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Economies 2016, 4(2), 7; doi:10.3390/economies4020007

Foreign Direct Investment, Trade, and Economic Growth: An Empirical Analysis of Bangladesh

1
College of Business, Dillard University, New Orleans, LA 70122, USA
2
Scott College of Business, Indiana State University, Terre Haute, IN 47809, USA
*
Author to whom correspondence should be addressed.
Academic Editor: David O. Dapice
Received: 7 January 2016 / Revised: 29 March 2016 / Accepted: 31 March 2016 / Published: 15 April 2016
(This article belongs to the Special Issue Economic Development in Southeast Asia)
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Abstract

The study reveals that there is a relationship between foreign direct investments, trade, and growth rate of per capita GDP for Bangladesh with the help of annual time series data for 1973 to 2014. The Vector Error Correction Model (VECM) analysis shows that there is a long-term relationship between these variables. To check the validity of the VECM model, we did a few post-estimation diagnostic tests, and found that the residuals of the regressions have a normal distribution and do not show any auto-correlation. The trade and foreign investment variables have a significant impact on the growth rate of GDP per capita. Because FDI and trade are two important components of economic growth in Bangladesh, it is important to frame policies that promote growth and reduce the barriers for capital flows. View Full-Text
Keywords: foreign direct investments; economic growth; Bangladesh; trade foreign direct investments; economic growth; Bangladesh; trade
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Hussain, M.E.; Haque, M. Foreign Direct Investment, Trade, and Economic Growth: An Empirical Analysis of Bangladesh. Economies 2016, 4, 7.

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