Impact of Foreign Direct Investment on Bangladesh Economic Growth: An Econometric Analysis of Time Series Data.

Abstract

The primary emphasis of this research is Bangladesh's economic growth, with the goal of determining the impact of foreign direct investment on this growth. In order to better explain this, this article conducts a statistical investigation of the link between foreign direct investment and a variety of macroeconomic variables such as GDP, exports, imports, exchange rates, and inflation. Researchers examined time series data spanning 33 years, from 1987 to 2019. Johansen's co-integration, vector autoregressive, and vector error correction model techniques were utilized in conjunction with other techniques to determine the origins of the elements that have an impact on other variables, as well as the long- and short-term interactions between variables. There is a clear link between factors that have long-term implications and variables that have negligible short-term consequences. Furthermore, the study's findings reveal a two-way relationship between GDP and foreign direct investment. The findings show that the Bangladeshi government is capable of establishing policies that promote foreign investment, knowledge transfer, and international trade. In turn, the quantity of foreign direct investment received by the country will affect its economic prospects.