FOREIGN DIRECT INVESTMENT IN BANGLADESH : TREND AND PATTERN

This article provides a detailed analysis of the trends and patterns of Foreign Direct Investment (FDI) in Bangladesh during the 1990s. It examines the overall volume of FDI inflows and compares Bangladesh's performance with that of other countries in South Asia. The study analyzes the sectoral and source-country composition of FDI. It highlights the heavy concentration of investment in a few sectors, particularly in the energy (gas) and telecommunications sectors, and the dominance of a small number of source countries. The research explores the factors that have influenced these trends, including the government's liberalization policies and the specific opportunities in certain sectors. The paper argues that while FDI inflows had increased, they remained low relative to the country's potential and were not sufficiently diversified. The analysis concludes with a discussion of the policy challenges for attracting a larger and more diversified portfolio of FDI to contribute more effectively to industrialization and employment generation.

Following the economic liberalization of the early 1990s, Bangladesh made a concerted effort to attract Foreign Direct Investment (FDI). This paper provides a comprehensive analysis of the trends and patterns of these investment flows. The study begins with a statistical overview, charting the year-on-year growth of FDI inflows during the decade. It benchmarks Bangladesh's performance against its regional peers, revealing that while inflows were increasing, the country was still capturing only a very small share of the total FDI flowing to developing Asia. The core of the article is a detailed breakdown of the pattern of this investment. The sectoral analysis highlights the overwhelming concentration of FDI in the natural gas sector, a trend driven by the production sharing contracts signed with international oil companies. This is contrasted with the relatively low levels of FDI in the export-oriented manufacturing sector, despite the success of the RMG industry. The source-country analysis reveals a similar pattern of concentration, with a few countries accounting for the bulk of the investment. The findings suggest that Bangladesh had been successful in attracting large-scale, capital-intensive FDI into the energy sector, but had been much less successful in attracting the kind of labor-intensive, export-oriented FDI that could generate mass employment. The paper concludes that the key policy challenge was to broaden the base of FDI, moving beyond the enclave sector of natural gas to the wider manufacturing and service sectors.