Theoretical and Applied Economics
No. 11 / 2010 (552)
A Note on Causal Relationship between FDI and Savings in Bangladesh
Southeast University, Banani, Dhaka, Bangladesh
Muhammad SHAHBAZ
COMSATS Institute of Information Technology, Lahore, Pakistan
Muhammad IRFAN CHANI
National College of Business Administration & Economics, Lahore, Pakistan
Abstract. This paper aims to investigate the causal relationship between foreign direct investment and gross domestic savings in Bangladesh over a period of 1985-2007. In doing so, Johansen cointegration technique and error correction methods are employed to examine the long run and short run relationship between foreign direct investment and gross domestic savings. To determine the direction of causality, we used innovation accounting approach. Results suggest that there exist bi-directional causal relationship between foreign direct investment and gross domestic savings but the movement is stronger from domestic savings to foreign direct investment. The result also implies complimentary relationship between them and as such, policy makers in Bangladesh need to focus on the determinants of both FDI and domestic savings in order to accelerate its growth.
Contents
The de Larosière Report Regarding the new Structure of European System of Financial Supervision
Public Integrity, Economic Freedom and Governance Performance. A Comparative Study for the EU Member States and Acceding Countries
A Note on Causal Relationship between FDI and Savings in Bangladesh
The Effectiveness of Fiscal Policy in Combating Economic Crisis. An Analysis Based on the Economic Literature
The Effect of Fear Appeal HIV-AIDS Social Marketing on Behaviour: Evaluating the Importance of Market Segmentation
Underground Economy and Corruption: the Major Problems of the Romanian Economy
Health Insurance Participation: The Role of Cognitive Ability and Risk Aversion
Suggestions for Improvement of the Methodology of Elaboration and Substantiation of Economic and Financial Investment Projects in Agriculture