Causal Relationship Between Foreign Direct Investment And Capital Flight: A Case Study of Bangladesh

Abstract

The fundamental aim of this study is to investigate the relationship between Foreign Direct Investment (FDI) and Capital Flight (KF) of Bangladesh. To obtain the objective, this paper has conducted statistical analyses and examined time series data over a period of Forty one years from 1973 to 2014. Unit root test and Granger causality test were exercised to measure the relationship between independent variable (FDI) and dependent variable (KF). The results found in this paper signify a positive correlation between FDI and Capital Flight and may be a concern and significant for the government of Bangladesh. The government might focus on required reforms and policy implications to make foreign investment more beneficial.