Barriers to foreign direct investment in the power sector: evidence from Bangladesh

Tareq Mahbub and Juthathip Jongwanich

International Journal of Development Issues, 2019, vol. 18, issue 3, 310-333

Abstract: Purpose - The purpose of this study is to investigate factors that deter firms from pursuing foreign direct investment (FDI) in Bangladesh’s power sector. Design/methodology/approach - The study uses a mixed-method approach comprising semi-structured interviews and questionnaires. A quantitative analysis including a one-way analysis of variance and analytical hierarchy process is also included. Findings - The results reveal that political aspects are the most influential barriers impeding FDI in the power sector, followed by economic and financial, societal and regulatory aspects. Of the individual factors, land acquisition/rent/lease, corruption, political interference, an inadequate gas transmission system and a long independent power producers’ approval process are key obstacles deterring FDI in the power sector. The ownership structure matters in ranking decisions to conduct FDI. Practical implications - The study can assist managers in identifying key factors that deter FDI in the power sector. It can also assist the government to establish the right policies for the sustainable development of FDI in the power sector. Originality/value - This study is the first of its kind in Bangladesh’s power sector that analyzes the key barriers hindering FDI systematically. It also discusses policies on removing these barriers for sustainable development of FDI in the power sector.

Keywords: Bangladesh; Foreign direct investment; Joint venture; Barriers; Power sector; Wholly owned (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:ijdi-11-2018-0182

DOI: 10.1108/IJDI-11-2018-0182

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