An Analysis of Global FDI and Korean Investment in Bangladesh and Economic Cooperation Imperatives for the Host Country

The study efforts firstly to analyze the role of foreign direct investment including Korean ones in the economic growth of the manufacturing sector of Bangladesh, and then to assess the determinants of FDI inflows into Bangladesh with the objective to search for pertinent policy implications for economic cooperation between Korea and Bangladesh. This measurement of FDI’s share in the growth of output of Bangladesh is attempted in a simultaneous equations system whereby the relationship between the constituent FDI and its influencing factors are estimated in the second stage to evaluate the relative weights of the coefficients of FDI inflow into Bangladesh that are indicative of policy interventions in bilateral investment cooperation with South Korea. The subject matter of the study thus comprises an economic analysis of global FDI inflow in Bangladesh shedding light on the capital movement in a bilateral setting and to bring out factors for vigorous investment in value creating areas of two countries, and to assess the public policy aspects of current level of investment cooperation and suitable government policy in attaining better collaboration. Simultaneous equation systems are used to analyze the FDI’s contribution in Bangladesh’s economic growth and to identify the factors that influence FDI inflow into Bangladesh with an overall objective to draw implications for Korean investment operation and potentials in the host economy. Relevant literatures review is presented in delineating the description of the suitable empirical function accompanied by data sources of the variables used. The outcomes of the econometric estimations of FDI share in GDP and the coefficients of FDI determinants in country inflow are discussed in subsequent sections followed by drawing the implications for Korean foreign investments’ growth in Bangladesh and conclusions.