The impact of foreign direct investment on economic growth: Bangladesh perspective

The core objective of this study is to evaluate the impact of Foreign Direct Investment (FDI) on the economic development of Bangladesh. The theoretical viewpoints explained the effects of FDI on economic development in host countries, and empirical analysis identified the impact of FDI on economic growth, showing the causal link between them. The thesis consists of three correlated studies on the impact of FDI in case of Bangladesh. The first study aimed at exploring the economic growth pattern, the second study discussed the FDI scenarios and the final study examined the Impact of FDI on economic growth of Bangladesh from 1973 to 2022 by using econometric analyses. This study adopted the Autoregressive Distributed Lag (ARDL) method. According to the Error Correction Model (ECM), there is a low speed adjustment from the short run to the long run. The ARDL limits test demonstrated the existence of a long-run relationship between GDP and FDI. According to the Long term ARDL test results, FDI has a negative and insignificant impact on the GDP of Bangladesh in the long run. But the results of the regression analysis have shown that FDI has a favorable effect on economic growth. The ARDL result is consistent with the Dependency theory where it has not supported the Endogenous theory arguments in case of Bangladesh. Finally, the outcome is unclear for Bangladesh, and FDI has not been proven to be a significant determinant of Bangladesh's economic growth. Therefore, the study has rendered some policy recommendations to ameliorate the absorptive capacity of Bangladesh to exploit FDI. Keywords: Foreign Direct Investment, Economic Growth, Economic impact, Bangladesh.