Foreign Direct Investment in Bangladesh: Analysis of Sector Wise Impact on Economy

Abstract

Foreign direct investment is an important indicator of economic growth in any country especially developing and under developing countries which can make substantial progress in reducing poverty, supported by sustainable economic growth. Furthermore, the attraction in sector-wise investment in a country may generate a higher GDP growth rate. Keeping it in cognizance, this study examines the impact of sector-wise foreign investment on the economy of Bangladesh. To achieve the aim, Foreign Direct Investment data were collected from the survey report (2017) of the statistics department, Bangladesh Bank and Bangladesh economic review. For the fruitful study, the research work used descriptive analyses and multiple regression analyses to determine the impact of sector-wise FDI on economic growth. The growth rate over last 17 years of the foreign investment analysis indicates that highest growth was taken place in ‘Manufacturing’ sector followed by ‘Trade & Commerce’ and ‘Transport, Storage & Communication’ sectors which amount the rate 46.34, 21.74 and 21.66 per annum respectively. Whereas the multiple regression analyses indicate that FDI in the sector of ‘Services’, ‘Trade & Commerce’ and ‘Transport, Storage & Communication’ had the statistically significant effect on economic growth in Bangladesh. This finding suggests that a large part of the outcome of foreign investment may be due to the structuring influence of investment in trade, transport and energy sector in the forms of production.