Foreign Direct Investment
(Global & Bangladesh perspective)
INTRODUCTION
Foreign Direct Investment (FDI) is an engine for economic development in both developing and
developed countries. It provides both physical capital and employment possibilities that may or
may not be available in the host country. FDI is a mechanism of technology transfer, particularly
from developed countries to developing countries. It can provide ne technology, cheaper
production facilities, employment opportunities, management s!ill and so. "ast several years
ere a challenging one for the global FDI mar!et. #atural disasters, political unrest in $urope,
#orth & %outh &merica and 'iddle $ast led many companies to put on hold their FDI plans
leading to a sharp decline in FDI in many countries on. Beside this FDI plays a ma(or role in the
global economy as ell as the economy of a country. )his report shos the global trends of FDI
and the conditions of FDI in Bangladesh.
FDI (Foreign Direct Investment)
Foreign direct investments are the net inflos of investment to ac*uire a lasting management
interest in an enterprise operating in an economy other than that of the investor. It is the sum of
e*uity capital, reinvestment of earnings, other long+term capital, and short+term capital as shon
in the balance of payments.
Volume and trends of FDI in global context
)he above table shos that the FDI groth is negative in natural energy sector (,oal, -il and
natural gas), real estate, pharmaceuticals, electronic components, .otels and tourism sectors. /e
!no the orld falls in recession during the period of 0112. )his creates great problems in the
earning of peoples. It fall an effect on hotels and tourism sectors and electronic business.
During the period of orld recession occurred in 0112, many giant ban!s, insurance and leasing
corporation ere declare ban!rupts. )his creates a big effect in real estate business. &nd this
sector is still suffers.
In 0133, a significant political change occurs in the 'iddle $ast countries such as "ibya, )unisia,
$gypt, 4emen, Bahrain, and continuing in %yria. It reduces the production of oil and natural gas.
%everal accidents occur in coal mine areas hich reduce the production of coal.
,onclusion
5olitical stability is the most important issues for a country and the orld for development. )he
orld political stability is going unrest day by day. &nd it creates great effects on the volume and
trends of FDI.
Sources of FDI
$very industriali6ed is the ma(or sources of FDI in different countries. 7arious countries are no
tried to transfer their investment in different parts of the orld. )he main reasons or!ing
behind this are available resources, lo ages, e8pertise or!ers, easy communication, large
number of consumers etc. Folloing countries are the ma(or sources of FDI9
)op %ource ,ountries in &sia+5acific
'etals and minerals as the largest sector for FDI in &sia+5acific, ith an estimated :;<bn of
capital investment trac!ed by FDI mar!ets in &sia+5acific in 0133. /ith a =;> decline in capital
investment in coal, oil and natural gas, the sector moved don into second place. In contrast,
FDI in reneable energy gre rapidly, ith a =?> in pro(ect numbers and @@> increase in (obs
creation in the sector in 0133. In total, an estimated :<.?Abn of FDI as announced in &sia+
5acificBs reneable energy sector in 0133.%ignificant declines of FDI in %outh Corea and
)aian.
%ource9 fDi mar!etsDD.fDiIntelligence.com
)op %ource countries in "atin &merica and ,aribbean
Bra6il attracted more than one+third of FDI in "atin &merica and the ,aribbean. /hile
&rgentina recorded the fastest groth in inard FDI in 0133, Bra6il dominated FDI in the
region. )he number of FDI pro(ects in Bra6il gre by A2> in 0133 E the fastest groth recorded
by any of the orldBs largest economies E and as the highest absolute number ever recorded in
Bra6il since fDi 'ar!ets began recording FDI data in 011A. 'ost countries in "atin &merica and
the ,aribbean sa a groth in FDI pro(ects in 0133, ith the region as a hole increasing its
global share of FDI to 31>, from ?> in 0131 and only => in 011<.
"atin &merican and the ,aribbean FDI overseas sloed don in 0133. )he number of FDI
pro(ects established overseas by "atin &merican and ,aribbean companies fell by <>, compared
ith 31> groth in 0131. Bra6il is the leading outard investor from the region, folloed by
'e8ico, ,hile and Bermuda. -utard FDI from 'e8ico did not gro in 0133, hile ,hile sa a
3<> groth in overseas FDI pro(ects. Financial services company Banco Falabella as the
leading outard investor from ,hile, accounting for 0<> of all outard investment pro(ects
from the country, all of hich entered the ,olombian mar!et.
%ource9 fDi mar!etsDD.fDiIntelligence.com
)op %ource countries in $urope
)he number of FDI pro(ects in $urope declined by A> in 0133F it creates a huge (obless people
in especially in %pain, Italy, &ustria, Greece and 5ortugal. )he GC e8perienced solid groth in
FDI, reinforcing its position as the leading FDI location in $urope. &s ell as a 3A> increase in
recorded FDI pro(ect numbers, capital investment in the GC increased by ;2> and FDI (ob
creation by AA>. .oever, in terms of total (ob creation, FDI in Hussia generated the highest
number of ne (obs, ith 2?,1;@ (obs created in 0133 compared to <<,23@ in the GC. )his as
despite a decline in FDI in Hussia in 0133.
)he largest sector for FDI in $urope in 0133 as reneable energy. ,apital investment in
reneable energy almost doubled in 0133, reaching an estimated :;1bn and accounting for one+
third of estimated capital investment in $urope. In contrast, capital investment in the coal, oil and
natural gas sector fell by A<>, ith estimated investment of :3Abn. )he transport e*uipment
sector also sa a large decline in FDI in 0133, ith a 0=> drop in capital investment. In terms of
(ob creation, the real estate, hotel and tourism sector remained the leading sector for (ob creation.
)he life sciences sector also sa a ma(or decline in (ob creation of A@>
%ource9 fDi mar!etsDD.fDiIntelligence.com
)op source countries in 'iddle $ast and &frica
)he vast natural resources of this region, coal, oil and natural gas as the leading sector for FDI,
ith an estimated :A=bn capital investment in 0133. .oever, capital investment groth
declined by 3@> during 0133, because political instability in some countries li!e )unisia, $gypt,
"ibya, %yria. )he second leading sector in 0133 as the metals and minerals sector, ith :0@bn
of investment. In terms of pro(ect numbers, a financial and business service as the top sector,
accounting for AA> of all pro(ects recorded in the 'e& region, ith groth of A> in 0133. In
terms of (obs created, metals and minerals as the leading sector ith an estimated =@,111 (obs
created and ith very strong (obs groth of A2> in 0133. )he sector accounted for more than
one+*uarter of all (obs created by FDI in the 'e& region in 0133. )he fastest groing sector for
FDI in the region as the food, beverages and tobacco sector, ith a ;?> increase in FDI pro(ect
numbers, a 3;1> increase in (obs created, and a 011> increase in capital investment. )he
ea!est performing sector in 0133 as again the real estate, hotels and tourism sector, ith a
A<> decline in FDI pro(ects and ;1> decline in capital investment in 0133.
%ource9 fDi mar!etsDD.fDiIntelligence.com
,onclusion
"ast several years the orld political scenario is not loo!ing ell. In many countries faces
internal political clashes, civil ar, natural disasters etc. natural resources is going don day by
day. For this many pro(ects are not or!ing ell. Beside this the groth in FDI is highest in &sia
5acific region. &nd very unstable in the 'iddle+$ast countries. $urope is struggling to overcome
from recession in their countries. "atin &merica comparatively done ell in FDI mar!ets. It can
be assumed that they ruled in near future in attracting FDI. )he main problem in groth in FDI
mar!ets is very unstable political situation all over the orld. $very country more or less faces
this problem.
Directions of FDI
FDI in Bangladesh
FDI inflos in Bangladesh
<hough the amount of FDI is increasing over the years, FDI as a percentage of GD5 is
folloing a declining trend after F4 011;+1=. FDI as a percentage of GD5 increased to 3.AA>
in F4 011;+1= hile GD5 and FDI flo ere )!. A@
[email protected] billion and )!. ;?.A; billion
respectively. )hen FDI as a percentage of GD5 declined until F4 011@+12 and the scenario
changed only in F4 0112+1?. )he groth of FDI in F4 0112+1? as 0;.?<> higher than that of
previous fiscal year and FDI as percentage of GD5 increased to 3.1@> FDI inflos by countries
!a"or sources of FDI #countr$%ise&
,ountry+ise sources have shifted ith the change of sectoral distribution of FDI. )he
emergence of ne sources of FDI may be of particular relevance to lo+income host countries
li!e Bangladesh. Indeed, the role of developing and transition economies as sources of FDI is
increasing ith the passage of time. )ransnational ,orporations ()#,s) from developing and
transition economies have become important investors in many.
In F4 0131+33, Bangladesh received total G%D @@?.1; million FDI from ;; countries among
hich the share of G.C. is the highest at G%D 3;;.< million. In the same fiscal year, ma(or
sources of FDI inflo ere9 #etherlands (G%D @3.;3 million), .ong Cong (G%D ?A.=2
million), G.%.&. (G%D ?;.32 million), India (G%D 01.@3 million), %outh Corea (G%D @A.2;
million), Iapan (G%D A=.1= million), G.&.$. (G%D 00 million) and 5a!istan (G%D 0;.=?
million).
If the current trend e8ists, the inflo of FDI might be G%D 0;.0million from %ingapore, G%D
3;@.0 million from G.C, G%D ?2.@million from .ong Cong, G%D ?3.2 million from G.%.&.,
G%D @A.A million from %outh Corea and G%D @<.; million from #etherlands in the current
fiscal year.
