Impact of Foreign Direct Investment and Trade Openness on Economic Growth of Bangladesh: An Empirical Analysis

Sharfuddin Ahmed

This paper aims to assess the impact of Foreign Direct Investment and Trade Openness on the Economic growth of Bangladesh taking into consideration annual data from 1992-2020. Among the variables, Trade Openness has a long-term causality on Economic growth and FDI has not been found to have an impact on economic growth though this contradicts the theoretical expectation. Other matters are at play in this matter as well. Also, this study includes the data of 2020, which means the first year which COVID-19 struck the world as well as Bangladesh, is covered in the study. As the initial impact of COVID-19 on the Bangladeshi Economy is covered in this study, the study adds to the knowledge base from this perspective. The paper progresses to further analyze these findings by using models such as Augmented Dickey-Fuller test, Johansen Co-integration test, and Vector error correction model, and Granger Causality test and generate insightful policy recommendations for Bangladesh.

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