The Effect of Technological Advancement on Economic Growth: An Empirical Analysis of India and Bangladesh Economy

Abstract

This study investigates the impact of technological advancements on the economic growth of India and Bangladesh from 2004 to 2019, focusing on how innovation, digital infras- tructure, and physical capital contribute to GDP growth in two structurally different yet rapidly developing South Asian economies. Through a comparative analysis, the paper explores how India’s robust IT sector, thriving startup ecosystem, and high-technology ex- ports contrast with Bangladesh’s industrial and textile-led growth strategy that is gradually incorporating digital tools. Using the endogenous growth theory framework, the research examines how investments in technology infrastructure, institutional quality, and innovation efficiency influence long- term economic performance. It also assesses the role of physical capital and policy frame- works in facilitating or hindering technological diffusion. Stata software has been used to evaluate the regression model. We performed the Breusch-Pagan Lagrange Multiplier (LM) test to determine whether the Random Effects model is more suitable than the Pooled OLS model. The findings reveal that while both countries benefit from technological progress, India’s more advanced tech adoption yields stronger growth outcomes, whereas Bangladesh’s slower integration presents both challenges and untapped opportunities. This study contributes to the academic discourse on developmental economics by offering insights for policymakers on leveraging technology to foster inclusive and sustainable eco- nomic development in emerging markets.