Does the Foreign Direct Investment Enhance Bangladeshi Economy? An Empirical Study

Abstract

Like most developing countries, Bangladesh considers foreign direct investment (FDI) as a critical element of economic development. Numerous studies showed that the FDI significantly impacts economic growth due to the technological transfer and innovative capability that enters the recipient country. On the other hand, some other studies did not find any significant impact of FDI on economic growth. The purpose of this study is to determine whether the FDI or other factors, including human capital, infrastructure, and trade openness, impact the economic growth in Bangladesh. Using an ordinary least square (OLS) regression model, 35-year time series data of the variables were analyzed to investigate the variables that impact economic growth in Bangladesh. The study results depict that FDI has no significant impact on the economy of Bangladesh. In contrast, human capital, infrastructure, and trade openness significantly influence the Bangladesh economy. The study findings are expected to benefit the researchers, government agencies, and the decision-makers of multinational companies.