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Potentiality of Fdi Inflow in Bangladesh

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POTENTIALITY OF FDI INFLOW IN BANGLADESH

1. INTRODUCTION

Foreign Direct Investment (FDI) is considered as one of the crucial ingredients for fostering economic development of a developing country. Countries that are lagging behind to attract FDI are formulating and implementing new policies for attracting more investment. Even compared to other South Asian countries, FDI inflow to Bangladesh has traditionally been lower.

Foreign direct investment (FDI) is investment directly into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive to gain tariff-free access to the markets of the country or the region. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

2. TYPES OF FDI

As a part of the national accounts of a country FDI refers to the net inflows of investment.
There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative).
Inward FDI occurs when foreign capital is invested in local resources. The factors propelling the growth of inward FDI include tax breaks, low interest rates and grants.
Outward FDI, also referred to as "direct investment abroad", is backed by the government against all associated risk.

3. FOREIGN DIRECT INVESTOR

A foreign direct investor is an individual, an incorporated or unincorporated public or private enterprise, a group of related individuals, or a group of related incorporated and/or…...

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