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The Economic Impacts of Improved Foreign Investor Confidence in Bangladesh: A CGE Analysis

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  • Serajul Hoque

Abstract

This paper uses a large-scale computable general equilibrium model of Bangladesh to simulate the economic effects of attracting foreign investment by improved business confidence. The simulation results indicate that if all revenue of newly arrived capital accrues to foreign investors and the government maintains budget neutrality, in the long-run this would expand GDP slightly. In general, capital-intensive sectors experience robust expansion and labour-intensive sectors suffer a contraction in output and employment. Urban households experience increases in consumption because they are relatively heavily concentrated in manufacturing sectors that are favourably affected. In contrast, rural households experience decreases in consumption because they are relatively concentrated in the agriculture sector which is adversely affected.

Suggested Citation

  • Serajul Hoque, 2006. "The Economic Impacts of Improved Foreign Investor Confidence in Bangladesh: A CGE Analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-159, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-159
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    References listed on IDEAS

    as
    1. Decaluwe, Bernard & Martens, Andre, 1988. "CGE modeling and developing economies: A concise empirical survey of 73 applications to 26 countries," Journal of Policy Modeling, Elsevier, vol. 10(4), pages 529-568.
    2. Bandara, Jayatilleke S, 1991. "Computable General Equilibrium Models for Development Policy Analysis in LDCs," Journal of Economic Surveys, Wiley Blackwell, vol. 5(1), pages 3-69.
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    More about this item

    Keywords

    Business confidence; foreign direct investment; computable general equilibrium model; Bangladesh;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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