Determinants of Industrial Automation Adoption in Bangladesh’s Manufacturing: An Empirical Study

Abstract

This study analyzes the potential factors that determine the adoption of industrial automation in the manufacturing industry in Bangladesh using modern time series econometric methodologies from 1991 to 2022. The empirical results indicate that the production volume is a potential determinant of automation adoption in the manufacturing sector. However, increasing per capita income levels may limit the adoption of automation. On the other hand, rapid industrial automation is expected to increase import volume while necessitating significant investment. This study suggests that although automation will improve export performance, further improving manufacturing export performance through product diversity is a prerequisite for an import-dependent economy, as frequent adoption of automation will result in increased import volume, and higher exports will help to stabilize the country’s trade imbalance. For responsible implementation of automation technology in Bangladesh, it is necessary to prioritize strategic planning, invest in education and training, and implement supportive policies. Collaboration between the government, businesses, and educational institutions is crucial to creating a favorable environment for adopting automation technologies. By doing so, Bangladesh can balance the challenges and opportunities for industrial automation utilization in manufacturing industries.