Impacts of FDI Inflows on Domestic Investment, Trade, Education, Labor Forces and Energy Consumption in Bangladesh

Abstract

This study examines the impact of foreign direct investment on the domestic investment, trade, education, labor forces, and energy consumption in Bangladesh using annual time series data. It employs multivariate ordinary least square regression to find out the link between the variables. Multivariate OLS regression results show that FDI has a positive effect on the domestic investment, education, labor forces, and energy consumption in the country. It means that FDI assists the local investment, encourage education level, and energy consumption in promoting the economy. To explore the long-run relationship and cointegration between FDI and domestic investment, trade, and labor forces, the study uses Autoregressive Distributed Lag (ARDL) bound testing approach and Error Correction Model (ECM). Augmented Dickey-Fuller (ADF) test is used to check the stationarity of the variables. The ARDL model finds the long-run relation between FDI and domestic investment, trade, and labor forces in Bangladesh. So, the ARDL framework asserts that the variables move together in the long-run.