Foreign Direct Investment In Bangladesh Research Articles

Chinese Strategic Hedge in Bangladesh through Investment

During the last decade, the surge in Chinese outbound foreign direct investment in Bangladesh has been met with anxiety, often invoking national security concerns. Most scholars explain China’s investment with the connection of economic interests and market expansion. Scholars have not paid enough attention to the geostrategic rationale behind China’s investment statecraft towards Bangladesh. This study centres on the question: What economic and non-economic (geostrategic) factors drive the growing Chinese investment footprint in Bangladesh? Following the qualitative research approach, this study argues that along with economic incentives, non-economic issues such as security and strategic competition with India are the significant determinants of the Chinese increasing investment footprint in Bangladesh, which is beyond the notion of win–win cooperation enhancing China’s regional status and leadership in South Asia. This study promises to contribute to the literature on the Chinese political economy, providing a theoretically nuanced treatment of Chinese investment statecraft concerning neoclassical realism.

Does trade liberalization policy accelerate foreign direct investment in Bangladesh?: An empirical investigation

Foreign Direct Investment is one of the major sources of external funding and has a significant impact on economic progress in developing countries. This paper investigates the influence of the Trade Liberalization policy on Foreign Direct Investment (FDI) inflow in Bangladesh using annual time series data 1997-2020. ARDL model is used to examine the long-run relationship, and the ADF unit root test is applied to observe the level of integration. The study also employed the Error correction model to estimate long run as well as the short-run relationship between foreign direct Investment and Trade openness, along with remaining explanatory variables used in the model. The results reveal that Trade Openness has positive effect on foreign direct Investment in the short-run, and there is no impact exists in the long-run. The study also used CUSUM and CUSUM square tests to determine stability, and plots of those tests demonstrated that the parameters of the error correction model are stable over the period.

Significance of technological progress and capital formation to expand foreign direct investment in Bangladesh: Does money circulation matter?

Significance of technological progress and capital formation to expand foreign direct investment in Bangladesh: Does money circulation matter?

Some Recent Trends and Implications of Foreign Direct Investment in Bangladesh

ABSTRACT: This study was carried out to evaluate the recent trends and implications of foreign direct investment (FDI) in Bangladesh. Due to its cost-effective workforce, potential market, rapidly growing economy, advantageous geographical location, and other pertinent factors Bangladesh has become one of the most enticing developing countries for foreign direct investment (FDI). Both quantitative and qualitative analyses were used. The trends and implication of FDI was assessed through different variables such as Net FDI inflow in Bangladesh, FDI inflows as percentage of GDP of Bangladesh, sectoral FDI inflow in Bangladesh, net FDI inflows from top 10 countries and by sectors, net FDI flow by EPZ and non-EPZ areas, no. of employment by FDI, FDI inflow by components, GDP, export, import, balance of payment, foreign exchange rate, inflation and corporate tax rate, which were then analyzed using different statistical measures, such as growth percentage, trend equations, the square of the correlation coefficient and correlation matrix. Thirteen trend equations and R-squared were tested for different relevant variables of FDI. To estimate the implication of FDI in Bangladesh, seven hypotheses has also been tested. Among them, the trend values were positive for eleven variables. The square of correlation coefficient (R-squared) of most of the equations is more than 0.7, indicating well fitted trend equations. According to the results of this analysis, FDI has positive correlation between GDP growth, exports, imports, employment in EPZs, and exchange rates. However, there is a significant negative correlation between corporate tax rate and inflation rate. By introducing beneficial FDI policies, providing substantial investment incentives, streamlining pertinent regulations, minimizing bureaucratic procedures, and through better infrastructure Bangladesh must act swiftly to entice more foreign investors. Despite adopting lenient FDI regulations, the government musthave to ensure facilities like more export processing zones, easy access to IT facilities, maintaining stable foreign exchange rates, encourage FDI from leading nations, an attracting new foreign investment source. By implementing these policies into practice, Bangladesh can boost up economic growth and may attract more FDI. This study proves that there is room for FDI to increase in the future and supporting economic growth of Bangladesh.

An ARCH volatility analysis of real GDP, real gross capital formation, and foreign direct investment in Bangladesh

This paper aims to investigate the volatility of the growth rates of Bangladesh's real GDP, real gross capital formation, and net inflows of foreign direct investment. The study used data on these indicators from the World Bank for the period between 1972 and 2020. Autoregressive integrated moving average (ARIMA) and the autoregressive conditional heteroscedastic (ARCH) methods were applied to model the conditional mean and conditional variance components for each growth rate. The validity of the selected volatility models was evaluated using a variety of diagnostic techniques, such as the time series graph of estimated residuals, cumulative periodogram, and the portmanteau test for white noise. The overall performance of the selected models is evaluated using the mean squared error (MSE) and the root mean squared error (RMSE). For all three indicators, the conditional means depend on the growth rates of the previous year or two years, whereas conditional variances depend on the previous year’s rates. The outcomes of the study also indicate the existence of time-varying volatility in Bangladesh's economy. This study may be helpful in understanding the potential risks related to the volatile nature of macroeconomic growth rates.

Factors encouraging foreign direct investment (FDI) in the wind and solar energy sector in an emerging country

This study bridges the current research gap by exploring the determinants of foreign direct investment (FDI) in the renewable energy sector in Bangladesh through the OLI and TCE theories. Based on semi-structured interviews with 13 experts, it investigates the determinants of firms' decision-making processes in the UK, Singapore, USA, Denmark, Thailand, China, and South Korea, conducting FDI in the renewable energy sector in Bangladesh. The results show that the institutional environment assumes the highest weight over macroeconomic and natural conditions for attracting FDI in Bangladesh's wind and solar energy projects. In the macro-economy, economic growth and access to local finance are important in attracting FDI. Contrarily, land availability assumes the highest importance for attracting FDI in the natural condition dimension.

Nexus between exports, imports and foreign direct investment: Evidence from Bangladesh

Foreign Direct Investment (FDI) plays a significant role in international trade (IT). Numerous recent studies focused on the FDI-IT nexus and found a strong interrelation between the two variables. The current research empirically examines the causal linkage among imports, exports, and FDI in Bangladesh, utilizing available time-series data from 1980-2015. The study finds that the long-run equilibrium association exists among Exports, Imports and FDI. The study also finds unidirectional causality running from imports and exports to FDI, meaning the rise and fall of exports and imports cause an increase or decrease in FDI of Bangladesh, respectively, and there is no other long-run causality found among other variables. In the short run, unilateral causality is running from imports to FDI, imports to export and exports to FDI. These empirical findings mean that expanding trade can be used to attract more FDI in Bangladesh. Therefore, the study findings strongly support the notion that international trade (exports and imports) stem from the attraction of FDI. IIUC Business Review Vol. 10, Dec. 2021 pp. 25-42

Foreign Direct Investment in Bangladesh: Analysis of Policy Framework, Impact, and Potential

The paper examines the policy framework toward FDI including monetary and non-monetary incentives offered to attract FDI, analyzes the trend and sources of and the sectors attracting FDI inflows, and the potential for FDI in Bangladesh. The analysis is based on data collected both from primary and secondary sources. Major sectors attracting FDI include RMGs, power, textile and wearing, telecommunications, banking, gas, and petroleum. The analysis shows that fiscal/nonmonetary incentives alone and competitive advantage in factor endowment (cheap labor) are not enough to attract additional FDI into Bangladesh. The key is to adopt proactive policies for creating and maintaining an FDI-friendly business environment in the country Bangladesh. For attracting more FDI into Bangladesh, the efforts need to include, among others, increased infrastructure spending especially in digital architecture, creating functional one-stop investment service center, emphasis on skill training to facilitate technology transfer, targeted measures to attract FDI into backward and forward linkage industries, participation in regional and global value chains.

Inward foreign direct investment in Bangladesh: Do we need to rethink about some of the macro-level quantitative determinants?

Inward foreign direct investment in Bangladesh: Do we need to rethink about some of the macro-level quantitative determinants?

Does Foreign Direct Investment in Bangladesh: Opportunity or Threat to Economic Growth?

Does Foreign Direct Investment in Bangladesh: Opportunity or Threat to Economic Growth?

Impacts of Inflation and Exchange Rate on Foreign Direct Investment in Bangladesh

Impacts of Inflation and Exchange Rate on Foreign Direct Investment in Bangladesh

Sovereignty, National Interest & Security and the Bilateral Investment Treaties of Bangladesh and the Netherlands: a Comparison

Abstract In absence of any global treaty, the bilateral investment treaties are playing the important role of regulating foreign investments in the host countries. The primary purpose of economic globalization is the economic development of the developing and least-developed countries as well as to facilitate benefits of the home states. Bangladesh and the Netherlands also signed bilateral investment treaties to facilitate trade. Bangladesh foreign investment laws and bilateral investment treaties mainly protect foreign investors; however, neither include any specific provisions of protecting sovereignty, national interest, and security. The Netherlands generally follows EU foreign investment policies. This paper addresses two questions: (a) do the bilateral investment treaties of Bangladesh and the Netherlands include any specific provisions to protect the sovereignty, national interest, and security, and (b) should the sovereignty, national interest, and security be considered during the entry of foreign direct investment in Bangladesh and the Netherlands? Using doctrinal research method, a total of 25 bilateral investment treaties have been analysed in order to explore whether they protect the sovereignty, national interest, and security of Bangladesh and the Netherlands. Based on the findings, this study will recommend that the government of Bangladesh should consider this important factor as an entry condition, either through amending the existing laws or through the bilateral investment treaties.

Does Asymmetric Relation Exist between Exchange Rate and Foreign Direct Investment in Bangladesh? Evidence from Nonlinear ARDL Analysis

The study aims to investigate the pattern of relationships such as symmetric or asymmetric, between exchange rate and foreign direct investment in Bangladesh by applying Autoregressive Distributed Lagged (ARDL) and nonlinear ARDL. In this study, we employed quarterly data for the period of 1974Q1 to 2016Q4. Data were collected and aggregated from various sources namely, Bangladesh Economic Review published by Ministry of Finance and statistical yearbook published by Bangladesh Bureau of Statistics and an annual report published by Bangladesh Bank. The relationship between exchange rate and FDI inflows attract immense interest in the recent periods, especially for developing countries' perspective. The results of the study ascertain the long run relationship between FDI, exchange rate, monetary policy, and fiscal policy. Considering the asymmetric assumption, the findings from NARDL confirm the existence of a long-run asymmetric relationship in the empirical equation. In the long run, it is observed that positive change that is the appreciation of exchange rate against USD decrease FDI inflows and negative shocks results in grater inflows of FDI, however, the positive shocks produce higher intensity that negative shocks in Exchange rate. For directional causality, the coefficients of error correction term confirm long-run causality, in particular, bidirectional causality unveiled between FDI and exchange rate.

Determinants of foreign direct investment (FDI) in the power sector: A case study of Bangladesh

This paper investigates the determinants of the decision-making process of firms conducting foreign direct investment (FDI) in the power sector. With the unavailability of long-term data series on FDI in Bangladesh's power sector, a mixed method approach (semi-structured interviews and questionnaires) is used. The findings indicate that regulatory aspects are the most influential for firms when engaging in FDI in the power sector, followed by economic and financial, political, and societal aspects. For individual factors, government's commitment to contracts, land acquisition, and tax exemption are key decision-making factors in conducting FDI, while road networks, gender diversity policies such as male predominance, and the right to freedom of association such as trade unions are considered least important. Firm-level characteristics, including firm ownership, firm size, and contract period, are important in ranking the determinants of conducting FDI.

FDI as an Opportunity for Economic growth of Bangladesh: A VECM Analysis

This study investigates the empirical relationship between economic growth (GDP) and Foreign Direct Investment (FDI) as well as the Real Effective Exchange Rate (REER) and Trade Openness (TOP) of Bangladesh over the period from 1973 to 2017 by using Johansen cointegration test and VECM analysis. The empirical findings exhibit that there are a distinctive short-run and long-run relationship that exists between economic growth and foreign direct investment in Bangladesh. While the Error Correction Term (ECT) result exhibits that real effective exchange rate and trade openness are causing economic growth in the long-run. This study highly suggests that fully utilizing foreign direct investment and trade openness is one of the best chances of Bangladesh to develop its economy. Therefore, the policymaker should have more foresight to influence foreign direct investment and trade openness on the long term basis, especially to facilitate investment in the special economic zone (such as EPZ) and export more manufacturing goods and services and importing capital goods through maintaining the trade balance.

Foreign Direct Investment in Bangladesh: Policy, Incentivs, and Trends

Foreign direct investment plays an important role in economic growth and generating employment in a globalized world. It is one of the major stimuli to economic development of the developing countries. But the distribution of FDI is unequal all over the world. Some countries are ahead, while others lag behind in attracting foreign direct investment. Bangladesh is a potential country for receiving a good amount of FDI, but the results are not satisfactory. Inflow of FDI in a host country would depend upon how much incentives are given by the host countries. This study highlights the present FDI policies and incentives offered by the Government of Bangladesh for attracting FDI and it also focuses on the trend of FDI inflows.

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

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. JEL Classification Code: F21

Foreign Direct Investment as an Instrument for promoting Economic Development in Bangladesh

A healthy financial sector is very much crucial for economic growth, especially for economies like Bangladesh. Because, growth in Bangladesh must come largely from exports and its enterprises must, therefore, be internationally competitive. But unfortunately, Bangladesh has a financial system in which borrowers fail to repay loans, foreclosure is almost unheard of, and the government has to bail out banks. However, the Foreign Direct Investment (FDI), the most powerful weapon for accelerating economic development in Bangladesh. To attain an economic growth rate in the seven to eight percent range, investment has to be increased significantly, Because of declining levels of official development assistance in recent years and inadequate domestic savings, FDI presents opportunities for overcoming domestic resource constraints. The Board of investment (BOI) was created as market mechanism where investors can cut through red-tape associated with foreign trade and business start-ups. FDI basically helps to fill-up the capital gap and shortage of a country. Foreign Direct Investment is one of the vital forces to boost up the economy. In this study paper I would like to draw a current scenario of Foreign Direct Investment in Bangladesh. In this regard I present the most updated data, avoid the uncompleted data and use the best judgment at the time of presenting the data to better knowing the current trend about the Foreign Direct Investment in Bangladesh. The benefits of FDI in terms of physical capital formation, transfer of technology, and know-how are sufficient to justify sustaining these flows.  Capital controls are not the answer to a rising flow of FDI. Foreign Direct Investment (FDI) will help the country in further developing infrastructures, creating more employment, developing capacity, enhancing skills of the labour force of the host country through transferring technological knowledge and managerial capability. To ensure that resulting payments liabilities remain within the country’s debt-servicing capacity, it is essential to develop an effective non-intrusive reporting and monitoring system the main ingredients of which are presented in the study.  JEL Classification Code:  G11, O24

Scenario of the Foreign Direct Investment (FDI) in Bangladesh: An Evaluation

The Economic indicators which are also considered to be the mirrors of economic scenario show the real picture of the development of a country like Bangladesh. Accordingly, Foreign Direct Investment (FDI) can be termed in this regard and it can represent Bangladesh as one of the developing indicators in terms of development structure. The objective of the study is to focus the position of FDI in Bangladesh along with its problems and remedies. The study in fact, finds that the contribution FDI of developed and developing countries in Bangladesh is not so appreciating because of some uncertainties like uneven ratio in between savings and investments, unsound GDP, trade deficit, political instability and so on. To develop the scenario of FDI in Bangladesh some suggestions have been outlined in this study.

Foreign Direct Investment in Bangladesh: Problems and Prospects

The issue of Foreign Direct Investment (FDI) has been receiving phenomenal attention from many governments. Bangladesh is not lagging behind from it. Economic development for the developing countries like Bangladesh is largely dependent on FDI. The major challenges for the host country are to ensure an eye-catching and conducive investment climate to foreign investors for FDI inflow. In recent years, Bangladesh has been devoting efforts for attracting FDI offering a lot of lucrative incentives and benefits. Though attempts taken to increase FDI inflow, the result achieved is not appreciable enough for Bangladesh. This paper will portray the FDI inflow since 1995 and finds out causes and reasons of low-inflow based on secondary data. It also finds out the impediments and highlighted prospects for FDI in Bangladesh and provides some recommendations for its enhancements. 
 
 The Journal of Nepalese Business Studies Vol. IV, No. 1 (2007) pp. 47-61