Does FDI intensify Economic Growth? Empirics from Bangladesh.

Tanin, Fahian and Ahmed, Zahir Uddin and Ahamad, Mazbahul Golam (2010): Does FDI intensify Economic Growth? Empirics from Bangladesh.

Abstract

Inward FDI to the middle-income countries has the evidence as a major stimulus to the economic growth; conventionally at export-oriented manufacturing sector. In point of fact, basic macro fundamentals like as growth of gross domestic capital formation, foreign reserve, infrastructure etc. accelerates the FDI inflows. This study reviews the long-run trend on the time scale of FDI to Bangladesh over the period 1975- 2006 and major factors determining foreign companies' decisions to invest, in associated with economic growth. Contents of the paper describe the theoretical development and extensive literature review to find out the appropriate variables to deter the foreign direct investment from time series data. On the basis of intricate link between foreign direct investment and growth, all explained determinants enhance the facilitation, turnover, and return in FDI concentrated sectors that promote long-term sustainable growth with specific shortcomings, directly or indirectly, in our labor-intensive economic activity. Reduced government’s ineffectiveness along with supporting policy framework makes Bangladesh as an attractive destination of FDI, that has a positive spillover and significant impacts affect over time through dynamic effects on economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: FDI, Economic Growth, Bangladesh
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

References

Accolley, Delali, “The Determinants and Impacts of Foreign Direct Investment”, Department of Economics, London Metropolitan University, 2004

Ahmad, S, “Foreign Capital Inflow ands Economic Growth: A Two Gap Model for the Bangladesh Economy”, Bangladesh Institute for Development Studies 18, no. 1 (March 1990): 55-78.

Ahmed, Nazneen, “Case Study on Bangladesh: Ad hoc Expert Meeting in preparation for the Mid-Term Review of the Programme of Action for the Least Developed Countries for the Decade 2001-2010”, UNCTAD.http://www.unctad.org/ Templates/Page.asp? intItemID=3851&lang=1.

Alam, Mohammad S, “Foreign Direct Investment and Economic Growth of India and Bangladesh: A Comparative Study”, The India Journal of Economics 80 (I), no.316 (July 1999): 1-15.

Bangladesh Board of Investment, “Foreign Direct Investment in Bangladesh during 2002: Survey Findings of the First-ever FDI Inflow Survey in Bangladesh”, Dhaka: Board of Investment, 2002.

Bangladesh Board of Investment, “FDI in Bangladesh, January-June 2003: FDI Inflow Survey #2. January-June 2003”, Dhaka: Board of Investment, 2003.

Bangladesh Board of Investment, “FDI in Bangladesh during 2004: The 4th FDI Inflow Survey”, Dhaka: Board of Investment, 2004.

Fry, Maxwell,” Some Lessons for South Asia from Developing Country Experience with Foreign Direct Investment”,Washington, DC: The World Bank, 1993.

Greene, W H, “ Econometric Analysis”, 3rd Edition, Prentice Hall International Edition.

Gujarati, D N. “Basic Econometrics”, 3rd edition, McGraw-Hill International Editions, Economic Series, 1995

Quazi, Rahim M.,“Foreign Aid and Capital Flight: A Case Study of Bangladesh”, Journal of the Asia Pacific Economy 9, no. 3 (2004): 370-93.

Kabir, Razeen, “Foreign Direct Investment and Sustainable Growth: A Case Study on Bangladesh”, Department of Economics, Emory College of Emory University, 2007.

Mondal, Wali I. “Foreign Direct Investment: An Analysis of Perceptions of Prospective Investors”, Studies in Economics and Finance 21, no. 1 (Spring 2003): 105-15.

Mottaleb, Khondoker Abdul, “Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries”, Civil Service College, Dhaka, 63 New Eskaton, BIAM, Dhaka-1000.

Sattar, Zaidi, “Foreign Direct Investment in Bangladesh: Issues of Long-run Sustainability”, Washington, DC: The World Bank, 1999.

World Bank Group, “Bangladesh Data Profile”, The World Bank. http://devdata. worldbank.org/external/CPProfile.asp?PTYPE=CP&CCODE=BGD.

www.data.un.org