Bangladesh is a promising developing nation in South Asia region. Based on the World Bank report, Bangladesh has ranked 122 among 183 countries in 2012 globally in terms of ease of doing business. The present study attempted to investigate the major problems areas which influence FDI inflows in Bangladesh. More importantly, the inflows of FDI in Bangladesh have declined since 2008-09.
This study sought to analyze the current business environment and how to create a congenial climate for attracting FDI in Bangladesh. The study also shows that the declining trend of FDI inflows in Bangladesh is directly corollary of the political situation. For creating a good business environment, Political stability of the host country is the prime determinant for attracting FDI.
Table of Contents
Chapter 1 Introduction
1.1 Motivation
1.2 Research Questions
1.3 Research Methodology
1.4 Data Collection Procedures
1.5 The time schedule of the research
Chapter 2 Literature Review:
2.1 Key Definitions
2.1.1 Foreign Direct Investment (FDI)
2.1.2 Business Friendly Environment (Business Climate):
2.1.3 Economic Growth
2.2 Current Research
Chapter 3 Theoretical Framework
Chapter 4 An overview of FDI in Bangladesh
4.1 Background
4.2 The Position of Bangladesh in South Asian Countries
4.3 Foreign Direct Investment Statistics
4.4 FDI as a Percentage of GDP
4.5 FDI as a Percentage of Total Investment
4.6 Ease of Doing Business in Bangladesh
Chapter 5 Advantages and Disadvantages for Attracting FDI in Bangladesh
5.1 Facilities and incentives for foreign investors (BOI, 2012)
5.2 Advantages for Attracting FDI in Bangladesh
5.3 Disadvantages for Attracting FDI in Bangladesh:
Chapter 6 Analytical Discussion
6.1 Survey Data Analysis and Discussion
6.2 Observation and perceptions of the respondents:
Chapter 7 Conclusion & Recommendations:
Research Objectives and Themes
This study aims to investigate the factors influencing Foreign Direct Investment (FDI) inflows in Bangladesh, specifically addressing the declining trend of FDI observed since the 2008-09 financial year. The primary research objective is to determine how the country can foster a business-conducive environment to improve FDI attraction and restore investor confidence.
- The role of government policy and political stability in attracting FDI.
- Analysis of the current business climate and barriers, such as infrastructure and bureaucratic constraints.
- The impact of political unrest on foreign and domestic investor confidence.
- Evaluation of existing incentives and the "ease of doing business" framework in Bangladesh.
- Policy recommendations to overhaul constraints and revitalize the investment landscape.
Excerpt from the Book
Political Climate
“Political climate/stability is one of the major factors in the policy framework of the government to facilitate FDI in host countries” (UNCTAD Report, 1991, p.2).Mmieh & Frimpong (2004) showed their research a negative correlation between political instability such as strikes, riots, shutdowns etc., & country’s image and FDI inflow in the inviting countries. An unstable political climate augments the trust as it makes the investor feel insecure (Ghumro & Hakro, 2007) . On the other hand, Nasrin et al (2010) showed their study that investors did not consider that political conditions are hindering the investment climate in Bangladesh. Literature review results also showed the contradicting perceptions, facts, findings about the political climate and doing business in Bangladesh. But, now, the present study has experienced through collected data and tried to get a right feedback about the real causes of bringing back a good political climate and how political climate spoil the investment and detract the FDI inflow in Bangladesh.
Summary of Chapters
Chapter 1 Introduction: Provides the research motivation and highlights the necessity of a favorable business climate for fostering FDI and economic growth in Bangladesh.
Chapter 2 Literature Review: Defines core concepts like FDI and business climate, while reviewing existing research on the determinants of foreign investment.
Chapter 3 Theoretical Framework: Utilizes Michael Porter’s Diamond Model to explain the competitive advantages and factors affecting a nation's investment environment.
Chapter 4 An overview of FDI in Bangladesh: Presents statistical trends of FDI inflows and analyzes Bangladesh’s position in global "Ease of Doing Business" rankings.
Chapter 5 Advantages and Disadvantages for Attracting FDI in Bangladesh: Examines government incentive packages against prevailing challenges like bureaucratic interference and poor infrastructure.
Chapter 6 Analytical Discussion: Discusses the qualitative findings from a survey of policy makers, foreign investors, and local investors regarding barriers to investment.
Chapter 7 Conclusion & Recommendations: Summarizes the research findings and offers actionable policy recommendations to improve the business environment and reverse the declining FDI trend.
Keywords
Foreign Direct Investment, FDI inflow, Business environment, Political stability, Economic growth, Bangladesh, Investment climate, Infrastructure, Good governance, Bureaucratic constraints, Corruption, Investor confidence, Policy regime, Sustainable development, Market competitiveness.
Frequently Asked Questions
What is the primary focus of this dissertation?
The research focuses on analyzing the factors that influence Foreign Direct Investment (FDI) in Bangladesh and explores strategies to create a more business-conducive environment to reverse the declining inflow of FDI.
What are the core themes addressed in this study?
The study centers on political stability, infrastructure quality, bureaucratic hurdles, government policy effectiveness, and the overall perception of Bangladesh by local and international investors.
What is the central research question?
The central question asks how Bangladesh can create a business-conducive environment to effectively attract more Foreign Direct Investment.
Which scientific methodology is employed?
The study applies a phenomenological approach and a qualitative research method, utilizing secondary literature review and structured interviews with 27 respondents including policy makers, foreign investors, and local investors.
What is covered in the main body of the work?
The main body reviews relevant theories, analyzes FDI statistics and "Ease of Doing Business" metrics, outlines advantages and disadvantages for investors, and discusses primary survey data to identify why FDI trends have been declining.
Which specific keywords characterize this study?
The study is characterized by keywords such as FDI inflow, political stability, business environment, infrastructure, and investment policy.
What role does political stability play according to this study?
The study concludes that political stability is the prime determinant for attracting FDI, noting that political unrest and frequent shutdowns severely damage investor confidence and increase transaction costs.
How does the author evaluate the "Diamond Model" in the context of Bangladesh?
The author argues that while Porter's Diamond Model helps explain national competitiveness, it has limited impact in the Bangladeshi context because it neglects the severe influence of political instability, which overrides traditional comparative advantages.
What recommendation does the author give regarding bureaucracy?
The author recommends simplifying bureaucratic procedures and implementing "one-stop services" for both local and foreign investors to reduce time and operational burdens.
What is the significance of the 2008-09 period mentioned in the study?
The 2008-09 period represents a peak in FDI trends, which the study examines to understand what conditions existed at that time—specifically stable political governance—that led to higher investor interest.
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- Rezaul Jahedi (Autor:in), 2013, Creating a business conducive environment to attract Foreign Direct Investment in Bangladesh, München, GRIN Verlag, https://www.grin.com/document/322461
