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An association amongst Foreign Direct Investment (FDI), Interest rate and Economic growth of Bangladesh from 1978 to 2020

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  • Shahnaz Parvin

    (Department of Finance & Banking (FIB), Faculty of Business Studies, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, Bangladesh.)

Abstract

This study aims at analyzing the effect of the Foreign Direct Investment (FDI) and interest rate on the Gross Domestic Product (GDP) as well as the nature of them in Bangladesh from 1978 to 2020 years. For accomplishing the objectives, this study uses the Auto Regressive Distributed Lag (ARDL) co-integration approach. The bound test provides a long run relationship of the explanatory variables with the dependent variable. The result of error correction representation of the short run dynamics reveals that a self –adjusting mechanism of -0.452 exists. In the long run, FDI has a positive impact on the GDP which is statistically significant at 1% level. On the contrary, FDI, interest rate and the lagged GDP have significant influence on the economics growth which is also statistically significant (p

Suggested Citation

  • Shahnaz Parvin, 2021. "An association amongst Foreign Direct Investment (FDI), Interest rate and Economic growth of Bangladesh from 1978 to 2020," International Journal of Science and Business, IJSAB International, vol. 5(11), pages 19-28.
    • Handle: RePEc:aif:journl:v:5:y:2021:i:11:p:19-28
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    References listed on IDEAS

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    2. Md. Noman Siddikee & Mohammad Mafizur Rahman, 2021. "Foreign Direct Investment, Financial Development, and Economic Growth Nexus in Bangladesh," The American Economist, Sage Publications, vol. 66(2), pages 265-280, October.
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    4. Faisal, Faisal & Rahman, Sami Ur & Chander, Rajnesh & Ali, Adnan & Ramakrishnan, Suresh & Ozatac, Nesrin & Ullah, Mr Noor & Tursoy, Turgut, 2021. "Investigating the nexus between GDP, oil prices, FDI, and tourism for emerging economy: Empirical evidence from the novel fourier ARDL and hidden cointegration," Resources Policy, Elsevier, vol. 74(C).
    5. Li, Xiaoying & Liu, Xiaming, 2005. "Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship," World Development, Elsevier, vol. 33(3), pages 393-407, March.
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    Cited by:

    1. Lingduo Jiang & Shuangshuang Liu & Guofeng Zhang, 2023. "The effect of bilateral currency swap agreements on foreign capital inflows: Evidence from China," Southern Economic Journal, John Wiley & Sons, vol. 90(2), pages 444-473, October.

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