1.

Abstract

Bangladesh, a country full of natural recourses, has been facing tremendous problems in economy since it became independent in 1971. Problems just increased in last few years, and one of the main reasons behind that is Political Instability. Political Instability has ery negati e impact on the in estment in Bangladesh. !ur term paper gi es a brief o er iew of the impact, which Political Instability has on the in estment clima" of Bangladesh.

2. Introduction
Bangladesh, a country full of natural recourses has been struggling to meet with the demands of general people due to se eral reasons e er since it became independent in 1971. #he price of daily necessary products has been increasing and getting out of reach of general public. $or many reasons, the approach of in estors has been negati e about in esting in our country. %ue to political instabilities, foreign in estors are also not too &een on in esting on Bangladeshi projects too much now a day. #his is not ery good for Bangladeshi in estment clima". 'e ha e to ma&e political parties to ma&e a come bac& o the right trac&, so that things can impro e.

3. Objectives
!ur moti e is to show the impact of Political Instability on the in estment clima" of Bangladesh. (o our first target is to find out what are the main political barriers coming on the way of in estment in our country and then by researching a lot, showing the impact of them on our in estment. By searching in the websites, with the direction of our course instruction all our group members became enable to o ercome all the problems, and de elop this research paper.

4. Methodology
!ur moti e is to show the impact of Political Instability on the in estment clima" of Bangladesh. 'ith the basis of that, our first target is to find out what are the main forms of political barriers coming on the way of in estment in our country and then by researching a lot, showing the impact of them on our in estment. By going through research papers, searching in the websites, with the direction of our course instruction all our group members became enable to de elop this research paper and o ercame all the problems we had earlier. 1

4.1 What is Political Instability Political Instabilities is a ariable which is ery hard to define and measure. 'e can differentiate political instabilities into ) parts*+ a. ,"ecuti e Instability b. (ocio+Political Instability #hese things are described below*+ a. Executive Instability #his approach defines political instability as the -Propensity to obser e go ernment changes.. #hese changes can be constitutional or unconstitutional both. #he main thing is most part of e"ecuti e instability is associated with uncertainties related with political policies. ,"ecuti e changes are distinct from the actual fre/uency of changes. It can be measured by changes in ariables li&e economic, socio+political and constitutional. b. !ocio"Political Instability #he second approach does not focus on direct e"ecuti e instability0 rather it refers to (ocial unrest and Political 1iolence. (ocio+ Political Instability is measured by constructing an inde" which summari2es arious ariables related with social unrest and political iolence. It refers to unwanted situation of the country. 4.11 Measure#ents o$ Political Instabilities and their i#%act on Invest#ent &li#ax #here are some different shapes of political instability. Although we ha e discussed those just a little while ago, thin&s are still ery clear. (o we are going for brief description of these measurements. #he figure gi e below will show that what e"ecuti e instability and socio+political instability refer to. #his will help us a lot to understand what &ind of impact the instability in politics is ha ing on our in estment and why so many years after becoming independent, e en today Bangladesh is still economically dependent, why we are still suffering from lac& in in estment and e en being a country full of natural resources, why foreign in estors are not too &een on in esting our country.

$igure 1* 3easurements of Political Instabilities

(o things become clarified about se eral forms of Political instabilities, where ,"ecuti e Instability means Political (tri&e and (ocio+Political Instability means 5orruption and 6aw+!rder situation. #hese factors are described below. i. Political (tri&e* !ne of the biggest forms of -Political Instability. is political stri&e, which is well &nown in Bangladesh as -7artal.. 7artal is a mass protest often in ol ing a total shutdown of educational institutions wor&places, offices, shops, courts of law as a form of ci il disobedience. As a result of that the whole economy suffers which causes big losses for in estors. In 8uly, )911 the in estors had a loss of o er #: ;99 millions because of 7artal. 7artal is a form of political right, which is unfortunately misused by our political parties for their own interests. 7artal is meant to be peaceful but our political parties ma&e it iolent, which scares and discourages people from going to wor& place which hampers our economy and thus 6ents in estors into great trouble. As a result of that in estment gets discouraged from both domestic in estors and foreign in estors. <ow the figure gi en below shows the total number of 7artals called by opposition parties. #he gi en statistics goes for period of the last go ernment which ruled till )99=, and it has the records e ery go ernment ruling for one period after independence*+

$igure )* #otal <umber of 7artals called indi idually for each go ernment after independence. 'hen a 7artal is called for, it creates iolence and chaos among the people and all the wor&places, offices, shopping malls, garments, factories or other places related to economy or in estment remain closed. If a company stops production for one day, that results into big amount of losses for an in estor. If production is stopped, the company ;

will not be able to sell the product and thus will incur losses. Product does not mean only tangible things0 products can be anything which sol es the problem of customers. (o now it is clearly understandable how dangerous 7artal is and by shutting down the wor&places, it causes losses to in estors as a result of which, both foreign and domestic in estors are losing their interest in in esting in Bangladesh. ii. 5orruption* Before we &now the impact of corruption on our in estment, we need to &now what corruption is. 5orruption is operationally defined as the misuse of entrusted power for pri ate gain. 5orruption can be further differentiated as >according to rule> corruption and >against the rule> corruption. $acilitation payments, where a bribe is paid to get illegal facilities both the recei er and the payer are e/ually guilty. 5orruption has become an inseparable part of the politics in Bangladesh. Because of corruption, our economy is getting hampered badly. Politicians are gi ing up their morality for gaining personal interest and thus doing corruption. !ften in our country when a business deal will be done by the go ernment, the go ernment chooses a person either someone who does not deser e to get the deal, but that person is related with the go ernment, or when someone bribes a huge amount to go ernment for getting that deal. $rom go ernment tender to e ery other business the go ernment is associated with, this is the same scenario e erywhere. 'hen a deser ing person will lose the chance e ery time, it is natural that the person who deser ed the opportunity will be discouraged and will lose interest to in est any more. #his is the same scene when it matters the international trades as well. 'hen an international company wants to in est in our country, it is seen that what &ind of relationship the go ernment has with the country of that in estor and how much bribe that in estor is paying the go ernment. If we remember = years ago in )99?, a 5anadian company named -<i&o. got a deal for a gas and in a gas field, a dangerous accident too& place. At that time the news paper reports said that <i&o had bribed the state minister A:3 3osharraf 7ossain for getting that deal and also for stopping the in estigation of the accident which too& place. At that the minister resigned and denied all these reports, but it has been pro ed as <i&o confessed in an international court that it had bribed the minister. #hese things certainly ha e a lot of impact on other in ertors both domestic and foreign. 'hen an in estor comes to &now this, that person will ne er be &een on in esting in any projects of Bangladesh. , en in the stoc& mar&et in Bangladesh saw the

biggest fall in )911 and reports clearly suggest that some big politicians from both the ruling and the opposition party are associated with this fall and they used the law a if they ha e done nothing wrong. #his is one &ind of corruption as well because they ha e misused both their power and the law of the country. It is high time to stop these &inds of corrupted politics0 otherwise it would call for destruction for both economy and in estment in Bangladesh. iii. 6aw+!rder (ituation* At last the 6aw+!rder situation of Bangladesh is another form of political instability and corruption. #he current law+order situation in Bangladesh is terrifying and e eryday when we see news on #1 channels or read news papers0 we see the news of people being &idnapped and then &illed for money. $rom school children to business icons, all &inds of people face this problem. In estors are facing another big problem, threat of e"tortion money. 'hen an in estor will see that other in estors are either gi ing money for doing business and remaining ali e and otherwise they are &illed, then certainly that person is not going to be too much pleased with that. (o clearly it does not matter how resourceful your country is, if you ha e threat of life and you can not do business in peace, you will certainly not want to in est your money in such a place. $or this situation on our country, political instability is clearly responsible. If in estigated correctly, all the people behind these illegal acti ities will be found as powerful politicians or related to politicians. Actually these things are pure combination of politics and corruption. Almost e eryday in Bangladesh, in estors are &illed for money and go ernment hardly ta&es some step on them. 'hen you ha e ris& of life for doing any wor&, you will be automatically become discouraged for doing that and this thing happens with the in estors as well. Almost e eryday an in estor is being &illed after &idnapped or due to business ri alry. In this condition, no one would li&e to lose his or her life after in esting money on any project in Bangladesh. If we go to flashbac& we will see that in 8une99, )919, an Indian businessman named @3a2idA was shot dead on spot outside a hotel in Banani. As usual police in estigation is still going on, but not a single criminal has been arrested. According to police, this murder has been committed for - Mugging, which is better
known as street robbery. So in the above circumstances, it is clear how risky life is for both domestic and foreign investors in Bangladesh.

?. &onclusion* $rom the whole research, it is clear that political instability has a ery ad erse impact on the in estment clima" of Bangladesh. #hings are getting out of control day by day as these things ha e become part and parcel of Bangladeshi politics. It is now the duty of the general people of Bangladesh to stand up and fight for our rights so that the o erall economic condition of the country becomes stable and there are perfect scopes and en ironment for honest in estors to in est and thus the general people can li e happily. 'e need to remo e corruption at first from our political system. If that happens, politics will automatically become stable. '. (e$erences i. ii. iii. i . . i. ii. Bangladesh (tatistics Bureau Bhttp*CCwww.bbs.go .bdC7ome.asp"D In estment 5orporation of Bangladesh Bhttp*CCwww.icb.go .bdC2inde".phpD Board of In estment Bhttp*CCwww.boi.go .bdD http*CCen.wi&ipedia.orgCwi&iC,conomyEofEBangladesh http*CCen.wi&ipedia.orgCwi&iC,conomyEofEBangladeshFIn estment http*CCwww.bhclondon.org.u&C#rade<E5ommerce.htm http*CCwww.google.comCurlG saHtIsourceHwebIcdH17I edH95,JK$jAL!AoIurlHhttpM4AM)$ M)$www.fdi.netM)$documentsM)$'orldBan&M)$databasesM)$unctad M)$in estmentguideM)$bangladesh.pdfIeiHi+ Iu#sLB$Je4rAfspf)pAwIusgHA$Kj5<$c4dhp('ej7721iuu#N6p'257: :AIsig)H;!97e7Jo"<(7=L)"N#c%Ag iii. i". ". "i. "ii. http*CCwww.consumercourt.inCproduct+ser icesC4994?+indian+businessman+ murdered+dha&a.html http*CCwww.tradingeconomics.comCbangladeshCgdp http*CCwww.gfmag.comCgdp+data+country+reportsC4)1+bangladesh+gdp+ country+report.htmlFa"221O9%ud89P http*CCCwww.tradingeconomics.com #he 'orld Ban&

).
6000 5000 4000 3000 2000 1000 0 1 2 3 4 5

*%%endix

FDI in $ Million Year

10 11

$igure 4* #otal $%I in Q 3illions since )991+)919 B(ource* In estment Implementation 3onitoring 5ell BII35D, Board of In estmentD

2020 2015 2010 2005 2000 1995 1990 1 2 3 4 5 6 7 8 9 10 FDI as % of Total Invest ment FDI as % of D! Year

$igure ;* $%I as M of total in estment and $%I as M of L%P from )991 to)919 (ource* Bangladesh (tatistics Bureau

GrossNational Investement per capita(in $)

700 600 500 400 300 200 100 0 2000 2002 2004 2006 2008 2010 2012 ross "ational Investement #er $a#ita%in $&

$igure ?* Lross national In estment per capita Bin QD since )991+)919 (ource* Bangladesh (tatistics Bureau

100%

100% ross Domesti$ !ro'($t ro)t* in % 100% Year

99%

10

$igure =* L%P growth rate in percentage since )991+)919 (ource* In estment 5orporation of Bangladesh 9

$igure 7* In estment #rade in (outh Asia in )99=+)999. B(ource* In estment Implementation 3onitoring 5ell BII35D, Board of In estmentD

$igure R* Bangladeshi L%P Bin Q BillionsD since 199R+)919 (ource* 'orld Ban&

19

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