The impact of foreign direct investment on the economy of Bangladesh: A time-series analysis
This paper aims to discover the relationship between FDI and GDP in the context of Bangladesh. Using annual data of FDI, GDP, and export for the period of thirty-three years from 1986 to 2018, the paper finds that above three variables are non-stationary at level but stationary at first difference....
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
General Association of Economists from Romania
2022-03-01
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| Series: | Theoretical and Applied Economics |
| Subjects: | |
| Online Access: |
http://store.ectap.ro/articole/1584.pdf
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| Summary: | This paper aims to discover the relationship between FDI and GDP in the context of
Bangladesh. Using annual data of FDI, GDP, and export for the period of thirty-three years from
1986 to 2018, the paper finds that above three variables are non-stationary at level but stationary
at first difference. No cointegration among three variables is found through the application of the
cointegration test. The Granger-causality test reveals that there are no causalities among the
variables except a causality running from FDI to GDP. The variance decomposition exhibits that
the forecast error variance of GDP is mainly explained by itself and FDI. A negative relationship
between FDI and GDP in the short-run is observed by the impulse response function. This finding
indicates that the absorptive capacity of Bangladesh is not sufficient enough to avail the FDI for
promoting economic growth. The paper renders some policy recommendations to ameliorate the
absorptive capacity of Bangladesh to exploit the FDI. |
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| ISSN: | 1841-8678 1844-0029 |