Effect of International Trade, Foreign Investment, Remittances, and Exchange Rate on the Economic Growth of Bangladesh

Background Of The Study

In this globalized world, every nation has to be engaged in foreign trade to retain their existence. It is an undeniable fact that because of this globalization, developed countries take the most advantages as they already have started using modern science & technology to sustain in this competitive world. On the contrary, poor countries faces many problems or unfavorable situation as they cannot adapt with the fast-changing world. It is certainly true that foreign trade is critical to improving the socioeconomic condition of distinct nations. The production growth, physical quality of life, capital investment opportunities and per capita income have been based on the local manufacturing and consumption behaviors, as well as overseas trade. International trade in recent decades has considerable enhancement and it is apparent that a very heavily traded commodities in this field are those relating to the monetary and financial systems, and several financial intermediaries provide funding for the commercial transactions. For several past years, it has been validated step by step development of global economic system and in recent years, the advancement of technology in numerous fields has followed varied corporate backgrounds.

Bangladesh is a developing country. It is blessed with plenty of natural resources. But due to lack of sufficient capital, technology and inadequacy of skills, appropriate use of its environmental assets is likely implausible. As a consequence, for acquiring industrial items and supplying raw resources, we must rely on international commerce. International trade plays the key role by which a country sets up its economic ties with different nations. Trade is an integral aspect of an economy's overall advancement. Export and import are strong tools for building Bangladesh's economy, and they may help the state achieve its social aims, such as eradicating famine. Export and import may help increase capital assets, provide workforce and investing possibilities, enhance economic potential, and assist link the local economy with the international economy in a capital-poor state such as Bangladesh. Foreign investment and remittance inflows can have a macroeconomic influence on Bangladesh's economy in a variety of aspects. For example, if a large amount of funds is saved, financial institutions can transform it into investment in the long run. If a significant amount of the remittance is spent on healthcare and schooling by the recipient family, this can contribute to the enrichment of human capital. In the long term, this may have an impact on Bangladesh's wealth creation. Even though the majority of overseas remittances are used for spending, this may boost the economy's collective needs, resulting in short-term increases in production and work opportunities.

Economic advancement is an important metric for all countries across the world. Furthermore, the nations have numerous unique programs and strategies in place since increased economic expansion leads to increased social assistance and long-term sustainable growth. A key goal of economic planning is to achieve rapid and persistent economic expansion, which is usually accompanied by more cohesion and greater opening up to foreign commerce. Not unexpectedly, the presence and form of the conjunction between trade openness and economic expansion has piqued people's curiosity and sparked heated discussion. Nevertheless, neither theoretical frameworks nor empirical analysis have yielded a conclusive outcome. Trade liberalization promotes ingenuity, technical development, and sustainable operation by exposing people to new commodities and allowing them to import high-tech inputs. There are several reasons in favor of international trade's contribution to economic progress. The core of international trade is the producing of goods and services. Improving exports might explicitly stimulate economic growth, either by increasing the manufacture of items for export or by allowing foreign currency buildup through the procurement of capital inputs. Furthermore, such commerce may provide greater knowledge connection, resulting in increased efficiency of inputs, which would transfer into produced outputs, resulting in economic progress.