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Foreign direct investment in the energy and power sector in Bangladesh: Implications for economic growth

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  • Khatun, Fahmida
  • Ahamad, Mazbahul

Abstract

In this paper we present a discussion on current energy and power situation of the country, and examine the causal relationship between FDI in the energy and power sector, and economic growth in Bangladesh for the period 1972–2010. Related trend reveals a considerable gap between energy production and energy use during this period. Moreover, inflow trend of FDI was also fluctuating over the studied period. We also find that there are robust positive and unidirectional short-run causal relationships running from FDI to energy use and from energy use to GDP growth. Empirical results also confirm a causal relationship for the energy use equation in the long run. Considering the resource and technology gap and requirements for the development of the energy and power sector, FDI should be encouraged to this sector that would be imperative to the targeted GDP growth.

Suggested Citation

  • Khatun, Fahmida & Ahamad, Mazbahul, 2015. "Foreign direct investment in the energy and power sector in Bangladesh: Implications for economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1369-1377.
    • Handle: RePEc:eee:rensus:v:52:y:2015:i:c:p:1369-1377
    DOI: 10.1016/j.rser.2015.08.017
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