Impact of Foreign Direct Investment on Bangladesh’s Balance of Payments: Some Policy Implications

This study reports high positive correlation between FDI inflows and Bangladesh’s aggregate exports and imports. The net impact on the current account balance and the balance of payments is positive. Bangladesh’s investment incentives and regulations for FDI are found competitive with those offered by similar other countries. Effective implementation of these measures and success in attracting higher FDI inflows, however, needs significant institutional reforms, radically reduced levels of control, better provision of essential infrastructures, perceived improvement in investment climate, and sustained socio-political stability.