Thinking Aloud: Volume III, Issue 7: December 1, 2016
The December, 2016 issue of Thinking Aloud focuses on Foreign Direct Investment (FDI) and Special Economic Zones (SEZs). The first article “The political economy of special economic zones (SEZs) in Bangladesh” sheds light on the fact that while it might be very difficult to dramatically improve the infrastructure and business environment of the overall economy ‘overnight’, SEZs can be built in a much shorter time and they can work as efficient enclaves to solve these problems. However, a number of issues need to be addressed to make SEZs in Bangladesh successful, which are related to faster implementation of SEZs, efficiency of port infrastructure and connectivity, improvement in business environment of the overall economy, prioritizing economic and export diversification, and improving the quality of institutions managing SEZs. The second article titled “What factors matter in attracting FDI?” investigates the factors affecting FDI inflow in a cross-country and over time framework. The results of the fixed effect panel regression models exhibit statistically significant and positive associations between FDI-GDP ratio and a number of explanatory variables which include economy’s openness, status of infrastructure, magnitude of domestic investment, domestic market size, government’s stability and better investment profile. For this issue, SANEM interviews Dr. Ahsan H. Mansur, Executive Director, Policy Research Institute (PRI) of Bangladesh, on the prospects, challenges and policy issues regarding FDI in Bangladesh. Dr. Mansur stresses the need for big flagship investment in order to boost the FDI inflow in Bangladesh. Dr. Mansur also believes that the 100 Special Economic Zones (SEZs) to be established by the government can play important role in attracting larger FDI from countries like Japan, China and India. The final page draws attention to the events that took place in the month of November.