SAJMS - South Asian Journal of Management Sciences

Index of Bangladesh as a destination of FDI: an assessment of FDI impact on socio-economic development

In the age of anxiety; it has been a very crucial task both for the foreign investors (MNCs) and Governments, whether the investment would be viable in consideration of the expected return and sustainability of the project on the one hand, and the socio-economic development of the country on the other. Foreign investors, while analyzing the viability of the investment project, consider the firm specific factors like internal resources, financial aspects and organisational capabilities as the micro environment, and country specific factors as macro environment in order to make a final decision regarding the international business operation. In this paper, an attempt has been made to simples the puzzle some process of investment decision by developing an index for Bangladesh as destination of FDI that defines the degree of suitability for the foreign direct investment in Bangladesh on the basis of country specific factors only. On the contrary, the Government can also determine the position of country's competitiveness in the eyes of the MNCs by looking at the index, and it can take appropriate measurers to improve the index on a continuous basis. The six largest multinational companies working in Bangladesh have been interviewed in order to collect primary data for developing the index that justifies its worth and overweighs the literature review. Finally, the paper also proves the relationship between foreign direct investment inflow, and the macro economic development of Bangladesh by suggesting a new model.

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