Impact of Foreign Direct Investment on Domestic Investment in Bangladesh
This study examines the impact of foreign direct investment inflows on domestic investment in Bangladesh by using time series data for the period of 1978 to 2017. Gross Capital Formation (GCF) is used as dependent variable (which is proxy of domestic investment) and Foreign Direct Investment (FDI), broad money (M2), export (EX) are used as independent variables. ADF test is used for testing stationary of taken variables in the model. Hence, some variables are stationary at level and one is at first difference, Autoregressive Distributed Lag (ARDL) estimation technique is used to accomplish the analysis. The result shows that in the long run and short run there is a positive but insignificant relation between foreign direct investment and domestic investment and relationship between export and domestic investment also positive and significant.
