BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES

ENVIRONMENT OF FOREIGN DIRECT INVESTMENT IN BANGLADESH: AN EMPIRICAL ASSESSMENT

Author: M. Tahlil Azim, Nasir Uddin

DOI Link: https://www.doi.org/10.56888/ BIISSj2001v22n3a1

ABSTRACT

In the face of the recent onslaught of globalization, attracting foreign direct investment (FDI) has been considered crucial for the development of underdeveloped economies. Governments around the world, especially of developing countries, are offering generous packages to the investors and pursuing vigorous diplomacy as a means to attract and host more FDL However, from the investors' point of view, the most important input for investment decision is the overall environment of the host economy. The present study focuses on the state of business environment of Bangladesh as a host of foreign capital. The study covers 32 environmental factors grouped into three broader areas like economic, social/physical and political/government factors. Data were collected from 15 foreign firms operating in Chitlagong Export Processing Zone. The study reveals that the investors have very positive attitude about the economic forces, while they maintain a bleak attitude about the political ones. The economic factors are tax and other incentives, cost of manager and operative workers, preferential trade arrangement with neighboring and developed countries, availability of qualified managers and unskilled workers, language and culture and labour productivity. The worst factors considered by the foreign investors are strike and demonstrations, corruption, law and order situation, bureaucracy and red tape.