The Impact of Economic Freedom on

Foreign Direct Investment Inflows in

Bangladesh
SH AHR U Z ZA MAN AK AS H
ID :23 - 21 8 3
SE C : B
Objective of the study

• This study aims to explore the impact of economic freedom on

foreign direct investment (FDI) net inflows in Bangladesh using
annual data over a twenty-year period from 2000 to 2019.
• The data used to conduct the analysis is time-series in nature.
Variables
Dependent Variable
• FDI Net Inflow
Independent Variables
• Market Size
• Growth Rate
• Total Reserves
• Human Capital
• Economic Freedom
Model Specification

The multivariate linear regression model has the following form:

LnFDIt = β1 + β2LnGDPt + β3GDPGt + β4LnTRt + β5HCapt + β6EFt + εt
• LnGDP represents the natural log of GDP
• GDPG is the GDP growth rate
• LnTR represents the natural log of total reserves
• HCap represents human capital
• EF is the measure of economic freedom
• εt is the error term
Analysis and Results

• Stationarity Test
• Multicollinearity Test
• Autocorrelation Test
• Normality Test
• Heteroscedasticity Test
 Findings
Variable Coefficient T-Statistic P-Value

EF .6260 0.45 0.661

LnGDP 5.5919 1.87 0.084*

GDPG .40376 2.09 0.057*

LnTR 1.3931 2.11 0.055*

HCap -.0930 -1.79 0.096*

Constant -.5876 -1.95 0.074*

R-Square 0.5044

Adjusted R-Square 0.3137

Prob(F-statistics) 0.0732

The R-square (0.5044) and adjusted R-square (0.3137) are satisfactory in this model.
Probability of F-statistics in this model is 0.0732 which tells us that the overall model is
significant at the 10% level
Thank you