The Need for Export Oriented FDI for Fueling Dynamic Export-led Economic Growth: A New Direction for Bangladesh.
Author(s)
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Abstract
Bangladesh has seen a substantial amount of private foreign investments in recent years, which have risen from a mere trickle in the 1980s to nearly US $ 400 million in fiscal year 1997-1998 to a record US $1.08 billion in 2008. It is believed that trade and exchange liberalization, current account convertibility and liberalization of investment regime have all helped to bring about this change. Most important, it is the opening of infrastructure and services to the private sector that has provided the biggest impetus to FDI in recent years. Despite these increased flows, it has been argued that there are some downside risks associated with FDI in Bangladesh, such as rising debt service payments, chronic current account deficits with prospects of negative net transfers looming on the horizon, and reporting difficulties by the Central Bank and the Board of Investment in the actual tracking and mobilization of these flows. There is also concern over the issue of sustaining these flows in the long-term, which would primarily depend on the importance of following sound macro-economic policies like maintaining stable exchange rates, low inflation and an open capital account that permits conversion of foreign exchange and repatriation of invested funds and most important, the development of ‘truly’ outward oriented ventures from MNEs for the sustainable development of FDI in Bangladesh.
Keywords
Foreign Direct Investment, Direct Foreign Investment, Export Oriented FDI
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