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The Effect of FDI to Accelerate the Economic Growth of Bangladesh and Some Problems & Prospects of FDI

Author

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  • Faruk, Mohammad Omar

    (Eastern University)

Abstract

Foreign Direct Investment (FDI) has great impact on the development of a developing country like Bangladesh. The foreign investor seeks for new sources of investment where the developing country seeks for new sources of fund to develop the country. The FDI does not only bring sources of fund in a developing country but also new technology in a developing country. The FDI has the important role to develop the garments & weaving, telecommunication, banking and pharmaceuticals industry of Bangladesh. In this paper the role of FDI in economic growth (GDP) is analyzed to find out relationship between FDI and GDP in Bangladesh. To analyze the impact, The GDP has been taken as a dependent and FDI as an independent variable to run the regression analysis where the result shows that the FDI can explain about 83% data of GDP, p value much less than 0.05 to reject null hypothesis and GDP changes 64.0709 units for changes of each unit of FDI. The correlation matrix shows the GDP and FDI is highly correlated (0.912024962) in perspective of Bangladesh economy, so the FDI has grater impact on GDP or Economic Growth of Bangladesh. Some of the problems and prospects of FDI in Bangladesh is also discussed in the paper.

Suggested Citation

  • Faruk, Mohammad Omar, 2013. "The Effect of FDI to Accelerate the Economic Growth of Bangladesh and Some Problems & Prospects of FDI," Asian Business Review, Asian Business Consortium, vol. 2(2), pages 95-101.
    • Handle: RePEc:ris:asbure:0129
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    Citations

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    Cited by:

    1. Ummya Salma & Md. Fazlul Huq Khan & Md. Masum Billah, 2023. "Foreign Capital and Economic Growth: Evidence from Bangladesh," Papers 2312.04695, arXiv.org.
    2. Md. Hasanur Rahman & Alfarunnahar Ruma & Mohammad Nasir Hossain & Rifat Nahrin & Shapan Chandra Majumder, 2021. "Examine the Empirical Relationship between Energy Consumption and Industrialization in Bangladesh: Granger Causality Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 121-129.
    3. Asaduzzaman, Md, 2019. "FDI as an Opportunity for Economic growth of Bangladesh: A VECM Analysis," MPRA Paper 110328, University Library of Munich, Germany, revised 05 Dec 2019.
    4. Sandip SARKER & Arifuzzaman KHAN & Rezwan MAHMOOD, 2016. "FDI, Economic Growth, Energy Consumption & Environmental Nexus in Bangladesh," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 33-44.
    5. Mowlaei , Mohammad, 2017. "Foreign Capital Inflows and Economic Growth of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(1), pages 37-54, January.

    More about this item

    Keywords

    FDI; FDI and GDP; Problems and Prospects of FDI; Economic Growth; Bangladesh Finance;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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