Assessing the Impact of Foreign Loans, Inflation, and Foreign Direct Investment on Economic Growth: Evidence from 51 Years of Data in Bangladesh
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This research studied 51 years of historical secondary data ranging from 1972 to 2023 to ascertain how foreign loans (FL), inflation rate (INF), and foreign direct investment (FDI) impact the gross domestic product (GDP) and gross national income (GNI) of Bangladesh, an emerging market economy. The study compiled secondary data from multiple sources, such as the World Bank, Bangladesh Bank, macrotrends.net, Bangladesh Economic Review, and Bangladesh Bureau of Statistics. It used the multiple linear regression model to assess the impact of FL, INF, and FDI on economic growth. The study results revealed that FL and FDI significantly impact economic growth. It implies that growing FL and FDI can boost the economic growth of an emerging market. It also indicates that external financial flows can significantly strengthen the macroeconomic fundamentals of a country and contribute to inclusive development if appropriately used. Therefore, Bangladesh should maximize the appropriate use of FL and FDI for high-impact projects and create a more suitable setting for FDI through regulatory reform and incentives. It would safeguard macroeconomic stability through integrated fiscal and economic policies, encourage public-private partnerships to get leverage from the use of technical know-how, and enhance sector-specific research to foster sustainable growth. Future studies could build on this work, examining other economic factors such as interest rates, domestic debt, remittances, public and private investment, policy reforms, and governance. In addition, further comparative studies with other emerging countries could be done to gain an inclusive insight into the influence of FL and FDI on economic growth.
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