Impact of Foreign Direct Investment and Domestic Investment in South Asia: Time Series and Panel Evidence

Investigating the crowding effect of FDI on domestic investments: Evidence from Bangladesh

“…Besides, foreign investors can start hiring skilled or efficient workers away from domestic firms which may adversely affect the productivity of domestic firms. In literature, the issues of the crowding effect of FDI on domestic investments have been dealt with by many researchers [ [4] , [5] , [6] , [7] , 10 , 11 , [13] , [14] , [15] , [16] , [17] , [18] , [19] , [20] , 25 , 29 ].…”

“…Some studies [ 17 ] [ 4 , 6 , 10 , 18 ] [ 12 , 20 , 29 ] concluded that inflows of FDI into host countries have crowded-in domestic investments. On the other hand, some other studies [ 11 , [13] , [14] , [15] , [16] , 19 ] asserted that FDI has crowded-out domestic investments.…”

“…A study [ 29 ] used data from five South Asian countries from 1980 to 2010 to examine the crowding effect of FDI on domestic investment. The study confirmed the crowding-in effect of FDI on the domestic investment for India, Pakistan, Sri Lanka, and Bangladesh both in the long-run and short-run.…”