Foreign Direct Investment as an Instrument for promoting Economic Development in Bangladesh


  • Md. Sajedur Rahman University of Information Technology and Sciences (UITS)
  • Md. Ali Ahsan University of Information Technology and Sciences (UITS)



Foreign Direct Investment, Economic growth, Bangladesh


A healthy financial sector is very much crucial for economic growth, especially for economies like Bangladesh. Because, growth in Bangladesh must come largely from exports and its enterprises must, therefore, be internationally competitive. But unfortunately, Bangladesh has a financial system in which borrowers fail to repay loans, foreclosure is almost unheard of, and the government has to bail out banks. However, the Foreign Direct Investment (FDI), the most powerful weapon for accelerating economic development in Bangladesh. To attain an economic growth rate in the seven to eight percent range, investment has to be increased significantly, Because of declining levels of official development assistance in recent years and inadequate domestic savings, FDI presents opportunities for overcoming domestic resource constraints. The Board of investment (BOI) was created as market mechanism where investors can cut through red-tape associated with foreign trade and business start-ups. FDI basically helps to fill-up the capital gap and shortage of a country. Foreign Direct Investment is one of the vital forces to boost up the economy. In this study paper I would like to draw a current scenario of Foreign Direct Investment in Bangladesh. In this regard I present the most updated data, avoid the uncompleted data and use the best judgment at the time of presenting the data to better knowing the current trend about the Foreign Direct Investment in Bangladesh. The benefits of FDI in terms of physical capital formation, transfer of technology, and know-how are sufficient to justify sustaining these flows.  Capital controls are not the answer to a rising flow of FDI. Foreign Direct Investment (FDI) will help the country in further developing infrastructures, creating more employment, developing capacity, enhancing skills of the labour force of the host country through transferring technological knowledge and managerial capability. To ensure that resulting payments liabilities remain within the country’s debt-servicing capacity, it is essential to develop an effective non-intrusive reporting and monitoring system the main ingredients of which are presented in the study.

 JEL Classification Code:  G11, O24


Download data is not yet available.

Author Biographies

Md. Sajedur Rahman, University of Information Technology and Sciences (UITS)

Lecturer, School of Business, University of Information Technology and Sciences (UITS), Bangladesh

Md. Ali Ahsan, University of Information Technology and Sciences (UITS)

Lecturer, School of Liberal Arts & Science, University of Information Technology and Sciences (UITS), Bangladesh


ADB (2010): Quarterly Economic Update, Bangladesh, September.-2010, Dhaka.

Aitken, Brian J. and Harrison, Ann E., 1999, ‘Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela’, American Economic Review, Vol. 89, pp.605–18.

Alfaro, L., Chanda, Kalemli-Ozcan, S., and Sayek, S., 2006, ‘How do foreign direct investments promote economic growth? Exploring the effects of financial markets on linkages’, NBER Working Paper Series 12522: 1-58.

Athukorala P. A W., 2003, ‘The Impact of Foreign Direct Investment for Economic Growth: A Case Study in Sri Lanka’ 9th International conference on Sri Lanka Studies, 28th- 30th November 2003, Matara, Sri Lanka, Full Paper Number 092.

Agosin, Manuel R. and Mayer, Ricardo, 2000, ‘Foreign Investment in Developing Countries: Does It Crowd In Domestic Investment?’ UNCTAD Discussion Paper 146, Geneva.

Balamurali, N. and Bogahawatte, C., 2004, ‘Foreign Direct Investment and Economic Growth in Sri Lanka, Sri Lankan Journal of Agricultural Economics’, Vol. 6, No. 1, pp. 37-50.

BB: Bangladesh Bank Annual Report, (Various Issues), Bangladesh Bank, Dhaka.

BB: Economic Trend, (Various Issues), Bangladesh Bank, Dhaka.

BBS (1993): Twenty Years of National Accounting of Bangladesh, Bangladesh Bureau of Statistics, Dhaka.

GOB: Economic Review, (Various Issues), Ministry of Finance, Dhaka.

Misztal, Piotr, 2010, ‘Foreign Direct Investments, As a Factor for Economic Growth in Romania’ Journal of Advanced Studies in Finance,. Vol. 1, Issue. 1, pp. 72-82.

Quader, Syed Manzur, 2009, ‘Foreign Direct Investment in Bangladesh: An Empirical Analysis on its Determinants and Impacts’, Retrieved from Paper No.26134.

Rehman Abdul, Orangzab, Raza Ali, 2011, ‘Determinants of Foreign Direct investment and its impact on GDP Growth in Pakistan’, Interdisciplinary Journal of Contemporary Research in Business Vol. 2, Issue. 9, pp. 198-205.

Rahman, Atiur (2006) “Measures to make FDI work”, The Daily Star, February 16, 2006.

Rothgeb, John M., Jr, 1984, ‘The Effects of Foreign Investment On Overall And Sectoral Growth In Third World States’, Journal of Peace Research, Vol. 21, No. 1, pp. 5-15.

Teanravisitsagool, Pattama, 1998, ‘Trade-off between Foreign and Domestic Investment: Theoretical Analysis and Empirical Investigation for the Case of Thailand’, Department of Economics, Carleton University.

UNCTAD (2011): World Investment Report, United Nations, New York.

UNCTAD (1999): Foreign Portfolio Investment (FPI) and foreign Direct Investment (FDI): Characteristics, Similarities, complementarities and Differences, Policy Implications and Development Impact, United Nations, New York.

Xiaohui L., Chang S. and P. Sinclair, 2009, ‘Trade, Foreign Direct Investment and Economic Growth in Asian Economies’, Applied Economics, Vol. 41, pp. 1603 - 1612, retrieved on 31 May 2013, retrieved on 27 May 2013, retrieved on 27 May 2013, retrieved on 25 May 2013





How to Cite

Rahman, M. S., & Ahsan, M. A. (2013). Foreign Direct Investment as an Instrument for promoting Economic Development in Bangladesh. Asian Business Review, 3(2), 92–99.

Most read articles by the same author(s)