An association amongst Foreign Direct Investment (FDI), Interest rate and Economic growth of Bangladesh from 1978 to 2020
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<0.05). This study finds a higher FDI leads to better economic growth as well as higher interest rate may lead decline in the GDP. So, policy makers should adopt policies in favor of the positive FDI for having higher economic growth although it has many conflicts between higher GDP and economic wellbeing.
Keywords: Foreign Direct Investment (FDI), Interest Rate, Gross Domestic Product (GDP), Economics Growth, Auto Regressive Distributed Lag (ARDL).
|Title:||An association amongst Foreign Direct Investment (FDI), Interest rate and Economic growth of Bangladesh from 1978 to 2020|
|Journal Name:||International Journal of Science and Business|
|ISSN:||ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)|
|Media:||Online & Print|
|Date of Publication:||9/11/2021|
|Paper Type:||Research paper|
Cite This Article:
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, 5(11), 19-28. doi: https://doi.org/10.5281/zenodo.5658401
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About Author (s)
Shahnaz Parvin (corresponding author), Associate Professor, Department of Finance & Banking (FIB), Faculty of Business Studies, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, Bangladesh.