| Summary: | In the context of developing countries such as Bangladesh, Foreign Direct Investment
(FDI) is an essential factor in the acceleration of economic growth. Besides narrowing down
the gap between national savings and net investment, it is facilitating the growth of various
sectors such as manufacturing, infrastructure, trade, telecommunication and energy. This
paper aims to analyze the status quo of FDI in Bangladesh along with its long term impact
on GDP growth, associated problems as well as possible remedies. Empirical analysis of
time series data from 1981 to 2011 indicates a long term positive relation between FDI and
GDP growth rate in Bangladesh. The relation between FDI inflow in various sectors and the
consequent contribution to GDP growth has been tested for as well, yielding expected results.
Encouragement of FDI is vital for the long run growth of the Bangladesh economy.
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