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. 2023 Jun 27;9(7):e17547.
doi: 10.1016/j.heliyon.2023.e17547. eCollection 2023 Jul.

Relationship between greenfield investment and economic growth: Evidence from Bangladesh

Sayed Farrukh Ahmed  1 , K M Zahidul Islam  2 , A K M Mohsin  1   3 , Guo Ai-Jun  3 , Syed Far Abid Hossain  4
Affiliations

Relationship between greenfield investment and economic growth: Evidence from Bangladesh

Sayed Farrukh Ahmed et al. Heliyon. .

Retraction in

Abstract

The key purpose of the study is to investigate the relationship between Greenfield investment and economic growth of Bangladesh using annual time series data during the period 2003-2020. The study employs Toda-Yamamoto (T-Y) tests of Granger causality method that performs Modified Wald Test (MWALD) in order to establish causal relation among different variables. There are three steps in implementing the T-Y procedure. The first step involves using different tests (ADF, PP, and KPSS test) to identify the maximum order of integration of the variable. The second step requires selecting the optimal lag length (p) based on several lag length selection criteria. In the third step, MWALD approach is used for testing the vector auto regression model for causality. The results of the tests (ADF, PP, and KPSS) concluded that the maximum order of integration of the variables is two. Then, the optimal lag length of two (p = 2) has been selected based on several lag length selection criteria. Finally, the findings reveal the evidence of unidirectional causality from Real Greenfield Foreign Direct Investment (RGFDI) to Real Gross Domestic Product (RGDP). The key contribution of this study is to investigate the Greenfield investments-growth relationship for a country like Bangladesh.

Keywords: Bangladesh; Economic growth; Greenfield investment; Toda-yamamoto (T-Y) tests of granger causality.

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Conflict of interest statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Figures

Fig. 1
Fig. 1
Amount of Greenfield FDI inflows in Bangladesh (million US$). Source: [49].
Fig. 2
Fig. 2
Amount of Greenfield FDI inflows in Bangladesh, India and Pakistan (million US$). Source: [49].
Fig. A1
Fig. A1
Inverse Roots of AR Characteristic Polynomial.
Fig. A2
Fig. A2
IRFs graph. The first panel shows that a shock in the changes of LRGFDI produced negative responses to LRGDP in the first three periods. However, it increases after that to produce positive responses to LRGDP in the next three periods. After that, it decreases to produce negative responses to LRGDP in the next three periods. Moreover, it increases after that to produce positive responses to LRGDP in the next period.
See this image and copyright information in PMC

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