Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries

By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play important role in achieving rapid economic growth in the developing countries. The fact is that FDI mostly flows towards the developed countries and only a small portion of FDI flows to a limited number of developing countries. Thus, most of the developing nations almost fail to attract a handsome amount of FDI. Using panel data from 60 low-income and lower-middle income countries, this paper firstly identifies the influential factors that determine FDI inflow in the developing countries and secondly empirically demonstrates the relationship between economic growth and FDI. It is found that countries with larger GDP and high GDP growth rate and maintain business friendly environment with abundant modern infrastructural facilities, such as internet can successfully attract FDI and FDI on the other hand, significantly affect economic growth of a country.foreign direct investment, determinants, developing countries, economic growth

Rural Craftsmanship, Employment Creation and Poverty Alleviation: The Case of the Bamboo Craftsmanship in Bangladesh

Abstract: More than 30 percent of total population in Bangladesh is extremely poor. Halving the existing poverty level as per the millennium development goals of the UN by 2015 is the major challenge of the country. The question arises as to how to eradicate extreme poverty quickly? Successful experience of the East Asian countries reveals that creation of employment opportunities in the non-farm industrial sector for the rural poor is instrumental to eradicate poverty. Due to stagnant large and medium scales industrial sector and sole dependence on agriculture sector for employment and income, Bangladesh suffers from huge unemployment and disguised unemployment, which has been further worsening due to high population growth rate. Since the long past, rural informal income generating activities, such as traditional bamboo craftsmanship, however, has created enormous employment and income opportunities in the country especially for the rural poor and distress women. Empirical studies though recognize the contribution of rural informal activities to poverty alleviation, seldom focuses on who are the craftsmen, how they produce and market their products. Using primary data collected from more than 200 bamboo craftsmen from four districts in Bangladesh, this study tries to examine the role of rural informal activities and characterizes who are the craftsmen. The study finds that bamboo craftsmen are mostly uneducated and inherited the skills and businesses from their parents. The study also finds that all of the workers in the bamboo industry are family members and nearly 50 percent of total workers in the bamboo sector are female. Thus, the traditional bamboo sector contributes enormously to the creation of employment opportunities for the rural women. Finally, based on the opinions of the craftsmen, the study recommends some suggestions for the development of the bamboo industry in Bangladesh.industrial cluster, industrial development, craftsmanship, bamboo

人的資本と産業発展: バングラデシュのニットウェア産業の事例

公共政策プログラム / Public Policy Program政策研究大学院大学 / National Graduate Institute for Policy Studies論文審査委員: 園部 哲史（主査）, 大塚 啓二郎, 山野 峰, 山形 辰史（日本貿易振興機構アジア経済研究所）, 大山 達

Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries

By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play important role in achieving rapid economic growth in the developing countries. The fact is that FDI mostly flows towards the developed countries and only a small portion of FDI flows to a limited number of developing countries. Thus, most of the developing nations almost fail to attract a handsome amount of FDI. Using panel data from 60 low-income and lower-middle income countries, this paper firstly identifies the influential factors that determine FDI inflow in the developing countries and secondly empirically demonstrates the relationship between economic growth and FDI. It is found that countries with larger GDP and high GDP growth rate and maintain business friendly environment with abundant modern infrastructural facilities, such as internet can successfully attract FDI and FDI on the other hand, significantly affect economic growth of a country

Rural Craftsmanship, Employment Creation and Poverty Alleviation: The Case of the Bamboo Craftsmanship in Bangladesh

Abstract: More than 30 percent of total population in Bangladesh is extremely poor. Halving the existing poverty level as per the millennium development goals of the UN by 2015 is the major challenge of the country. The question arises as to how to eradicate extreme poverty quickly? Successful experience of the East Asian countries reveals that creation of employment opportunities in the non-farm industrial sector for the rural poor is instrumental to eradicate poverty. Due to stagnant large and medium scales industrial sector and sole dependence on agriculture sector for employment and income, Bangladesh suffers from huge unemployment and disguised unemployment, which has been further worsening due to high population growth rate. Since the long past, rural informal income generating activities, such as traditional bamboo craftsmanship, however, has created enormous employment and income opportunities in the country especially for the rural poor and distress women. Empirical studies though recognize the contribution of rural informal activities to poverty alleviation, seldom focuses on who are the craftsmen, how they produce and market their products. Using primary data collected from more than 200 bamboo craftsmen from four districts in Bangladesh, this study tries to examine the role of rural informal activities and characterizes who are the craftsmen. The study finds that bamboo craftsmen are mostly uneducated and inherited the skills and businesses from their parents. The study also finds that all of the workers in the bamboo industry are family members and nearly 50 percent of total workers in the bamboo sector are female. Thus, the traditional bamboo sector contributes enormously to the creation of employment opportunities for the rural women. Finally, based on the opinions of the craftsmen, the study recommends some suggestions for the development of the bamboo industry in Bangladesh

Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries

By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play important role in achieving rapid economic growth in the developing countries. The fact is that FDI mostly flows towards the developed countries and only a small portion of FDI flows to a limited number of developing countries. Thus, most of the developing nations almost fail to attract a handsome amount of FDI. Using panel data from 60 low-income and lower-middle income countries, this paper firstly identifies the influential factors that determine FDI inflow in the developing countries and secondly empirically demonstrates the relationship between economic growth and FDI. It is found that countries with larger GDP and high GDP growth rate and maintain business friendly environment with abundant modern infrastructural facilities, such as internet can successfully attract FDI and FDI on the other hand, significantly affect economic growth of a country

Human Capital and Industrial Development: Evidence from the Machinery Industry in Bangladesh

While there is consensus that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries in developing countries. The emerging literature on cluster-based industrial development, based on successful cases in East Asia, empirically demonstrates that general human capital of a profit seeking entrepreneurs measured by his formal years of schooling, critically determines product upgrading and innovative activities, and, thus, the performance and growth of the industries. The present paper, using primary data, also empirically demonstrates that the application of modern production and marketing techniques is mainly a function of knowledge of an entrepreneurs measured by his years of schooling. Consequently, enterprises manage by relatively highly educated entrepreneurs tend to perform well and grow faster compared to others. Importantly, applying the instrumental variable estimation technique, present paper also demonstrates that the level of education of an entrepreneur is a positive function of the level of education and asset of his father. Based on the findings, present this paper argues that international donor agencies should invest on the accumulation of human capital in developing countries by investing on general education to untie the growth potentials of industries in developing countries

Human Capital and Industrial Development: Evidence from the Machinery Industry in Bangladesh

While there is consensus that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries in developing countries. The emerging literature on cluster-based industrial development, based on successful cases in East Asia, empirically demonstrates that general human capital of a profit seeking entrepreneurs measured by his formal years of schooling, critically determines product upgrading and innovative activities, and, thus, the performance and growth of the industries. The present paper, using primary data, also empirically demonstrates that the application of modern production and marketing techniques is mainly a function of knowledge of an entrepreneurs measured by his years of schooling. Consequently, enterprises manage by relatively highly educated entrepreneurs tend to perform well and grow faster compared to others. Importantly, applying the instrumental variable estimation technique, present paper also demonstrates that the level of education of an entrepreneur is a positive function of the level of education and asset of his father. Based on the findings, present this paper argues that international donor agencies should invest on the accumulation of human capital in developing countries by investing on general education to untie the growth potentials of industries in developing countries

Determinants of Small Enterprises’ Performance in Developing Countries: A Bangladesh Case

Family-based traditional microenterprises are abundant in developing countries, and in many cases they are a major source of income and employment for both urban and rural poor. With a few exceptions, however, most these family-based traditional microenterprises in the rural areas of developing countries seldom grow in terms of enterprises’ size and product quality. Thus, they tend to perform poorly relative to their growth potentials. The development of these family-based microenterprises would be instrumental to employment generation, poverty alleviation and sustainable economic growth in developing countries. Using primary data collected from the traditional handloom industry in Bangladesh, this paper inquires into the development process of family-based traditional microenterprises in developing countries. The paper empirically demonstrates that entrepreneurs’ general human capital acquired by formal education is critically important for the introduction of new and high value-added fashionable products, and, thus, performance of the enterprise

Determinants of Small Enterprises’ Performance in Developing Countries: A Bangladesh Case

Family-based traditional microenterprises are abundant in developing countries, and in many cases they are a major source of income and employment for both urban and rural poor. With a few exceptions, however, most these family-based traditional microenterprises in the rural areas of developing countries seldom grow in terms of enterprises’ size and product quality. Thus, they tend to perform poorly relative to their growth potentials. The development of these family-based microenterprises would be instrumental to employment generation, poverty alleviation and sustainable economic growth in developing countries. Using primary data collected from the traditional handloom industry in Bangladesh, this paper inquires into the development process of family-based traditional microenterprises in developing countries. The paper empirically demonstrates that entrepreneurs’ general human capital acquired by formal education is critically important for the introduction of new and high value-added fashionable products, and, thus, performance of the enterprise