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An Analysis of the Impact of GDP, Trade openness, Inflation rate and Market size in Attracting Inward FDI in Bangladesh Based on Empirical Analysis

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  • Md Kamrul Hasan
  • Nurun Nahar Nishi

Abstract

This study aims to find out the impact of different variables like MKTS, GDP, TO and INFR in attracting FDI in Bangladesh. Using various statistical test like Augmented Dickey- Fuller (ADF) Unit Root Test, Phillips- Perron (PP) Unit Root Test, Granger Casuality Test & Ordinary Least Square Method (OLS Method), this research has found that some variables has positive influence in attracting FDI in Bangladesh where some variables has negative relation with FDI. Data has been analyzed by EViews in OSL regression method and it is found that OLS regression is 0.924341 that indicates 92% representing the variation in independent variables can explain 92% variation in attracting inward FDI. P value for MKTS and GDP is less that 5% that means MKTS and GDP has an impact on FDI and they are statistically significant. OLS regression analysis for another two variables- TO and INFR is not statistically significant as the P value is greater than 5% but they have negative relationship with FDI. This study is actually to make up a decision whether the variables can accelerate the trend of attracting FDI in respect of Bangladesh. Furthermore, this research will show the way to government how to deal with the investors. Therefore , this study is needed to sort the present economic situation of Bangladesh & figure out the most probable reasons & technique to attract more FDI in the country with future research in this field.

Suggested Citation

  • Md Kamrul Hasan & Nurun Nahar Nishi, 2019. "An Analysis of the Impact of GDP, Trade openness, Inflation rate and Market size in Attracting Inward FDI in Bangladesh Based on Empirical Analysis," International Journal of Science and Business, IJSAB International, vol. 3(3), pages 278-291.
    • Handle: RePEc:aif:journl:v:3:y:2019:i:3:p:278-291
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    References listed on IDEAS

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    1. Mohammed Ershad Hussain & Mahfuzul Haque, 2016. "Foreign Direct Investment, Trade, and Economic Growth: An Empirical Analysis of Bangladesh," Economies, MDPI, vol. 4(2), pages 1-14, April.
    2. Ghebrihiwet, Nahom & Motchenkova, Evgenia, 2017. "Relationship between FDI, foreign ownership restrictions, and technology transfer in the resources sector: A derivation approach," Resources Policy, Elsevier, vol. 52(C), pages 320-326.
    3. Agiomirgianakis, G. M. & Asteriou, D. & Papathoma, K., 2003. "The determinants of foreign direct investment: a panel data study for the OECD countries," Working Papers 03/06, Department of Economics, City University London.
    4. Karl Sauvant, 2015. "Attracting Foreign Direct Investment and Benefiting from it: Challenges for the Least Developed Countries," Transnational Corporations Review, Ottawa United Learning Academy, vol. 7(2), pages 125-127, June.
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    Cited by:

    1. Muhammad Mahmud Mostafa, 2020. "Impacts of Inflation and Exchange Rate on Foreign Direct Investment in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 4(11), pages 53-69.
    2. Emon Kalyan Chowdhury & Bablu Kumar Dhar & Md.Abu Issa Gazi, 2023. "Impact of Remittance on Economic Progress: Evidence from Low-Income Asian Frontier Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 382-407, March.

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