The Determinants of Foreign Direct Investment in Bangladesh

Abstract

The aim of this paper is to explore, by estimating a linear regression model, the determining factors of foreign direct investment (FDI) inflows in Bangladesh over the period of 2005-2015. The study has used secondary data from publications issued by the Bangladesh Bank (BB) and other statistical reports. In the model, dependent variable is FDI and Independent variables are Market Size, Inflation, Openness, Corporate tax rate, Domestic Investment, Labor Force, Average Exchange Rate, Real interest rate. The result shows that Market Size, Openness, Labor Force, Average Exchange Rate and Real interest rate have positive effect on FDI inflow. On the other hand corporate tax rate and Domestic Investment have negative effect on FDI inflow.

Keywords: Foreign Direct Investment (FDI), Determinants, Economic Growth, Bangladesh.