POPULATION GROWTH, INFRASTRUCTURE DEMAND, AND CONSTRUCTION TRADE: SOCIOECONOMIC IMPLICATIONS FOR BANGLADESH

Bangladesh’s population growth and urbanization have heightened demand for construction materials, leading to heavy import reliance amid domestic supply constraints. This study tests whether mature population expansion (aged 18+, proxied by total population and instrumented with an 18-year lag) causally drives these imports and produces an import-amplifying (inverse) home-market effect in a developing economy.An augmented gravity model is estimated on bilateral construction material imports to Bangladesh (1995–2021) using BACI (CEPII), World Bank, and CEPII data. OLS yields counterintuitive negative coefficients on domestic population and construction intensity, likely due to endogeneity. Two-stage least squares, instrumenting construction demand with lagged population, reveals a positive and significant effect in the preferred specification without year fixed effects (fitted coefficient 3.37, p < 0.05), confirming demographic pressure significantly increases imports.The results extend new trade theory by evidencing an inverse home-market effect in intermediate goods trade under supply constraints (Krugman, 1980; Anderson & van Wincoop, 2003). They underscore persistent structural import dependence and the need for accelerated domestic capacity-building, backward linkages, and resilient supply chains to support sustainable infrastructure-led growth. The analysis offers rigorous evidence to inform Bangladesh’s industrial and trade policy.