Impact of Foreign Direct Investment on Domestic Investment in Bangladesh

Hamida Begum; Nurun Nahar Akhi

Authors

Hamida Begum
Nurun Nahar Akhi

Keywords:

GCF, FDI, ARDL

Abstract

This study examines the impact of foreign direct investment inflows on domestic investment in Bangladesh by using time series data for the period of 1978 to 2017. Gross Capital Formation (GCF) is used as dependent variable (which is proxy of domestic investment) and Foreign Direct Investment (FDI), broad money (M2), export (EX) are used as independent variables. ADF test is used for testing stationary of taken variables in the model. Hence, some variables are stationary at level and one is at first difference, Autoregressive Distributed Lag (ARDL) estimation technique is used to accomplish the analysis. The result shows that in the long run and short run there is a positive but insignificant relation between foreign direct investment and domestic investment and relationship between export and domestic investment also positive and significant.

Downloads

How to Cite

Impact of Foreign Direct Investment on Domestic Investment in Bangladesh. (2019). Global Journal of Human-Social Science, 19(E6), 1-9. https://socialscienceresearch.org/index.php/GJHSS/article/view/2929

Download Citation

References

M Agosin, R Mayer (2005) Foreign Direct Investment in Developing Countries: Does It Crowd in Domestic Investment. 33(2), 149-162.

M Agosin, R Mayer (2000) The Role of International Investment Agreements in Attracting Foreign Direct Investment to Developing Countries.

S Ali, H Raza, A Iqbal (2015) Dynamic Linkages between Foreign Direct Investment, Public Investment and Private Domestic Investment: Evidence from Pakistan.

Waqar Ameer, Helian Xu (2017) RELATIONSHIP BETWEEN INWARD FOREIGN DIRECT INVESTMENT, DOMESTIC INVESTMENT, FORMAL AND INFORMAL INSTITUTIONS: EVIDENCE FROM CHINA. 3(2), 83-98.

James Ang (2009) Do public investment and FDI crowd in or crowd out private domestic investment in Malaysia?. 41(7), 913-919.

N Apergis, C Katrakilidis, N Tabakis (2006) Dynamic linkages between FDI inflows and domestic investment: A panel cointegration approach. 34(4), 385-394.

A Ashraf, D Herzer (2014) the effect of greenfield investment and M & A on domestic investment in developing countries. 21(24), 997-1000.

H Azlina, J Suhanis (2014) FDI and Domestic Investment in Malaysia.

Debashis Chakraborty, Jaydeep Mukherjee (2013) Is There Any Relationship Between Foreign Direct Investment, Domestic Investment and Economic Growth in India? A Time Series Analysis. 4(3), 309-337.

W Chen, Z Qin (2006) Identification of two way reflexivity dynamics in an integrated investment decision -support framework. 5, 732-741.

David Dickey, Wayne Fuller (1979) Distribution of the Estimators for Autoregressive Time Series With a Unit Root. 74(366), 427.

D Dickey, W Fuller (1981) Likelihood ratio statistic for autoregressive time series with unit root. 49, 1057-1072.

J Gregorio (2003) The Role of Foreign Direct Investment and Natural Resources in Economic Development. 196, 179-197.

S Goh, K Wong (2012) Outward FDI and Domestic Investment. 55(27), 1-4.

D Gujarati, D Porter (2009) Basic Econometrics.

Ipek (2015) The Contribution Of FDI Flows To Domestic Investment: An Econometric Analysis Of Developing Countries(Doğrudan Yabancı Sermaye Yatırımlarının Yurtiçi Yatırımlara Etkisi: Gelişmekte Olan Ülkeler İçin Ekonometrik Bir Analiz). 22(2), 401.

R Lipsey (2000) Interpreting Developed Countries' Foreign Direct Investment.

E Megbowon (2016) Foreign Direct Investment Inflow, Capital Formation And Employment In South Africa: A Time Series Analysis. 8(2).

J Misun, V Tomsik (2002) Does Foreign Direct Investment Crowd in or Crowd out Domestic Investment?. 40(2), 38-56.

P Narayan (2004) Reformulating critical values for the bounds F-statistics approach to cointegration: an Application to the tourism demand model for Fiji.

Anis Omri, Bassem Kahouli (2014) The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region. 68(3), 257-263.

B Ouattara (2004) Modelling the long run determinants of private investment in Senegal.

M Pesaran, Yongcheol Shin (1999) An Autoregressive Distributed-Lag Modelling Approach to Cointegration Analysis. 11, 371-413.

M Pesaran, Yongcheol Shin (1998) An Autoregressive Distributed-Lag Modelling Approach to Cointegration Analysis. 371-413.

N Prasanna (2010) Direct and Indirect Impact of Foreign Direct Investment (FDI) on Domestic Investment (DI) in India. 1(2), 77-83.

Alessia Amighini, Margaret Mcmillan, Marco Sanfilippo (2017) FDI and Capital Formation in Developing Economies: New Evidence from Industry-level Data. 1(2), 77-83.

Muhammad Shahbaz, Sakiru Solarin, Haider Mahmood, Mohamed Arouri (2013) Does financial development reduce CO2 emissions in Malaysian economy? A time series analysis. 35, 145-152.

D Sunny, A Sawant (2011) Crowding In And Crowding Out Impact Of FDI on Domestic Investment: An Indo China Analysis. 1-11.

Sebastine Ugwuegbe, U Judith, M Edith, O (2014) The Impact of Foreign Direct Investment on Capital Formation in Nigeria: A Co-Integration Approach. 2(2), 188-196.

Irfan Ullah, Mahmood Shah, Farid Khan (2014) Domestic Investment, Foreign Direct Investment, and Economic Growth Nexus: A Case of Pakistan. 2014, 1-5.

Guoxin Wu, Yu Sun, Zhuning Li (2010) The Crowding-in and Crowding-out Effects of FDI on Domestic Investment in the Yangtze Delta Region. 2(4), 59-75.

Y Yahia, L Haiyun, M Khan, S Shah, M Islam (2018) The impact of foreign direct investment inflow on domestic investment: Evidence from Sudan. 8(6), 1-10.