The Economic Impacts of Improved Foreign Investor Confidence in Bangladesh: A CGE Analysis

Hoque, Serajul (2006): The Economic Impacts of Improved Foreign Investor Confidence in Bangladesh: A CGE Analysis.

Abstract

This paper uses a large-scale computable general equilibrium model of Bangladesh to simulate the economic effects of attracting foreign investment by improved business confidence. The simulation results indicate that if all revenue of newly arrived capital accrues to foreign investors and the government maintains budget neutrality, in the long-run this would expand GDP slightly. In general, capital-intensive sectors experience robust expansion and labour-intensive sectors suffer a contraction in output and employment. Urban households experience increases in consumption because they are relatively heavily concentrated in manufacturing sectors that are favourably affected. In contrast, rural households experience decreases in consumption because they are relatively concentrated in the agriculture sector which is adversely affected.

• Item Type: MPRA Paper
• Language: English
• Keywords: Business confidence; foreign direct investment; computable general equilibrium model; Bangladesh.
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

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