Causal Relationship between Current Account Deficit and Foreign Direct Investment: An Empirical Analysis of Bangladesh

Bushra Humaira Sadaf and Sakib B. Amin

The causal association between foreign direct investment and current account deficit has gained interest of researchers and policy makers all around the world due to it’s consequences. While this paper examines the co integration and causal relationship between current account deficit and foreign direct investment in Bangladesh economy. For this research we have taken into account annual data starting from 1980 to 2015.Our results reveal that there is a unidirectional causality running from foreign direct investment to current account deficit in context of Bangladesh. That is there is causality between foreign direct investment and current account deficit running from foreign direct investment to current account deficit.