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Bangladesh

Why does efficiency-seeking FDI matter?

Cecile Fruman's picture
Today we face an interesting paradox. The number of people in the world living in extreme poverty has decreased dramatically in the past three decades. In 1981 half of the population in the developing world lived in extreme poverty. By 2010, despite a 60 percent increase in the developing world’s population, that figure dropped to 21 percent.

While extreme poverty has diminished, however, the gap between the richest and poorest countries has increased dramatically. In 1776, when Adam Smith wrote The Wealth of Nations, the richest country in the world was approximately four times wealthier than the poorest. Today, the world’s richest country is more than 400 times richer than the poorest.

What separates them?

One answer is knowledge, diversification and the composition of exports, all areas in which foreign direct investment (FDI) has an important role to play. 

FDI matters, but not all FDI is created equal
 
While FDI is important for economic growth, not all FDI is the same. One way to differentiate is by an investor’s motivations using a framework established by British economist John Dunning:
  • Natural resource-seeking investment: Motivated by investor interest in accessing and exploiting natural resources.
  • Market-seeking investment: Motivated by investor interest in serving domestic or regional markets.
  • Strategic asset-seeking investment: Motivated by investor interest in acquiring strategic assets (brands, human capital, distribution networks, etc.) that will enable a firm to compete in a given market. Takes place through mergers and acquisitions.
  • Efficiency-seeking investment: FDI that comes into a country seeking to benefit from factors that enable it to compete in international markets.

This last category – efficiency-seeking FDI – is particularly important for countries looking to integrate into the global economy and move up the value chain.
 

SACOSAN VI: An opportunity for South Asian leaders to focus on sanitation and the Sustainable Development Goals

Junaid Kamal Ahmad's picture

The text below originally appeared in The Daily Star as part of the SACOSAN VI Supplement. The Daily Star is an English newspaper of Bangladesh.

SACOSAN VIThe 6th South Asian Conference on Sanitation (SACOSAN VI) is a historic milestone for South Asian governments. The conference reflects the efforts South Asia has made towards safe sanitation for all, but importantly, it signals the Region’s commitment to shift from the Millennium Development Goals (MDGs) to the more challenging platform of the Sustainable Development Goals (SDGs). This shift will require even greater leadership from the governments, more sustained partnership from the development community, and greater grass-root innovation. SACOSAN VI is the right moment for South Asia to concretely signal its commitment towards achieving SDG 6 – the Water and Sanitation Goals.

How digital public procurement has transformed Bangladesh

Zafrul Islam's picture
Digital Public Procurement Transforms Bangladesh


Each year, Bangladesh spends around $10 billion of its national budget on public procurement to build and maintain schools, roads, power plants and others. Public funds can be used effectively for the people only when the procurement system is transparent and efficient.  In the last few years, the country has shifted away from traditional procurement standards – paperwork and long processing time – and rolled e-GP, a new electronic government procurement system.

Skilled Women Are Breaking Labor Force Barriers in Bangladesh

Ahamad Tanvirul Alam Chowdhury's picture

Dolly owns and runs “Lovely Fashion,” a tailoring shop in Tongi near Dhaka, the capital of Bangladesh. She is in her mid-twenties and earns around BDT 12,000 (USD 150) a month.  “I work hard. I can support my family to live with dignity in the society,” says Dolly. “Finally I have peace of mind and financial independence.”

Dolly working in her tailoring shop
Dolly working in her tailoring shop

Why Do More Than 50,000 Families in Bangladesh Buy a Solar Home System Every Month?

Zubair K M Sadeque's picture

“Does the solar home system work? Do you really get better lights? Or, is it just a big fuss?’ I have been asking solar home systems households in rural Bangladesh these basic questions for the past five years as part of my implementation review missions for the Rural Electrification and Renewable Energy Development program, which has installed over  2.8 million solar home systems since 2002. This has so far contributed to a 9% increase in access to electricity in Bangladesh.

A Lesson from Malala: Girls’ Education Pays Off

Sri Mulyani Indrawati's picture
Originally published on the World Bank 'Voices: Perspectives on Development' blog

 

When I heard the news last autumn that 15-year-old Malala Yousafzai of Pakistan had been shot simply for standing up for her right as a girl to get an education, I was horrified.

It also reminded me how lucky I was.

When I was offered a rare scholarship to study abroad, it wasn’t acceptable for me, as a young married Indonesian woman, to live apart from my husband. My mother laid out two options: Either he would join me, which meant giving up his job, or I had to decline the offer.

I know it was her way to advocate for my husband to support me, which he did without hesitation. We both went to the United States to complete our master’s degrees. I combined it with a doctorate in economics, and we had our first child, a daughter, while we both were graduate students.

Microcredit Borrowers in Bangladesh Are Not Necessarily Trapped in Poverty and Debt as many contended in recent years

Shahid Khandker's picture

With spectacular growth of microfinance institutions (MFIs) in Bangladesh, there is a growing concern that borrowers might be borrowing from multiple sources and more than they are able to repay, and hence, they are trapped in poverty and debt.  Microfinance programs, operating in Bangladesh for more than two decades, have reached more than 10 million households in 2008, nearly half the rural population, with an annual disbursement close to US$1.8 billion and an outstanding balance of US$1.5 billion.  Multiple program membership has increased over the years: it was nonexistent in 1991/92, 11.9 percent in 1998/99 and 36 percent in 2010/11. 

However, a recent study shows that increased borrowing, even from multiple sources, has not lowered loan recovery rates. 

Also, another recent study observes that microcredit borrowers are not necessarily trapped in poverty and debt. This study analyzes data from a long panel survey over a 20-year period, and finds that although many participants have been with microcredit programs for many years they are not necessarily trapped in debt as the accrued assets due to borrowing outweigh accumulated debt for many borrowers.

How to create 100 million jobs

Ivan Rossignol's picture

How can countries create 600 million jobs for its citizens?

As the World Bank convenes its Spring Meetings in Washington this week to discuss the state of international development, the question on everyone’s mind is: How to restart growth and create jobs?

Job creation on an unprecedented scale is needed to avoid severe social dislocation: About 22 million jobs were lost worldwide during the global financial crisis – at a time when many developing countries face an explosion in their working-age population. According to the Bank’s “World Development Report 2013,” 600 million jobs need to be created in the next 15 years just to maintain current employment rates.