Foreign Direct Investment and Economic Growth: Evidence from Bangladesh

The objective of this study is to examine the relationship between foreign direct investment and economic growth in Bangladesh using annual data from 1986 until 2013. Cointegration technique is applied to examine the long run relationship between foreign direct investment and real gross domestic product in Bangladesh. Granger causality is also employed to see the causal effect of foreign direct investment and real gross domestic product. Our main findings reveal that there is no significant long run relationship between foreign direct investment and economic growth. However, two-way granger causality is evident between foreign direct investment and gross domestic product. Foreign direct investment granger cause to gross domestic product and gross domestic product also granger cause to foreign direct investment.