The journal article “Foreign Direct Investment in the Energy and Power Sectors in Bangladesh: Implications for economic growth” authored by CPD Research Director Dr Fahmida Khatun and Senior Research Associate Mr Mazbahul Ahamad, was published in the Renewable and Sustainable Energy Reviews in August 2015.
In this paper we present a discussion on current energy and power situation of the country, and examine the causal relationship between FDI in the energy and power sector, and economic growth in Bangladesh for the period 1972–2010. Related trend reveals a considerable gap between energy production and energy use during this period. Moreover, inflow trend of FDI was also fluctuating over the studied period. We also find that there are robust positive and unidirectional short-run causal relationships running from FDI to energy use and from energy use to GDP growth. Empirical results also confirm a causal relationship for the energy use equation in the long run. Considering the resource and technology gap and requirements for the development of the energy and power sector, FDI should be encouraged to this sector that would be imperative to the targeted GDP growth.
Keywords: Foreign direct investment; Energy and power sector; Economic growth; Bangladesh