Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?

Abstract

This paper investigates the threshold effect of environmental degradation on the FDI-poverty nexus in sub-Saharan Africa for the period 1986–2018. The study used panel threshold regression for the empirical analysis. The evidence from threshold regression using different measures of poverty and environmental degradation shows that the poverty reduction effect of FDI is not eroded by environmental degradation. The study found overwhelming evidence that at the higher level of environmental degradation, FDI contributes significantly to poverty reduction except when Household final consumption is used to proxy poverty and FDI produces an insignificant effect on poverty reduction at the higher level of methane emissions and nitrous oxide emission. Based on this finding, any attempts to reduce environmental degradation by reducing the inflow of FDI will worsen poverty rates in the region.

Financial development–ecological footprint nexus in Malaysia: the role of institutions

“…Equally, the positive effect of trade openness suggests that Malaysia does not benefit from the scale, technique, and composition effects of international trade. The positive effect of trade openness on EFP aligns with the submissions of Al-Mulali et al (2015), Le et al (2016) and Dada and Akinlo (2021) who conclude that trade openness spurs environmental degradation. Nevertheless, studies by Chen et al (2018), Fakher (2019) and Dada et al (2021a, b) found that trade openness improves environmental quality.…”

“…These mixed results generated criticisms that the EKC framework failed to consider other structural, institutional, and macroeconomic variables that tend to influence the environment. Furthermore, recent studies have incorporated structural, institutional, and macroeconomic variables in testing the EKC hypothesis using CO 2 emission, nitrogen dioxide (NO2), sulphur dioxide, industrial waste, water pollution, threatened species, and deforestation to measure environmental degradation (Kubicova, 2014; Opoku and Boachie, 2020; Dada and Ajide, 2021; Akinlo and Dada, 2021; Dada and Akinlo, 2021). Nevertheless, these proxies only capture part of the environmental pollution; that is they do not represent the entire human activities on the environment.…”

Shadow Economy and Environmental Pollution in West African Countries: The Role of Institutions

“…Methane emissions (kt of CO 2 equivalent) and Nitrous emissions (thousand metric tons of CO 2 equivalent) are used for the robustness check. Studies such as Dada and Akinlo (2021); Akinlo and Dada (2021), Opoku and Boachie (2020), Kubicova (2014), among others have used these proxies due to their contribution to greenhouse gases that result in global warming (Intergovernmental Panel on Climate Change, 2014). The results obtained using Methane emissions and Nitrous emissions are reported in Tables 6 and 7.…”

Does foreign direct investment affect poverty in BRICS?

“…Five groups emerge on this front. First, FDI alleviates poverty (Algan et al, 2021;Jalilian & Weiss, 2002;Topalli Asian Economic and Financial Review et al, 2021;Ucal, 2014); second, FDI exacerbates poverty (Bornschier & Chase-Dunn, 1985); third, there is no relationship between the two variables (Arogundade et al, 2022;Chinyere, Christian, Ogbonna, & Igwe, 2021;Dhingra & Jain, 2021;Magombeyi & Odhiambo, 2017a); fourth, a bi-directional causality exists between FDI and poverty reduction (Arogundade et al, 2022); and fifth, FDI triggers the reduction of poverty only under certain conditions (absorption capacities) in the host nation (Arogundade et al, 2022;Dada & Akinlo, 2021;Fauzel, Seetanah, & Sannassee, 2016;Hanim, 2021;Quinonez, Saenz, & Solorzano, 2018). These mixed results, divergent views and conflicting findings motivated this investigation of FDI-led poverty alleviation to contribute to the existing literature.…”