Version 1
: Received: 19 December 2020 / Approved: 24 December 2020 / Online: 24 December 2020 (09:30:19 CET)
How to cite:
Rashid, R.; Hossen, S.S. Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013. Preprints2020, 2020120611. https://doi.org/10.20944/preprints202012.0611.v1
Rashid, R.; Hossen, S.S. Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013. Preprints 2020, 2020120611. https://doi.org/10.20944/preprints202012.0611.v1
Rashid, R.; Hossen, S.S. Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013. Preprints2020, 2020120611. https://doi.org/10.20944/preprints202012.0611.v1
APA Style
Rashid, R., & Hossen, S.S. (2020). Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013. Preprints. https://doi.org/10.20944/preprints202012.0611.v1
Chicago/Turabian Style
Rashid, R. and Sk. Sharafat Hossen. 2020 "Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013" Preprints. https://doi.org/10.20944/preprints202012.0611.v1
Abstract
This study investigates the impact of Foreign Direct Investment (FDI) on economic growth and examines the causality between FDI and economic growth in Bangladesh during 1972-2013. Gross Domestic Product (GDP), export performance (EXP), Foreign Direct Investment (FDI), and Gross Fixed Capital Formation (GFCF) are considered to capture the objective of the study. The study methodology includes some systematic steps. As the data used in the study is time-series in nature, the author employs unit root tests, and in this case, Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests are used. Then Johansen’s cointegration test, Granger causality test, regression with Newey-West Standard Error and Vector Error Correction Model (VECM) are applied. By using the ADF and PP test the study reveals that the variables of four-time series are integrated of I (1) i.e. they are stationary at first difference. Regression analysis result demonstrates that FDI has a positive effect on economic growth. The Granger Causality test discloses that there is a unidirectional relationship between FDI and economic growth. But the VECM estimation finds that in the long run FDI negatively affects economic growth.
Keywords
Time-series analysis; Foreign Direct Investment; economic growth; Bangladesh economy
Subject
Business, Economics and Management, Economics
Copyright:
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.