Introduction
Bangladesh characterised by high population density, low resource base, recurrent natural disasters and persistent socio-cultural instability has come a long way since its independence in 1971. The country has performed well especially in recent years, showing that a country can achieve significan human and social development at relatively low levels of income along with creating strong fundamentals and future growth. The integration of developing and least developed countries with the global economy increased sharply in the 1990s with change in their economic policies and lowering of barriers to trade and investment. Foreign direct investment (FDI) is expected to benefit poor countries such as Bangladesh in a number of ways. Firstly, it supplements domestic investment which is low due to lack of resources in these countries. Secondly, FDI is expected to generate employment, transfer, increase domestic competition and bring other positive externalities such as transfer of good practices. Bangladesh offers attractive investment opportunities to foreign investors and has adopted policies to attract FDI into the country. In fact Bangladesh seems to offer one of the most liberal FDI regimes in South Asia. The economic model was developed based on the past behavior of GDP and the external sector. It indicated that FDI is the sector having the most significant impact on GDP and aid the second most significant. While imports negatively affect economic growth, exports have played a very important role over the period.
During the 1990s, notable progress was made in economic performance. Along with maintaining economic stabilization with a significantly reduced and declining dependence on foreign aid, the economy appeared to begin a transition from stabilization to growth. In the 1980s, per capita GDP had grown slowly at the rate of about 1.6 per cent per