An Empirical Analysis of Macroeconomic Indicators as Determinants of Foreign Direct Investment (FDI) in Bangladesh 1976-2018

M.S. Islam¹ , M. Sahajalal²

Section:Research Paper, Product Type: Journal-Paper
Vol.5 , Issue.12 , pp.107-110, Dec-2019

Online published on Dec 31, 2019

Copyright © M.S. Islam, M. Sahajalal . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
The purpose of this study is to find out the relationship between selected macroeconomic variables with the inflow of Foreign Direct Investment (FDI) percentage of GDP and how macroeconomic variables affect the FDI inflow in Bangladesh. In this paper, FDI has been selected as a Dependent variable and Real Gross Domestic Product (GDP), Real Exchange Rate (RER), Inflation rate (INF) and Interest rate (INT) selected as independent variables. In the study, time-series data has been collected from the World Economic Indicator and the Bangladesh Bureau of statistics for the year 1976 to 2018. To analyzing data, EViews 9 software has been used for time series data maintain. Different types of the test have been exercised such as Descriptive statistics, Visual graph, Augmented Dickey-Fuller Test (ADF) Unit Root Test, Correlation analysis and Johansen Test for Co-integration for achieving the paper’s goal. This Paper’s result illustrates that there was a relationship between the variables. In this study, the impact of GDP, RER, Inf has a negative impact on FDI on the other side the impact of Int positively impact on FDI. From the CUSUM and CUSUM square test, it can be said that in this period out model was not stable. Consequently, to attracting more foreign direct investment, the government of Bangladesh and economic policy-maker should concentrate on the macroeconomic factors that influence FDI. This paper has produced pioneering knowledge; it will help us to found out the relationship between selected macroeconomic variables and the percentage inflow of foreign direct investment in Bangladesh.

Key-Words / Index Term :
Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Real Exchange rate (RER), Inflation rate (INT), Interest rate (INT), Bangladesh Economy

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