi pharmaceutical industry posses‘ excellent chemistry, skilled workforce and process reengineering skills. This adds to the competitive advantage of the Bangladeshi companies. The strength in chemistry skill helps Bangladeshi companies to develop processes, which are cost effective.

Copyright © 2012, Asian Business Consortium | GDEB

Page 136

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

7.

8.

9.

10. 11. 12. 13.

14.

15. 16.

17.

18.

19.

ISSN 2305-9168

The pharmaceuticals industry has MIS system. These companies have knowledge about diseases, which are available in our country. Most of the companies are more sophisticated. They are more concern or aware about each other. The pharmaceutical companies follow the relationship selling method. The company representatives try to motivate the doctors to prescribe their medicine for the patients. The medical representatives of the pharmaceutical companies maintain the relationship with the doctors. The pharmaceutical industry has the loyalty of the customers and vendors. Drug is essential for life. So these companies have certain markets to sell the medicines in Bangladesh. These industries have some competitive advantages over the other industries. The pharmaceutical industries have strong manufacturing capacities. Most of the companies have the quality control system. They are committed to formulate and supply drugs and formulations in a qualified manner. The growth rate of the pharmaceutical industry is increasing day by day. It is good news for the pharmaceutical industry in Bangladesh. Some companies of the pharmaceuticals industry have got the license of the global brand. Such as Healthcare Pharmaceuticals Company limited manufacture the brands of the F. Hoffmann-La Roche limited. Latest technologies are installed in the pharmaceuticals sector in Bangladesh. Some companies in our country got the technical guidance from the globally reputed pharmaceuticals company. For example, the Healthcare pharmaceuticals company manufactures the drugs with the active support and technical guidance of the globally reputed pharmaceuticals company F. Hoffmann-La Roche Limited, Basel, Switzerland.6 As pharmaceutical industry is a separate industry from other industries. So pharmaceutical industry in Bangladesh have little or non-threatening competition. Beximco Pharmaceuticals Company introduced the Metered Dose Inhalation Aerosols for the first time in Bangladesh by commissioning of its state of the art Metered Dose Inhalers (MDI) plant. The MDI plant has been designed in such a way to ensure highest possible quality at every stage of manufacturing and quality control. 7 Some companies export medicines in many countries of the world. For example Beximco Pharmaceuticals Company limited has obtained the National Export Trophy (gold) for two consecutive years (1998-1999, 1999-2000). 8 It is a good opportunity for the pharmaceuticals company in Bangladesh. The export markets for the pharmaceuticals products are Bhutan, Cambodia, Czech Republic, Germany, Iran, Iraq, Kenya, Malaysia, Mozambique, Myanmar, Nepal, Pakistan, Philippines, Russia, Singapore, South Korea, Sri Lanka, Thailand, Ukraine, Vietnam, and Yemen. To ensure all the qualities, a highly dedicated academically sound and professionally competent team consisting of pharmacist, chemist, biochemists, microbiologists and engineers are using most modern and sophisticated equipment like high performance liquid chromatography, Gas chromatography, infrared spectrophotometer, Ultraviolet spectrophotometer, Homogenizer, in vitro bioavailability tester, Lung simulator, Disintegrator, Dissolution tester and many other latest computer aided quality control instruments and diseases. Most of the companies in the pharmaceutical industry have the strong reputation in the market. These company such as are Square Pharmaceuticals Company limited, ACI Pharmaceuticals Company limited. Beximco Pharmaceuticals Company limited.

Copyright © 2012, Asian Business Consortium | GDEB

Page 137

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

20. Some of the company dominates the pharmaceuticals market in Bangladesh. 65% of the drugs used in Bangladesh are produced in Bangladesh. 35% drugs are imported from the foreign countries. 21. The distribution systems of the pharmaceuticals company are strong in Bangladesh. Some medicines require quick transportation services. Otherwise it will damage. The companies have depots through which the company distributes their products all over the 64 districts in Bangladesh. 22. Bangladeshi pharmaceutical industry has strong sales force. The sales force has to deal with doctors. They have to motivate the doctors to prescribe the particular medicines. Otherwise a company cannot get success in these industries. 23. Some companies have strong research and development (R&D) department. For example Beximco Pharmaceuticals employs a significant part of its resources in R & D that makes BPL a forerunner in the Bangladesh pharmaceuticals industry. Weaknesses 1. The Bangladesh pharmaceutical industries are marred by the price regulation. Over a period of time, this regulation has reduced the pricing ability of companies. The DGDA (Directorate General of Drug Administration), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies. The companies, which are lowest cost producers, are at advantage while those who cannot produce have either to stop production or bear losses. 2. Bangladesh pharmaceutical sector has been marred by lack of product patent, which prevents global pharmaceutical companies to introduce new drugs in the country and discourages innovation and drug discovery. But this has provided an upper hand to the Bangladesh pharmaceutical industry. 3. Bangladesh pharmaceutical market is one of the least penetrated in the world. However, growth has been slow to come by. As a result, most of the pharmaceutical companies are relying on exports for growth. 4. Most of the pharmaceutical companies are in low financial positions, Due to the low financial position; it is not possible for some companies to install the latest technology in their premises. 5. Some of the pharmaceutical companies are in unskilled workforce. As a result these companies cannot minimize the cost of the production. 6. Due to very low barriers to entry, Indian pharmaceutical industry is highly fragmented with about 250 large manufacturing units and about 18,000 small units spread across the country. This makes Bangladesh pharmaceutical market increasingly competitive. The industry witnesses price competition, which reduces the growth of the industry in value term. To put things in perspective, in the year 2004 the industry actually grew by 8.6%. 7. Most of the companies do not up to date their machineries, they perform their activities with the traditional machineries, and so it is difficult to maintain the quality of the medicines. 8. Some of the companies in this industry have the rented premises, as a result it add costs to the production. So the selling prices are increasing day by day. 9. Innovative effectiveness is low in our country due to the lack of the sophisticated equipment, lack of the capital, lack of the skilled manpower, and the lack of the professional in our country.

Copyright © 2012, Asian Business Consortium | GDEB

Page 138

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

10. Sometimes per unit cost of the medicines are higher than the imported medicines. The selling prices of the medicines become higher. So the domestics company has to fight with the multi-national companies. 11. The pharmaceutical sector attained a lower growth rate of 8.6% only during the 2004 as against 5.90% during the previous year. The lower growth rate of national pharmaceuticals market may be attributed to various factors such as lower public expenditure on health care. Natural calamities including floods, cyclones, epidemical diseases and lower agro crop harvest. The national pharmaceutical market growth and that of the company during the past few years. 12. Sometimes the selling price of the medicines are high in our country, it is beyond general customer‘s purchasing power. 13. Some pharmaceutical companies do not have any reputation in national or regional level; their products are not standard level. 14. The industries have to depend on foreign experts, technology, and raw materials. Due to the lack of the proper guidelines and the lack of the proper infrastructure facilities. The industry faces problems in marketing the products. Opportunities The SAARC region, Bangladesh stands out as a nation with a vast potential to become a leading pharmaceutical producer. Currently the country is producing mostly the drug formulations and nearly 250 units are engaged in this activity. The production by these units is adequate to meet almost 95 percent of the national requirements. With many large pharmaceutical units, the international manufacturing standards are largely absent amongst most of the small units. Regulatory procedures are yet to fully evolve. However companies like Beximco Pharmaceuticals, Square Pharmaceuticals, etc are now trying to adopt international manufacturing standards in their facilities. New drug policy will help to expand pharmaceuticals industry Lifesaving international-standard drugs are now being produced in Bangladesh and the country is about to achieve self-sufficiency in production of pharmaceuticals. Unveiling the plaque of an essential medicine-producing project here, The Essential Drugs Company Limited (EDCL) is already supplying drugs to different international organizations and also exporting abroad. After implementation of the new policy, the industry would further expand and generate new job opportunities in the country. As a least developed country Bangladesh would get opportunity to produce patent medicines till 2016. BAPI Eyes to expand Pharmaceutical Markets Bangladesh is now exporting pharmaceuticals to about 30 countries and also eyeing expansion of more markets next year. Bangladesh had started exporting pharmaceuticals to some neighboring countries like Myanmar, Sri Lanka and Nepal in the 1980s and since then the export market expanding gradually. Bangladesh Association of Pharmaceutical Industry (BAPI) said that the country would get the opportunity for exporting pharmaceuticals and other related items to India and China and other countries next year. Bangladesh is, among the 49 least developed countries (LDCs), which has the strongest base of manufacturing pharmaceuticals and so the country would get share of exporting the items after the global market will open up for all in the year 2005. Besides, the regular brands, Bangladesh are also exporting high-tech specialized products like inhalers, suppositories, Nasal Sprays, injectables and infusions. 9

Copyright © 2012, Asian Business Consortium | GDEB

Page 139

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Threats 1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government. 2. The competition is increasing day by day in the pharmaceuticals sector. So the pharmaceutical companies have to face competition in the market. 3. Rising the cost of the wages; the basic wages, so it effect on total cost of the production and it will increase the selling prices of the medicines. 4. Increasing the interest rate, the interest rate of the bank is increasing day by day. So the investors do not agree to borrow from the bank 5. Threats from other low cost countries like China and Israel exist, so, differentiation in the contract manufacturing side may wane. 6. The short-term threat for the pharmaceutical industry is the uncertainty regarding the implementation of VAT. Though this is likely to have a negative impact in the shortterm, the implications over the long-term are positive for the industry. 7. There is a worrying development in the industry. Some companies appear to be focused on the maximization of short-run sales as opposed to long-run profits. This shift in focus is never good for the industry. Prices crash and marketing expenditure to finance gimmicks shoots up resulting in lower profits per unit of sale. Many companies panic at this stage and join the bandwagon of bad selling and marketing practices. 8. Bad selling practices in the pharmaceuticals industry by some companies are likely to dampen the market growth. In addition depreciation of the taka will raise the cost of imported raw materials. 9. The pharmaceuticals sector attained a lower growth rate of 8.6 % only during the year 2004 as against 5.90% during the previous year. The lower growth rate of national pharmaceutical market may be attributed to various factors such as lower public expenditures on health care, natural calamities, including the floods, cyclones, epidemical diseases and lower agro-crop harvest. 10. Existing product become unpopular or unfashionable, the quality or the ingredients of the medicines are changing day by day. So the company has to face the losses. 10

SUGGESTION  

The pharmaceuticals industry has to make commitment to the quality of the medicine, because medicines are directly related to life. The companies have to concern about this fact. So the pharmaceuticals industry should clearly identify the strengths, weaknesses, opportunities and threats. They have to point out of the strengths and take steps to utilize these strengths properly. The pharmaceutical industries have to challenge with the threats of the external environments. So they have to differentiate their product from other industry.

CONCLUSION There still remains a lot of work in the field of SWOT analysis of the pharmaceuticals industry in Bangladesh. Several questions remain unanswered with regards to this emerging construct, some of which have been addressed within this paper, and some of which still remain to be explored. This research within the SWOT analysis has helped to shed some light in establishing what the characteristics of the SWOT analysis are. The SWOT analysis also provides the information about the pharmaceuticals industry in

Copyright © 2012, Asian Business Consortium | GDEB

Page 140

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Bangladesh. There is some strength in the pharmaceuticals industry in Bangladesh. Government should take step to utilize this strength properly. Further researches will be pursued in this area by us in the hope of gaining a better understanding of SWOT analysis and its constituents, with the ultimate goal of providing a practical and functional measurement tool.

REFERENCES [1] Shawon, S.A. 2011. Research Report: Pharmaceutical Industry of Bangladesh. IDLC Finance Limited. [2] The Daily Star. 2011. Current scenario of Bangladesh pharma market. http://bddrugs.com/detail.php?nid=13. 20 May 2013. [3] Habib, M.A., Alam, M.Z. 2011. Business analysis of pharmaceutical farms in bangladesh: problems and prospects. Journal of Business and Technology. 4(1): 61-77. [4] Bhuiyan, M.A.R., Moniruzzaman, and Sultana, S. 2011. Analysis of pharmaceutical industry of bangladesh: (it‘s challenges and critical success factors). Bangladesh Research Publications Journal. 5(2): 142-156. [5] Saad, K.S. 2012. Research Report: An Overview of Pharmaceutical Sector in Bangladesh. BRAC EPL Limited. [6] Healthcare Pharmaceuticals Limited (HLP). 2012. Partnering. http://www.hplbd.com/cakehplbd/pages/partnering. 22 May 2013. [7] The News Today. 2011. News Report. http://www.newstoday.com.bd/index.php?option=details&news_id=56395&date=201203-17. 24 May 2013. [8] Beximco Pharmaceuticals Limited (BPL). 2012. News Release. http://beximcopharma.com/latest-news/5335-beximco-pharma-enters-eu-market.html. 22 May 2013. [9] Shafiuzzaman. S.M. 2004. Bangladesh Pharmaceutical Sector: A Vision of Success. BAPI. [10] Rahman. W. 2012. Pharmaceutical Industry: Progress and Challenges. The Daily Star. 19 May 2013.

CALL FOR PAPER American Journal of Trade and Policy (AJTP) is an open-access, peer-reviewed interdisciplinary journal which seeks articles from any broad theme of international trade. AJTP features reports on current developments in international trade as well as on related policy issues. The digital online version is published by AJTP, and the hard copy (print) version is published by Asian Business Consortium (ABC). Website: www.ajtp.us

ABC Journal of Advanced Research (ABC JAR) is a peer-reviewed multi-disciplinary international journal devoted to academic advanced research. It specializes in the publication of comparative thematic issues as well as individual research articles, review essays, and book reviews. Committed to disseminating rigorous scientific research to the widest possible audience, ABC JAR is fully and freely accessible on line (ISSN 2304-2621).

Deadline for the upcoming issue Submission: 30th July 2013. Reviewer‘s Feedback: 05th August 2013. Payment Deadline: 08th August 2013. Expected to be in the press by the 2nd week of August, 2013.

Copyright © 2012, Asian Business Consortium | GDEB

Page 141

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Micro Credit and Women Empowerment: A Study on Grameen Bank’s Strategy of Poverty Alleviation Mohammed Thanvir Ahmed Chowdhury1; Musa. Halima Begum2; Md. Ridwan Reza3; & Tahrima Chowdhury Jannath4 1&2

Senior Lecturer (Sociology), Department of Business Administration, Leading University, Bangladesh Senior Lecturer, Department of Business Administration, Leading University, Bangladesh 4 MBA, Department of Business Administration, Leading University, Sylhet, Bangladesh 3

ABSTRACT Generally, it is held that, Women economic participation is positively related to their status. It is assumed that participation changes woman‘s power relationship and hence her status in the family, and thus a woman having no such access will have relatively low power and status. Relatively argued, women experience hunger and poverty in much more intensive ways than men. If one of the family members has to starve, it is an unwritten law that it has to be the mother. That is why women were targeted in the center point of micro credit program. However, the stagnation in the impact of micro credit on income may have serious implication for the success of micro finance institution and their long term sustainability and therefore the question deserves serious attention from researchers. The above concerns are related mostly to the long term impact of micro credit. Thereby we were intended to see the structures which dictate dependence press on these women. And if the gains they have made in income and assets are to be sustained, the control they have negotiated over their lives is to be maintained. In this regard, we want to see how women can build their empowerment and what Grameen Bank can do to strengthen them for poverty alleviation. Key Words: Micro Credit, Women Empowerment, Poverty Alleviation JEL Classification Code: I32; E51

1. INTRODUCTION In rural Bangladesh, women have little or no access to the formal employment market nor do they have the necessary credit to engage in income generating activities. The attractive feature of micro credit is its ability to address the credit needs of the poor. This credit generates work for women in the informal sector. Thus micro credit institutions in Bangladesh (like Grameen Bank) have developed strategies for providing collateral free loans to the poor and asset less households. Although poverty alleviation has featured as a priority development goal of successive governments, nearly half of the population of the country continues to live below the poverty threshold. Therefore, there is hardly any controversy about the great urgency of pursuing the objective of poverty reduction in the shortest possible time. Provision of micro credit has been widely recognized as an

Copyright © 2012, Asian Business Consortium | GDEB

Page 142

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

important instrument for achieving thus objectives. Our study focused the debate on the strategy of poverty alleviation as well as the impact of micro credit program on the women of rural areas. And we hope our study may contribute to investigate the socioeconomic condition of rural women in future. Bangladesh achieved independence in 1971. The situation worsened further when a devastating famine hits Bangladesh in 1974. Against this backdrop a number of humanitarian organizations set up relief and rehabilitation camps throughout Bangladesh. These organizations came to be known as non-Governmental organization or NGOs. Their programs of rehabilitation in a devastated economy gained popularity and the NGOs are present in every remote corner of the country performing vivid of functions ranging from relief for the disaster stricken and destitute population to provide training for empowerment of women and entrepreneurship to alleviate poverty. The BRAC, PROSHIKA, ASA, GRAMEEN BANK are the leading NGOs of present Bangladesh and GRAMEEN BANK is mostly renowned among them due to the winning of novel peace prize in 2006 by Dr. Yunus and Grameen bank together. Traditional banks in Bangladesh are gender biased and do not want to lend money to women. In Bangladesh, if woman even rich women want to borrow money from a bank, the manager will ask; did you discuss this with your husband? And if she answers yes, the manager will say, is he supportive of your proposal? If the answer is still yes, he will say, would you please bring your husband along so that we can discuss it with him? But no manager would ever dream of asking a prospective male borrower whether he has discussed the idea of a loan with his wife and whether he would like to bring his wife along to discuss the proposal. Even suggesting this would be an insult! So it is not by chance that prior to Grameen, women constituted less than 1 percent of all the borrowers in Bangladesh put together. To Dr. Yunus it was clear that the banking system itself was gender biased. Thus no longer question of avoiding gender bias, there was now a development reason to favor women. The more Yunus got involved, the more he realized that credit given to women brought about changes faster than when given to men (Dr. Yunus, Banker to the poor, 1998). The Grameen Bank‘s extension of credit to the rural poor has lead to the creation of opportunities for self employment (Yunus, 1982).The female participants in the Grameen Bank program earn cash incomes and contribute to the total family budget on a regular basis. A Bangladesh institute of bank management study documented that women borrowers increased their family income by about 72% due to availability of Grameen bank credits (Quasim et al, 1985) The land, scale of poverty, powerlessness and gender subordination in rural Bangladesh forms the contextual basis for Grameen bank and indeed the micro credit model in Bangladesh. The famine of 1974 provided the urgency for professor Md. Yunus to look for alternatives. He discovered that while the credit market was the scene of the most brutal exploitation of the poor (with high interest rates leading to persistent indebtedness, leading to forced sale of assets and destitution). It was also the arena where interventions were easiest for allowing the poor to break out of their cycle of poverty. The conventional banking structure however does not provide access to the poor because the poor can provide no collateral and because the overheads required for servicing loan become too high for the small size of loans that people required. Government loan programs for rural areas in turn get monopolized by the rich and powerful. Amongst the poor, women are even more discriminated against; because patriarchal norms ensures their exclusion from the facto ownership of assets and because the work that women generally engage in (home

Copyright © 2012, Asian Business Consortium | GDEB

Page 143

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

based) are not classified as economically productive. Hence the need for targeted collateral free credit for the poor and specifically poor women; hence the need for micro credit. 1.1 Micro Credit: A small amount of money used as a means of boosting income of the poor recipients. 1.1.2 Poverty: Poverty means number of people do not have the purchasing capacity to buy their survival basic needs such as a minimum level of food consumption, level of schooling, clothing and shelter. 1.1.3 Women Empowerment: Empowerment of women means recognizing women‘s contribution, enhancing their self respect and self dignity, controlling their own bodies & resources like land and other property and freedom of speech & choice.

2. OBJECTIVES OF THE STUDY The broad objective of this study is to see the relationship between micro credit and women empowerment. More specific objectives of this research are as follows(a) To study the role of Grameen Bank on women empowerment; (b) To evaluate Grameen Bank‘s strategy of poverty alleviation.

3. SOME NOTEWORTHY LITERATURE Studies on Micro credit have been mostly evaluative in nature. Researchers have tried to examine the kind of impact Grameen Bank programs have had, especially on women borrowers. Generally, these studies provide descriptive data on gradual changes in the number of Grameen Bank memberships, amount of loans taken, income earned from loan money, household income, areas of investment, acceptance of dowry, outside participation, and women‘s status in the family. One such study was conducted by Ghai (1984) who evaluated Grameen Bank‘s program at a very early stage of its establishment. He notes that 1. ―Remarkable feature and strength of the project is the attention paid to women among the landless‖ (1984:17). 2. At the time of his writing female clients rose from 31% in 1980 to 46% in 1983. 3. Ghai points out that, prior to becoming banks member, most of these women were beggars, agricultural laborers, maid servants or housewives. They had no access to resources which could improve their economic condition. 4. With loans from Grameen bank, they began investing in two major sectors, livestock and fisheries, and processing and manufacturing. 5. The earning opportunity for women has a clear impact on the division of labor between the spouses. While women borrowers can engage in making bamboo and cane products, husking rice or looking after a cow, husbands can complement the family income by selling processed rice, milk, meat, handicrafts and buying raw materials (Ghai, 1984). 6. Ghai also notes that, contrary to the popular belief that a women‘s participation in the process of earning incomes potentially creates tension in the family, it actually improves the relationship among the spouses and mothers-in-law. It also improves a wife‘s overall status in the household and in the local community‖ (Ghai, 1984:41). In another study, Hossain (1984) specially focused on the extent of Grameen Bank‘s impact on poor women‘s employment and income as well as productivity. His primary source of data came from a sample survey among 612 randomly selected Grameen Bank borrowers conducted by the Bangladesh Institute for Development Studies (BIDS).

Copyright © 2012, Asian Business Consortium | GDEB

Page 144

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

1.

Commenting on the socioeconomic background of the female borrowers, he mentions that majority (61%) of the respondents belonged to an extremely impoverished group. At the time of applying for loans 65% of those women were unemployed and rest were domestic workers. 2. Hossain‘s study (1984) shows that the loan money enables female borrowers to add to the family budget. Their net yearly household income is estimated to be 6000 taka and their productive labor yields only 1.31 taka per hour which is 42% lower than the wage of male borrowers. 3. Hossain concludes: ―considering that women have very few job opportunities, whatever little they earn contributes to the increasing household and per capita income (1984:21).‖ Looking at socioeconomic status (SES) and mobility of the Grameen bank‘s female clients, measured by indicators such as increase in land ownership, income and gainful employment, Ahmed (1985) noted considerable changes in all these areas. 1. Thirty seven percent of the females (N=120) said that they owned some land, and fifty eight percent who had no income before earned some money after taking loans from the bank. 2. Furthermore, his study showed that while ―entrepreneurial activities‖ increased by twenty-eight percent for these women, their housework decreased by forty percent. These are the result of investing Grameen Bank‘s loan money into income generating activities. The review of studies done so far shows that research on Grameen Bank has focused on its performance, its success in accessing the landless rural poor, the recovery of credit, problems with rural village power structure and so forth. A very few have exclusively studied the impact credit has had on women‘s lives. Ahmed (1985), among others, investigated whether borrowing from Grameen Bank has had any effects on woman‘s actual as well as perceived status. 1. He assumed that Grameen Bank woman participants would be more conscious than non-participants about the evil of dowry, repression, divorce, desertion, and violence against them, and consequently may more often support equal rights for men and women. 2. Ahmed‘s study reveals that, even though awareness about such issues is very high (81 to 100 percent) among the female borrowers, only 48 percent of them support equal rights. 3. However, he shows only 19 percent of the women in Ahmed‘s sample actually justify wife beating on the ground that it is a controlling mechanism for ―disobedience, slowness in household chores and an attempted self-assertion as well as for feeding the ‗sadistic‘ male ego‖ (Ahmed, 1985:14). 4. Apart from this minor exception, Ahmed found that overall there has been an improvement in the perceived status of the wives (measured by husband‘s attitude towards wife before and after she took a loan). In a later study, Hossain (1986) also found that, 1. Grameen Bank credit has produced new employment among one-third of the female respondents (out of 534 females). Loans taken by females are mostly invested in such activities as cow, goat and poultry raising, paddy and pulse husking and trading, cattle fattening, peddling, grocery and stationary shops, and in traditional cottage industries such as handlooms weaving, mat and fish-net making.

Copyright © 2012, Asian Business Consortium | GDEB

Page 145

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

2.

Even though the maximum of an individual loan is 5000 taka, Hossain‘s (1986) study shows that forty percent of the female members loans range between 1400-2500 taka. In comparison to men, women received 15% less money. He further mentions that a female member‘s loan amount as compared to that of a male was always less for most of the activities. Islam-Rahman (1986), on the other hand, systematically documented the impact of Grameen Bank by comparing four groups of women: Grameen Bank female members who took loans over different periods of time, women from the same (project) village who had no access to Bank‘s credit, non-borrowers from two control villages (Tangail and Rangpur) where Grameen Bank did not operate, and non-borrowers from the project as well as from the control villages. 1. His expectation was that earnings gained through involvement in the Bank‘s program would bring about changes in the consumption pattern of food and clothing, family decision-making, and reproductive behavior of women. Grameen bank participants were expected to have an increased consciousness about the education of children and their job opportunities, and to oppose early marriage of their daughters. 2. The majority of the female clients in Islam-Rahman‘s (1986) study are from nuclear families. Only 25% have primary or little education. Their average landownership is only 2.5 acres. 3. Eleven percent of her sample are widowed or divorced and only four and one-half percent are unmarried, while the majorities (84%) are married. Islam-Rahman reports that on all accounts Grameen bank borrowers are better off compared to other groups. Most of the females are found to be inexperienced in conducting their own entrepreneurial activities. 4. Islam-Rahman (1986) notes that 77.4% of the women themselves utilize almost 75% of the credit. In almost all cases there has been an increase in the incomes of Bank‘s borrowers. On the average, women contribute 38% to the total household income and this happened because very few of these women were previously generating an income. 5. On decisions about the purchase of food items, clothing, medical expenses, visiting relatives, and marriage of children, Islam-Rahman notes that even those who let their husbands manage their loan ―are in a better situation than housewives in the male loaner group though they are less important than the active loaner women‖ (1986:68). 6. Female borrowers take a more active part in decision making compared to any other group. To find out extent to which the Bank‘s efforts raise awareness among women, Atiur Rahman (1986) gathered data through a sample survey of female and male members from Rangpur, Tangail and Dhaka regions. 1. His findings show that 54% of the male and 81% of the female respondents learned to sign their names and in the process become aware of the necessity of education. A majority said they would provide higher education for their sons, while they agreed that girls should have some education. 2. Citing case studies from Rangpur and Patuakhali areas, Rahman mentions that women discovered strength in collective solidarity and not only challenged the traditional norms and values, but also fought against social injustices. Overall, members are aware of the disadvantages of purdha, dowry, superstition, as well as the benefits of sanitation, small family, late age at marriage, and group cooperationconditions that provide an opportunity to enhance their quality of life.

Copyright © 2012, Asian Business Consortium | GDEB

Page 146

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

3.

However, as Grameen Bank‘s social development programs are at a formative stage, Rahman cautions about its impact: They have at least economic staying power, a precondition which normally does not exist among the other poor (1986:47). The findings of Qazi Kholikuzzaman Ahmed (2007) from the study of socio economic impact of micro credit in Bangladesh is given below. 1. Only about 10% of all female respondents (numbering 2482) have said that they are in full control of running the economic activities undertaken using micro credit they received. The other 90% run them either in consultation with their husbands and other members of their respective families or they do not participate at all. 2. About 72% of the female respondents are now always or occasionally give more importance in family decision making compared to the situation before enrollment. 3. About 28% of the female respondents still face physical or mental torture from one or another member of the family, usually the husband. The intensity of torture has increased in the case of 60% of these respondents, while in the case of 40% it‘s about the same or somewhat less than before. Dixon (1978: 15) argued that, ―a woman earning half of the household income will likely have more bargaining power than the woman who earns none, even when total household earnings are the same.‖ In developing countries survival of low income families may compel all members to engage in productive activities. In spite of little improvement in total household earnings a woman‘s status is likely to be affected by the increase in bargaining power as a result of her crucial contribution to family subsistence. Lee and Peterson (1983) have noted that when the wife‘s contribution becomes a valued resource for the welfare of the family, the wife will have more influence in decision making. 3.1 The process of poverty alleviation through micro credit: Success of micro credit in poverty alleviation will depend on how far it can address the constraints faced by the poor households. The economic environment characterizing the poor consists of lack of ownership of productive assets and lack of adequate remunerative employment. Human capital endowment is a requisite for ensuring remunerative nonagricultural employment; but the literacy rate among the rural poor is low. Members from extreme poor households face disadvantages in the labor market in the form of gender segmentation and adverse terms of attached labour (Sen 1993). Manifestation of extreme poverty may take the form of malnutrition (Chowdhury 1992) and ill health which has a second round effect in perpetuating poverty. Expansion of micro credit in Bangladesh and other South-East Asian countries has been rooted in the expectation that MC can help in the generation of self employment which can solve the problems of both unemployment and poverty in these densely populated developing countries. Poor households access to institutional finance is limited because of their inability to provide collateral. Poor households can improve their income through an increase in the labour force participation ratio, which is possible through women‘s involvement in income generating activities. The access to micro credit is expected to ease the constraints in the credit market and thereby create self employment and increase the productivity and earnings from self employment. The global commitment to micro credit as a vehicle for poverty reduction is evident from the aims of the forthcoming micro credit summit. In Bangladesh, there will be further expansion of these programs in response to their success in effectively targeting poor people and reducing their poverty. It is believe that programme expansion will strengthen the likelihood that structural constraints of economic, social and gender relations will be reduced. (Mustafa et al 1996 p. 20)

Copyright © 2012, Asian Business Consortium | GDEB

Page 147

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

3.2 The overwhelming credit attraction: The safest way for NGOs to get away from total economic dependency on shrinking aid funds is to increase their share of revolving loan funds. Once these revolving loan funds have been lent to my target group and then repaid, they become an asset fully controlled by the NGOs. A real asset when it comes to future economic security and sustainability from the NGOs point of view. This then becomes the solution for the NGOs in their struggle for economic sustainability for their organization. The description above reveals that almost all the major impact assessment studies obtained positive pictures of the impact of micro credit on income. However one should also examine the limitation of the performance of micro credit. What we need is a systematic investigation into the question of whether women‘s participation in the Grameen bank and income derived from such participation are valued resources for decision-making power in the family. From the family sociological perspective, answers to this question with data from Bangladesh may help to strengthen the theoretical understanding of power in the family. Conversely, it may show the limitations of the application of such a theory to developing nations. From the larger perspective of a scientific discipline like sociology or family sociology, an attempt to test the general theories of the field is certainly important in itself. While it adds to the cumulative knowledge of the field in terms of enhancing a theory‘s generalize ability, it can also validate or modify specific components of a theory.

4. METHODOLOGY In this study exploratory-analytical research design has been followed. It has been tried to explore the relationship between micro credit and women empowerment through Grameen Bank‘s strategy of poverty alleviation. Concerning the study area, at first Sylhet district is selected purposively. Secondly Mollargaon branch of Grameen bank is selected purposively as it is one of the biggest branches of Grameen bank in Sylhet. The required primary data for this study were collected from the above study area in July, 2011. Population and Sampling The total 3879 women participants of Grameen bank Mollargaon Branch are the population of this study. Stratified random sampling is used as a method to draw the sample size. At first the population is divided into four strata based on their joining date. Strata 1(0-5 years length of attachment with Grameen Bank), strata 2(6-10 years), strata 3(11-15 years), strata 4(15+ years). Then total sample size ‗n‘ is selected by using the following formula---n = p.q z2/e2. deff n =sample size z2 =Two-sided normal variate value at 95% confidence level (1.96) e = standard error (10%) = 0.5 x 0.5 (1.96)2/(0.10)2 x 1.5 deff = Design effect = 144 Now to draw the sample size from each stratum, proportional allocation formula is used ni = n/N x Ni So, the total sample size = n1+n2+n3+n4 = 69+34+26+15 = 144

Copyright © 2012, Asian Business Consortium | GDEB

Page 148

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

In this study, methodological triangulation (sample survey, case study) used. Firstly by using schedule questionnaire, information is collected from 144 respondents through sample survey method. And guide questionnaire is also used for case study to get in depth understanding of the respondents. The collected quantitative information is processed through SPSS program by using computer. To represent qualitative information several case studies have been made.

5. RESULTS AND DISCUSSION Credit programs target credit to the rural poor- those who are functionally landless (owning less than half an acre of land) or having assets amounting to less than the value of an acre of medium quality land or engaging in wage labor for once livelihood. Since collateral is not required, credit program generally relying on the group mechanism, transfers risks of non repayment from the program to the group itself. The problem of asymmetrical information (program having limited information on borrowers) is resolved through selection of members by the group (screening out high risk borrowers) and through imposition of joint liability on the group. While individual borrowers receive loans, sanctions (in the form of suspension of new loans) are imposed on the collective group in the case of default by any individual borrower. From the early days of the expansion of MFIs, the skeptics have put forward the views that the micro credit financed activities bring in a law return and micro credit cannot therefore be instrumental in raising household income. Given the law rate of return from most rural activities investment opportunities would soon be exhausted and the scope for further expansion of micro credit would be limited. Even though such evidences have not been established through rigorous quantitative research, skeptical views have been expressed in a number of newspaper report and in some case study based research paper. From this study, it is viewed that among the 144 respondents aged woman have high frequency and in age group 45-49, highest amount of people (21.5%) remains on that (Appendix Table 1). We see that among total population in our study area, 77.8% people are married, only 2.8% are unmarried, 5.6% divorce, 2.8% are separated and 11.15% are a widow. It can be said that maximum loan taker are married women (Appendix Table 2). Turning to religious status, we find 120 people (83.3%) are Muslim and 16.7% people are Hindu. Hence we can say most of the respondents are Muslim who have been involved with Grameen bank‘s micro credit program in our study area (Appendix Table 3). Concerning the educational qualification, it reveals that more than fifty percent people (53.5%) are illiterate. Twenty five percent respondents have primary education, 16% have secondary education, and only 5.6% have higher secondary education. So it is clear that most of the people are involved with micro credit program are illiterate (Appendix Table 4). As regard this study, we see that 69 people out of 144 (47.9%) are involved with micro credit program from 1-5 years. And the lowest 15 people (10.4%) have attachment with Grameen bank for more than 15 years (Appendix Table 5). We found that 88.9% people have the house of their own and only 11.1% people have no house (Appendix Table 6). We see a large number of people (41.7%) have the income between 4001-6000 taka. Only 1.4% among the 144 people has income more than 10000 taka (Appendix Table 7). Our findings shows that 112 respondent out of 144 pay the installment from their business profit but sometimes it goes tougher and 32 female feel burden; that indicates they are unable to pay installment from the profit money (Appendix Table 8). We found that, from

Copyright © 2012, Asian Business Consortium | GDEB

Page 149

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

144 respondent 41% follow the family planning program and 56.3% respondent are not following this (Appendix Table 9). Our study represents 36.1% family out of 144 respondents, husband plays headship role, in 32.6% family son plays headship role and in 22.2% family respondent herself plays headship role (Appendix Table 10). From the study, we found that 24 women out of 144 look after their property by themselves, 52 women said their husbands look after their property. And 68 women out of 144 replied their son look after their own property. So it is clear that very few member of micro credit look after their own property (Appendix Table 11). It can be said from the study, women who have the control over the property are only 16.7% of 144 women. And 36.1% replied their husband have the control over the property and the highest percentage 47.2% women said their son have the control over the property. Hence it is noticed that very few percentage of women have the control over the property (Appendix table 12). According to the respondent‘s view, 50.7% respondent feel micro credit program is good, 29.9% respondent think micro credit activities are very good program. And 19.4% respondent mentioned it is satisfactory to them (Appendix Table 13). Correlations Matrix

Monthly income Pearson of respondents Correlation at present Sig. (2-tailed) N Present assets of Pearson respondents Correlation Sig. (2-tailed) N Educational Pearson qualification of Correlation respondents Sig. (2-tailed) N Duration of Pearson involvement Correlation Sig. (2-tailed) N Amount of loan Pearson taken Correlation Sig. (2-tailed) N Control over Pearson loan Correlation Sig. (2-tailed) N

Monthly Present Educational Duration Amount of income of assets of qualification of loan taken responden respondents of involveme ts at respondents nt present 1 .226 .148 .435 .597

Control over loan

.364

. 144 .226

.007 144 1

.076 144 .087

.000 144 .116

.000 144 .306

.000 144 .194

.007 144 .148

. 144 .087

.302 144 1

.166 144 -.251

.000 144 -.015

.020 144 -.106

.076 144 .435

.302 144 .116

. 144 -.251

.002 144 1

.861 144 .373

.205 144 .373

.000 144 .597

.166 144 .306

.002 144 -.015

. 144 .373

.000 144 1

.000 144 .330

.000 144 .364

.000 144 .194

.861 144 -.106

.000 144 .373

. 144 .330

.000 144 1

.000 144

.020 144

.205 144

.000 144

.000 144

. 144

** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).

Copyright © 2012, Asian Business Consortium | GDEB

Page 150

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Concerning the above correlation matrix, it can be said that, with the respondent‘s current monthly income, present assets of respondents, educational qualification, duration of involvement with micro credit, amount of loan taken and control over loan are positively correlated. With present assets of respondents, educational qualification, duration of involvement, amount of loan taken, and control over loan are positively correlated. With educational qualification, duration of involvement, amount of loan taken and control over loan are negatively correlated. With duration of involvement, amount of loan taken and control over the loan are positively correlated. Finally with amount of loan taken, control over loan is positively correlated. Table: Current assets of respondents Vs Duration of involvement with micro credit

Current assets of respondents

Duration Total of involve ment 1-5 6-10 11-15 15+ House 29 3 32 Boat Shop Wood business Raw materials Rice business Fish business House+ rickshaw House+ cattle+ firming land House+ rickshaw + raw materials business Polli phone House+ polli phone House+ boat House+ Cattle House+ Tractor others

Total

2 4 1 3 5

1 2 4 7 2 3 1 7 2

3

4

4 4 2

4

4 7

6

4 12

8 4 8 15 8 4 4 16 15 4 12

1 4 4

2

1

69

34

1 26

1 15

4 4 4 2 144

Turning to the table above, we see that among 144 respondents, 32 women have no property without house and they are been involved with micro credit from 1-10 years. 8 respondents have boat only as assets and among them one is involved for 6-10 years, 3 women are involved between 11-15 years, and 4 women are involved in more than 15 years. 4 respondents have only shop. Among them 2 have involved between 1-5 years, and rest of 2 are involved between 6-10 years. 8 respondents have wood business. Among them 4 are involved within 6-10 years, and another 4 are involved within11-15 years.15 respondent have raw materials business. Among them 4 are engaged within 1-5 years, 7 are involved within 6-10 years and4 are involved within 11-15 years.8 respondent have rice business where 2 of them are engaged between6-10 years, 2 are involved within 10-15 years and 4 are involved in more than 15 years.4 respondents have fishing business where one is engaged within 1-5 years, and rest of 3 are involved between 6-10 years. 4 respondents have house and rickshaw. Among them3 are involved in 1-5 years, and one is involved within 6-10 years.16 respondents have house, cattle and firming land. Among them 5 are engaged in 1-5 years, 7 are involved within 6-10 years, and 4 are involved within10-15 years.15 respondents have house, rickshaw and raw materials business.2 are

Copyright © 2012, Asian Business Consortium | GDEB

Page 151

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

involved between 6-10 years,7 are involved within 10-15 years and 6 are involved in more than 15 years.4 respondents have Polli phone business where everyone is involved within 1-56 years.12 respondents have house and polli phone. All of them are involved in 1-5 years.4 respondents have house and boat. Among them one is engaged in 1-5 years, 2 are involved in 6-10 years and 1 is involved in 10-15 years.4 respondents have house and cattle where all of them are involved in1-5 years.4 respondents have house and tractor where everyone is involved in 1-5 years. And finally among others two respondents one is involved in 10-15 years and the second one is involved in more than 15 years. From the above table it is significant that as far as duration of involvement is increasing the numbers of respondents are decreasing.

6. FINDINGS FROM CASE STUDIES Jahanara Begum (Pseudonym, age 26) is the eldest one among the five siblings. She is a widow woman. Her father is late and mother is a paralyzed patient. Her younger sister (second in siblings) is married and two brothers (third and fourth) is doing job in a workshop. And the youngest sister is studying in class six. She and her two brothers earn about 3500-4000 taka per month. But they are to spend about 3000-3500 taka each month. So their family cannot save money. Jahanara went to school up to class three. They have no land for cultivation. They got three decimal lands and a bamboo made house from their father by inheritance. When she asked about the reasoning behind involvement with micro credit, she said, ―I got married with Abdul Sattar in 2002. My husband was a rickshaw puller. And unfortunately my husband died in December, 2005 by road accident. I have no children. My husband‘s family did not accept me cordially and continued rude behave with me. I felt unsecured and returned to my father‘ family in March, 2006. But the economic situation in my father‘s family is not good for survival. Then I thought, I have to do something. I took decision to do business. But I had no capital to start business. Few months later, I heard about Grameen Bank activities from my neighboring people. I went to Grameen Bank office and talked with the officers about the system. I joined with Grameen Bank in August 2006. I received 5000 taka loan from Grameen bank and started rice selling business.‖ She explains about her present situation as, ―When I started my business, I was not sure that I can do this business. But with the time being my neighboring people know that I am doing rice selling business. I purchase 3 beg rice (150 kg) each week at whole sale rate and sell it in my home. I sell at very marginal profit. Even my selling price is lower than local market. For this, many people come to my home. I can give my installment from the profit money. Though sometimes I face problem, but this problem is not regular. So I am in better position than my past.‖ Her perception about micro finance institution like, ―I think Grameen bank is good for the poor people. We can get loan easily than the other Banks. But I feel interest rate is little bit higher. And the officers are very strict. They never consider if anybody fails to pay installment. Even sometimes members have to borrow money to pay the installment. After all if anybody can invest the borrowed money, then it brings benefits towards them. Rubina Begum (pseudonym, age 35) is a divorcee woman. Her husband was a rickshaw puller. She has two daughters and a son. Her first daughter is married and son is doing job in a workshop. Her second daughter reads in class five. She has no house of her own. She lives in a colony where she has to pay 500 taka rent per month. When she was asked for reasoning behind her involvement with Grameen bank, she replied, ―I did household work as a servant in neighboring houses. Two years back my husband got second

Copyright © 2012, Asian Business Consortium | GDEB

Page 152

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

marriage and divorced me. Then I fall in serious trouble. I couldn‘t maintain my family expenses. Few days later I heard about micro credit program from a Grameen Bank member. Then I went to Grameen bank office and took 5000 taka loan to start a tea stall.‖ As she said about her present situation, ―now I can maintain my family expenses and I can pay the installment every week from my profit. I give 135 taka per installment on every Sunday. I already paid 27 installments. Now I am planning to take second loan, about 10000 taka to expand my business. I can make profit daily 100-150 taka in average.‖ Her perception about Grameen bank, ―I personally happy with Grameen bank. I have very good relation with the field officers of Grameen bank. I regular pay my installments so that the officers do good behave to me. But those who cannot repay the installment, they are to face trouble. Hence, to me, Grameen bank is helpful.‖ Lokkibala Rani (pseudonym, age 44) is married and her husband Ashim Kumar pal is a fisherman. Lakkibala has two daughters and a son. Her first child Shamoli is married and second child Devu helps his father in fishing. Her third child Anupom is a student of class five. When she was asked for reasoning behind her involvement with Grameen bank, she responds, ―I have multiple loans. I took my first loan 5000 taka from BRAC and spent this money on my daughter‘s marriage. I had no way of income then. For this we couldn‘t repay the loan. Then I went to Grameen bank and took 5000 taka loan. From this amount, I spent 2000 taka to repay the installments of BRAC and rest of 3000 taka I spent to repair my house.‖ She said about her present condition, ―now I am ill. I have chronic back pain. I cannot do any work. My family depends on my husband‘s income. Though my elder son helps his father but he is very young. Moreover, fishing is seasonal business. Most of the times my husband remains unemployed. So, sometimes I fail to repay the installments of Grameen Bank. Two months back, my husband had suffered by typhoid and I had to spend 2000 taka for his treatment. I was unable to pay the installment for four weeks. Hence my center head Shumita Das and Grameen Bank field officer Harun sir gave pressure on me. But I surrendered that time. I cried and requested them to consider me. And I promised that, I will manage within two weeks. But they did not rely on me. Following the next day, they take away off the sealing (tin made) of my house.‖ Her perception regarding Grameen bank, ―I think, the poor people like me have the opportunity to take loan from NGOs like Grameen bank. But those who have daily income source, they get benefits from that. And those who consumed the borrowed money at time like me, they suffered a lot. Though the field officers do misbehave with us, nevertheless we need micro credit program.‖ The following observations illustrate the emerging concerns about the impact of micro credit on poverty alleviation. (a) Case studies have shown that borrower have been initially successful but in the long run face a downturn in terms of ownership of asset and level of income. (b) 69 percent of dropouts resulted from inability to pay installments due to loss in income generating activity. (c) The older groups and branches of MFIs have higher loan default rate and longer percentage of ineffective groups.

7. CONCLUSION AND RECOMMENDATION Credit can certainly plays a very important role in the economic empowerment of the poor. But all credit stories are not stories with a happy ending. When credit schemes turn out to be unprofitable, when invested group savings as well as credits have turned into

Copyright © 2012, Asian Business Consortium | GDEB

Page 153

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

costly losses, then the empowerment endeavor turns into its opposite. The landscape of poverty, powerlessness and gender subordination in rural Bangladesh forms the contextual basis for Grameen bank and indeed the micro credit model in Bangladesh. It was also the arena where interventions were easiest for allowing the poor to break out of their cycle of poverty. The conventional banking structure however does not provide access to poor because the poor can provide no collateral and because the overheads required for servicing loans become to high for the small size of loans that poor people requires. Amongst the poor women are even more discriminated against; because patriarchal norms ensure their exclusion from de facto ownership of assets and because the work that women generally engaged at home based productions are not classified as economically productive. The concern with poverty is not only about preventing further decline in welfare, it is also about breaking out of the vicious grip of poverty and making definitive graduation from the vulnerable status. The redeeming feature of micro credit program participation is that even without a significant increase in women‘s access to resources whose allocation is structurally determined. It is possible to increase access to other choice-expanding but less restricted resources and to enhance the exercise of women‘s agency, both of which can eventually be effected in transforming the very structures that restrict women‘s access to resources. In this respect, a long term and sustainable programs strategy would be necessary to promote the expansion of women‘s access to house hold resources, particularly income generated from loan investment. This is possible if women to be active in decision about loan use and in the control over incomes from loan investment. This is the reason why micro credit is an attractive business for NGOs. Such quick multiplication of credit funds helps the MCIs to sustain and enlarge their operations and prosper. But as seen in this study, micro credit borrowers often fail to break out of income poverty and many even get caught up in an increasing debt-burden syndrome and slide further into poverty. As indicated by the results of the study, not much has happened in relation to women‘s empowerment through micro credit. Only about 16.75 of the respondents have said that they are in full control of the property run by using the micro credit they take. To recapitulate, the positive impact of the amount of credit on income without a corresponding positive impact of the length of membership indicates the possibility that the successful members continue to obtain credit while the unsuccessful ones drop out or become ineffective members. It is therefore pertinent that future research should focus on the members who drop out or become ineffective members.

REFERENCES [1] [2] [3] [4] [5] [6]

Ahmed Q.K ( 2007) Socio-Economic and Indebtedness-Related Impact of Micro-Credit in Bangladesh, Dhaka: The University Press Limited. Ahmed S & Hakim M. A.(2004) Attacking Poverty with Micro credit, Dhaka: The University Press Limited. Hamid S. (1996) Why Women Count: Essays on Women in Development in Bangladesh, Dhaka: The University Press Limited. Holcombe S. H.(!995) Managing to Empower: The Grameen Bank’s Experience of Poverty Alleviation, Dhaka: The University Press Limited Kothari C.R.(1990) Research Methodology: Methods & Techniques, Second Edition, New Age International Publishers, Delhi, India. Khandker S. R.(1998) Fighting Poverty with Micro credit: Experience in Bangladesh, Dhaka: The University Press Limited

Copyright © 2012, Asian Business Consortium | GDEB

Page 154

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

[7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20]

ISSN 2305-9168

Mizan A.N. ( 1994 ) In Quest of Empowerment: The Grameen Bank impact on women’s power and status, Dhaka: The University press Limited Mahmud S. (2001) Assessing Women’s Empowerment in the Context of Development: The Case of Micro Credit in Bangladesh, Dhaka: Bangladesh Institute of Development Studies. Mondal w.(2002) Micro Credit And Micro Entrepreneurship, Dhaka: The Academic Press and PublishersLimited. Nachmias C.F.(1996)Research Methods in the Social Sciences, Fifth Edition, New York: St. Martin‘s Press Inc. Rahman H.Z & Hussain M.(1995) Rethinking Rural Poverty: Bangladesh as a case study, Dhaka: The University press Limited Rahman R.I. (2000) Poverty Alleviation and Empowerment Through Microfinance : Two decades of experience in Bangladesh, Dhaka: Bangladesh Institute of Development Studies. Sen Amartya (1999) On Economic Inequality, Third Edition, Oxford University Press. Todd Helen (1996) Women at the Center: Grameen Bank Borrowers After one Decade, Dhaka: The University press Limited. Sahay S. (1998) Women and Empowerment: Approaches and strategies, New Delhi: Discovery publishing House. Wood G.F. & Sharif I. (2001) Who Needs Credit? Poverty and Finance in Bangladesh, Dhaka: The University press Limited Wright G.A.N. (2000) Micro Finance System, Dhaka: The University press Limited. Yunus Muhammad (1998) Banker to the Poor: The Autobiography of Muhammad Yunus, Dhaka: The University press Limited Cochran William G.(1990) Sampling techniques, third edition, Wiley eastern limited, India Kothari C.R. (2005), Research Methodology –Methods and techniques, second edition, New age international limited, India

Appendices Age (Years) 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55+ Total

TABLE1: AGE OF THE RESPONDENTS Frequency Percent Valid Percent Cumulative Percent 16 11.1 11.1 11.1 12 8.3 8.3 19.4 20 13.9 13.9 33.3 24 16.7 16.7 50.0 8 5.6 5.6 55.6 31 21.5 21.5 77.1 16 11.1 11.1 88.2 17 11.8 11.8 100.0 144 100.0 100.0

Type Married Unmarried Divorce Separated widow Total

TABLE 2: MARITAL STATUS OF THE RESPONDENT Frequency Percent Valid Percent Cumulative Percent 112 77.8 77.8 77.8 4 2.8 2.8 80.6 8 5.6 5.6 86.1 4 2.8 2.8 88.9 16 11.1 11.1 100.0 144 100.0 100.0

Copyright © 2012, Asian Business Consortium | GDEB

Page 155

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Table 4: Educational qualification of the respondents Years of Schooling Frequency Percent Valid Percent Cumulative Percent 0 77 53.5 53.5 53.5 1-5 36 25.0 25.0 78.5 6-10 23 16.0 16.0 94.4 11-12 8 5.6 5.6 100.0 Total 144 100.0 100.0 Table 5: Duration of involvement with micro credit program Years Frequency Percent Valid Percent Cumulative Percent 1-5 69 47.9 47.9 47.9 6-10 34 23.6 23.6 71.5 11-15 26 18.1 18.1 89.6 15+ 15 10.4 10.4 100.0 Total 144 100.0 100.0 Table 6: Live in own house Type Frequency Percent Valid Percent Cumulative Percent yes 128 88.9 88.9 88.9 no 16 11.1 11.1 100.0 Total 144 100.0 100.0 Table 7: Monthly income of the respondents at present Amount (Taka) Frequency Percent Valid Percent Cumulative Percent 1-2000 16 11.1 11.1 11.1 2001-4000 42 29.2 29.2 40.3 4001-6000 60 41.7 41.7 81.9 6001-8000 8 5.6 5.6 87.5 8001-10000 16 11.1 11.1 98.6 10000+ 2 1.4 1.4 100.0 Total 144 100.0 100.0 Table 8: Repayment from profit Type Frequency Percent Valid Percent Cumulative Percent yes 112 77.8 77.8 77.8 no 32 22.2 22.2 100.0 Total 144 100.0 100.0

Copyright © 2012, Asian Business Consortium | GDEB

Page 156

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Table 9: Using family planning yes no n/a Total

Frequency Percent Valid Percent Cumulative Percent 59 41.0 41.0 41.0 81 56.3 56.3 97.2 4 2.8 2.8 100.0 144 100.0 100.0

Table 10: Head of the family Frequency Percent Valid Percent Cumulative Percent Self 32 22.2 22.2 22.2 Husband 52 36.1 36.1 58.3 Son 47 32.6 32.6 91.0 Others 13 9.0 9.0 100.0 Total 144 100.0 100.0 Table 11: Property looks after Frequency Percent Valid Percent Cumulative Percent Self 24 16.7 16.7 16.7 Husband 52 36.1 36.1 52.8 Son 68 47.2 47.2 100.0 Total 144 100.0 100.0 Table 12: Control over loan/ property self husband son Total

Frequency Percent Valid Percent Cumulative Percent 24 16.7 16.7 16.7 52 36.1 36.1 52.8 68 47.2 47.2 100.0 144 100.0 100.0

Table 13: Respondent‘s perception about micro credit program of Grameen bank Type Frequency Percent Valid Percent Cumulative Percent Satisfactory 28 19.4 19.4 19.4 Good 73 50.7 50.7 70.1 Very good 43 29.9 29.9 100.0 Total 144 100.0 100.0

Copyright © 2012, Asian Business Consortium | GDEB

Page 157

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

Global Disclosure of Economics and Business (Peer reviewed international journal)

Open Access Philosophy

1. 2. 3.

Under Open Access Philosophy, GDEB will not charge for the access of its journals. This will ensure that a large percentage of students, scholars, researchers and practitioners will be able to benefit from the research published through ABC journals. Moreover, this process will also enable authors’ papers to receive a higher ranking. A greater number of people being able to access and consequently refer to papers will mean a higher citations and Impact Factor for ABC journals. Following are advantages of Open Access Philosophy: Your research work will be indexed and abstracted in the internationally reputed databases and search engines immediately after publication. Open Access increases the number of downloads, page views, citations etc. increasing the rate of dissemination of your research work manifold. It is inferred from past researches that the papers published under "Open Access Philosophy" are four times more likely to be cited than the papers published under "Non-Open Access Philosophy"

Peer Review Policy Paperless, web-based peer review system, professional and helpful suggestions from reviewers. Articles in this journal have undergone a rigorous blind peer review system, based on initial editor screening and involving in-country and international refereeing, ensures that articles meet the highest standards of quality. Most ABC journals have ISSN with Global Indexation. It facilitates our scholars, researchers, scientists, professors, corporates, governmental research agencies, librarians etc., in a more positive way in their research proceedings. Faster Turnaround Time Many journals take many months, even years to publish research. By the time papers are published, often they become outdated. GDEB publishes papers in the shortest possible time, without compromising on quality. This will ensure that the latest research is published, allowing readers to gain maximum benefit. We provide feedback instantaneously and furnish details of the outcome within about 5 - 6 working days of submission of your research paper. This enables research scholars to use their time effectively on the actual research rather than on the follow ups. Strong International network & Collaboration We have exposure to wide range of industries across geographies and worldwide connect through international colleagues and thereby the recognition. We work in collaboration with extremely creditable companies, academic institutions, reputed publication units, government bodies and research firms. By publishing with us, you join ABC Global Research Community of 50,000 scientists / researchers.

For Details- go through the link: www.gdeb.weebly.com

Copyright © 2012, Asian Business Consortium | GDEB

Page 158

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

It gives us immense pleasure to forward the link of the current issue of our Journal Asian Accounting and Auditing Advancement (4A Journal) circulated all over the world 141 countries/territories (Japan; United Kingdom; United States; Russia; Australia; China; Canada; France; Germany; Hong Kong; Italy; Mexico; New Zealand; Singapore; Spain; Swaziland; Switzerland; Taiwan; Afghanistan; Albania; Algeria; Argentina; Armenia; Austria; Bahrain; Bangladesh; Barbados; Belgium; Benin; Bhutan; Bolivia; Bosnia and Herzegovina; Botswana; Brazil; Brunei; Bulgaria; Cameroon; Chile; Colombia; Congo [DRC]; Costa Rica; Côte d’Ivoire; Croatia; Cyprus; Czech Republic; Denmark; Djibouti; Egypt; Eritrea; Ethiopia; Fiji; Finland; Gambia; Georgia; Ghana; Greece; Guatemala; Guyana; Hungary; Iceland; India; Indonesia; Iran; Iraq; Ireland; Israel; Jamaica; Jersey; Jordan; Kazakhstan; Kenya; Kuwait; Kyrgyzstan; Laos; Latvia; Lebanon; Lesotho; Liberia; Libya; Lithuania; Luxembourg; Macau; Macedonia [FYROM]; Malawi; Malaysia; Maldives; Malta; Mauritius; Moldova; Morocco; Mozambique; Myanmar [Burma]; Namibia; Nepal; Netherlands; Nicaragua; Nigeria; Norway; Oman; Pakistan; Palestinian Territories; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Poland; Portugal; Qatar; Romania; Rwanda; Saudi Arabia; Senegal; Serbia; Sierra Leone; Slovakia; Slovenia; South Africa; South Korea; Sri Lanka; Sudan; Suriname; Sweden; Syria; Tanzania; Thailand; Togo; Trinidad and Tobago; Tunisia; Turkey; Uganda; Ukraine; United Arab Emirates; Uruguay; Uzbekistan; Venezuela; Vietnam; Yemen; Zambia; Zimbabwe), for your kind reference and record.

Copyright © 2012, Asian Business Consortium | GDEB

Page 159

Global Disclosure of Economics and Business, Volume 2, No 2 (2013)

ISSN 2305-9168

ASIAN BUSINESS CONSORTIUM

WWW.ABC.US.ORG

Asian Business Consortium (ABC) is a multi-disciplinary research, training, publishing, digital library supporting and service house. Though founded in 2010 as the Business and Computing organization of Asia, it was reconstituted as the ABC in 2011. It has been working for creating and nurturing talents in USA, Malaysia and Bangladesh since its inception. As ABC is going global, it intends to open offices in pAustralia, Germany, Japan, Pakistan, and other Asian countries in near future. The objectives of consortium are solely centered round the welfare and humane attitude of the founders who enthusiastically took up this noble cause and materialized it with a view to promote research and educational activities for the encouragement of scholars to develop their knowledge, to publish their analysis oriented scientific researches in international Journals, books, the task of organizing workshops, seminars, conferences, training, personality development programs and allied services. In addition to research activities, ABC provides a good number of scholarships to the poor and meritorious students at various levels of education throughout the world. It plays an important role in the field of research by funding research projects and publishing the research papers. This consortium will unquestionably become the mouth-piece of the dark horses and unacknowledged scholar whose endowed and commendable contributions shall be provided an outlet keeping in mind the greater good of the larger society of the world. ABC runs the following international referred journals for creating a platform to share the thoughts of professionals, scholars and academicians throughout the world.

        

Asian Journal of Applied Sciences and Engineering (AJASE) International Journal of Reciprocal Symmetry and Theoretical Physics (IJRSTP) ABC Journal of Advanced Research (ABC JAR) Engineering International (EI) American Journal of Trade and Policy (AJTP) Asian Accounting and Auditing Advancement (4A Journal) Asian Business Review (ABR) Global Disclosure of Economics and Business (GDEB) ABC Research Alert (Online Journal)

Each journal home page provides specific information for potential authors and subscribers. Open access policy, the quick review process, rich editorial boards and quality publications have already made ABC Journals unique. ABC Journals are published under the direct supervisions of renowned academicians of the world. Collaboration in Conference ABC considers high-quality conference papers for publication. Please contact us for detailed information. Collaboration in Publishing If you like to start writing a book, propose a new journal or advertise in ABC journals, please feel free to contact us.

Copyright © 2012, Asian Business Consortium | GDEB

Page 160