Foreign Direct Investment and Employment Generation for Host Country: An Analysis on Service Sector of Bangladesh

Abstract

The concern of Foreign Direct Investment (FDI) has been an exponential factor for the purpose of continuing economic growth and employment generation; Bangladesh is not lagging behind in this respect. Host country can make a sustainable growth and explore the potential of raising the productivity in the free market economy by resource transfer effect, employment effect, the balance-of-payment effect and the effect on competition and economic growth. The major challenge for the host country is to ensure the business environment that must be conducive. The whole analysis is mainly based on secondary data. In recent years, Bangladesh has been devoting efforts for attracting FDI offering in service sector with manifold compelling incentives and benefit but the result achieved is not appreciable enough for Bangladesh. Trade liberalization helps to escalate the FDI in service sector in Bangladesh excluding relevant problems like poor infrastructure, bureaucratic problems, land acquisitions and decrepit policies and programs regarding taxing situation. The study reveals that for the continuation of FDI in service sector and guaranteeing employment growth the country should reform the trade policy, industrial policy, monetary and fiscal policy, exchange rate policy and political reconciliation.