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Determinants of, and the relationship between FDI and economic growth in Bangladesh

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  • Ahamed, Mazbahul Golam
  • Tanin, Fahian

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 attractivedestination of FDI, that has a positive spillover and significant impacts affect over time through dynamic effects on economic growth.

Suggested Citation

  • Ahamed, Mazbahul Golam & Tanin, Fahian, 2010. "Determinants of, and the relationship between FDI and economic growth in Bangladesh," Bonn Econ Discussion Papers 01/2010, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:012010
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    References listed on IDEAS

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    1. Mottaleb, Khondoker Abdul, 2007. "Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries," MPRA Paper 9457, University Library of Munich, Germany.
    2. Accolley, Delali, 2003. "The Determinants and Impacts of Foreign Direct Investment," MPRA Paper 3084, University Library of Munich, Germany.
    3. Rahim Quazi, 2004. "Foreign Aid And Capital Flight," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 9(3), pages 370-393.
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    Cited by:

    1. Arif, Asma & An, Pengli & Qi, Yajie & Li, Huajiao & An, Haizhong & Hussain, Mujahid & Wang, Yanli, 2021. "The influence factors of the national roles in the FDI network: A combined methods of complex networks and Panel Data Analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 563(C).
    2. Ummya Salma & Md. Fazlul Huq Khan & Md. Masum Billah, 2023. "Foreign Capital and Economic Growth: Evidence from Bangladesh," Papers 2312.04695, arXiv.org.
    3. Islam, Mohammad Mohidul, 2022. "The dynamics of Foreign Direct Investment (FDI) inflows in developing economies: Evidence from Bangladesh," OSF Preprints tehuf, Center for Open Science.

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