ENVIRONMENT OF FOREIGN DIRECT INVESTMENT IN BANGLADESH: AN EMPIRICAL ASSESSMENT

This article provides an empirical assessment of the environment for Foreign Direct Investment (FDI) in Bangladesh at the turn of the millennium. It analyzes the key factors that influence the decisions of foreign investors, including the country's policy and regulatory framework, macroeconomic stability, infrastructure quality, and political climate. The study is based on an analysis of available data and surveys of foreign investors. The research identifies both the strengths of Bangladesh as an investment destination, such as its liberal investment regime and low labor costs, and the significant weaknesses, including bureaucratic inefficiencies, inadequate infrastructure, and perceptions of corruption and political instability. The paper argues that improving the investment environment is critical for attracting the FDI needed to accelerate economic growth and industrialization. The analysis concludes with a set of policy recommendations aimed at addressing the key deterrents to foreign investment.

Attracting Foreign Direct Investment (FDI) is a central component of the development strategy for most developing countries. This paper offers a rigorous empirical assessment of the investment environment in Bangladesh around the year 2001. The study begins by outlining the official policy framework for FDI, noting its remarkable openness and the range of incentives offered to foreign investors. The core of the article, however, moves beyond policy on paper to assess the reality on the ground. It analyzes macroeconomic indicators to gauge the stability of the investment climate. A significant part of the study is dedicated to an examination of the major operational obstacles that foreign investors face. These include the severe deficit in physical infrastructure, particularly in the energy and transport sectors, and the well-documented problems of bureaucratic red tape and corruption, which significantly increase the cost and risk of doing business. The paper also discusses the negative impact of the country's confrontational political culture on investor confidence. The findings from this assessment lead to a clear conclusion: while Bangladesh's policy framework was attractive, its implementation and the broader governance environment were significant deterrents. The paper concludes with a call for a concerted, whole-of-government effort to address these structural weaknesses to translate the country's potential into actual investment inflows.