FDI Fostering LDC and Emerging Economies-Fact or Myth: An Investigation on Bangladesh

Abstract

Although the research on vibrant and multidimensional impact of foreign direct investment (FDI) on economic growth is not scarce but its impact on least developed countries (LDC) and emerging economies remains a popular topic. This is mainly because of the diversified nature of these economies. The present study aimed at investigating the impact of FDI on growth from the context of LDC and emerging economies on the basis of the result of Bangladesh. In doing so it has analyzed the trend of FDI inflows during the period of 1996-2013 and quantifying the impact of FDI on GDP, Export and Gross domestic investment. The result shows that amount of FDI inflow is following an increasing trend where investment on manufacturing sector is flourishing in the recent past. The impact analysis is made through conducting three simple linear regression models where the result shows that FDI has positive as well as significant impact on GDP, export and gross domestic investment. Due to 1 dollar increase in FDI inflow, GDP is increased by 68.51 dollars whereas in case of export, it is increased by 19.49 dollars and gross domestic investment is increased by 19.60 dollars.

Keywords: FDI Inflow Trend, GDP, Export, Gross Domestic Investment

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