Governance and FDI in Bangladesh: A global perspective

The main objective of this project is to identify the effects that political instability and corruption have on foreign investment to Bangladesh, with a particular focus on the energy sector. Does instability or corruption negatively affect investment in this sector, and if so, by how much?

This information is important to increase public awareness of the costs of weak governance in Bangladesh. This information is also a prerequisite to increase and receive ‘better’ inward FDI to Bangladesh whether it is in the energy sector or in other sectors. While getting foreign investment can significantly improve the growth prospects of Bangladesh, the extent to which this will result in inclusive growth likely depends on the governance situation and the resulting characteristics of the corporate sector.

Lessons from other developing countries tell us that in the energy and resources sectors in particular, the institutions of a country are crucial in creating growth that benefits the broad population. The impact of instability and corruption on foreign direct investment in the energy sector will be analysed using cross-country data on energy sector FDI.