This study explores the role of infrastructure availability, particularly
with respect to transportation, information and communication
technology and energy consumption in determining the attractiveness of
foreign direct investment (FDI) inflows in Bangladesh. The
infrastructure of a country not only encourages its local investment to
develop its socio-economic condition but also attracts the foreign direct
investment. For the empirical analysis this paper uses data for the period
1975-2011 from the World Development Indicators (WDI) (on FDI, per
capita energy consumption and GDP) (WDI 2014). The long term
relationships between infrastructure and FDI are explored by using
cointegration analysis for Bangladesh. The data sets are found to be
integrated of the same order. It is also found that they move together in
the long run by Johansen Cointegration Test. Using VAR Granger
causality/Block exogeneity Wald causality test the study has revealed
some interesting causal relationships between foreign direct investment
and different infrastructure indicators in Bangladesh. Bi-directional
causality is observed only from LNICT to LNFDI in Bangladesh.
