What Is The Impact Of Foreign Direct Investment On The Economy Of A Developing Country Of South Asia?

According to economic analysts, foreign investors send money to Bangladesh to support the country’s economy. India, Pakistan, Bangladesh, Sri Lanka, and Nepal are all South Asian countries that have adopted strong economic reform strategies designed to integrate their economies with the international community. As a result, all countries except Pakistan have seen increased economic growth and improvements in most macroeconomic indicators domestically and internationally. Indeed, in recent years, the South Asian region has become one of the world’s fastest-growing regions.

How Do You See The Improvements In Foreign Direct Investments During Recent Years?

Overall, the FDI climate in South Asian countries changed dramatically during the 1990s, and even more so in recent years. South Asia has undoubtedly become an important investment destination due to its liberalised approach to FDI and continuous changes in the FDI policy structure. As a result, it is possible to conclude that there has been a positive shift in FDI policies, with more emphasis on bilateral trade agreements, increment of money transfers to Bangladesh as remittance through incentives to foreign workers of the country, and offering investment incentives to foreign investors in all South Asian countries.

What Are The Improvements Need To Increase FSI In South Asian Developing Countries?

However, in many of these nations, there are still bureaucratic delays, reserved industries where foreign investors are not permitted to invest, and ceilings in several industries/sectors. Accelerating economic reforms and ensuring that their economies are politically stable and free of internal strife will go a long way toward making South Asia a more appealing FDI destination.

What Are The Significant Factors Responsible For Impacting Foreign Direct Investment?

For four south Asian countries, the FDI effect on growth indicates that FDI has a positive and vital impact on growth. Exports, gross domestic capital formation, online money transfer to Bangladesh and other countries, and infrastructure are also significant contributors to development. To achieve higher growth, South Asian countries must increase their domestic investment, exports, and infrastructure facilities and attract more foreign investment. Furthermore, through positive spillovers to South Asian countries, FDI has a positive impact on export growth. While FDI has no immediate effect on domestic investment, it positively and substantially impacts time due to the dynamic effects.

One of the most significant factors for Bangladeshi economic development that needs to point out is expatriates send money to Bangladesh online during the pandemic. This is the international money increasing day by day due to increasing numbers of foreign workers moving abroad for employment in developed countries.