Impact of Cumilla Export Processing Zone on Bangladesh’s Export and Foreign Direct Investment: An Econometric Analysis

An export processing zone is a demarcated region inside a nation that is established to encourage and streamline export-driven industry. Increased export along with improved level of foreign direct investment (FDI) and employment generation are the key determinants of success of Export Processing Zones (EPZs) of a nation. This paper tries to explore the effects of Cumilla Export-Oriented Zone (EPZ) in Bangladesh over the period 2001 to 2022 using secondary data from different sources. This study focuses on the EPZ’s employment, investment, and export conditions utilizing bar diagrams, and its percentage contribution to export and foreign direct investment. Furthermore, this paper explores the relationship between the FDI in EPZs and employment of Cumilla EPZ. Auto Regressive Distributed Lag (ARDL) bound test is performed in this analysis. The findings of this paper show that there is significant negative relationship between FDI in EPZs and employment of Cumilla EPZ in the short run. But in the long run, there is significant positive relationship between FDI in EPZs and employment of Cumilla EPZ. This paper recommends promoting diverse investing, implementing advanced technologies, reducing raw material price and energy price volatility.