Investigating the Impact of Foreign Direct Investment on Poverty Reduction Efforts in Africa

Abstract

The study explored whether the complementarity between foreign direct investment(FDI) and natural resources availability led to poverty reduction in Southern and WesternAfrican nations using panel data analysis (fixed effects, random effects, pooled ordinaryleast squares (OLS) and dynamic generalised methods of moments (GMM) with dataspanning from 2002 to 2012. The objective emanates from the theoretical view that if thecountries that are receiving FDI have abundance of natural resources, a large number ofthe unemployed people are likely to get jobs, earn income and get out of poverty zone.Three measures of poverty were used in the current study, namely life expectancy atbirth, total (years), household consumption expenditure as a ratio of gross nationalproduct and mortality rate and infant (per 1 000 live births). Generally, all the four paneldata analysis methods produced similar finding: the interaction between FDI and naturalresources reduced poverty levels in African countries studied. Southern and WesternAfrican nations are therefore urged to implement FDI enhancement policies which attractforeign investors into the natural resources extraction sector if they want to sustainablyreduce poverty. Future studies should investigate other macroeconomic factors that mustbe available in the host country before FDI reduce poverty in all its forms.

Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

“…Beyond the thresholds, aid and remittances are complementary in contributing more to entrepreneurship development in African countries. This result is in line with the argument put forward by Nkusu and Sayek (2004), Ang (2010) and Tsaurai (2018). Their studies show that external finance during the present globalization era positively influences economic productivities and in most cases, they complement each other in promoting productive activities in emerging economies.…”

How responsive is the poverty to the foreign direct investment inflows in Nigeria? Evidence from linear and non-linear ARDL

“…Meaning that a unit appreciation in FDI inflows mitigates the poverty significantly, and this indicates the dynamic impact of the FDI towards growth, job opportunities and poverty reduction. The finding supports the empirical results of Dagume (2021), Tsaurai (2018), Fowowe and Shuaibu (2014) and Gohou and Soumare (2012). The error correction term shows the high speed of adjustment of at least 50% and significant in correcting the economy when there is a deviation from the equilibrium.…”

The Impact of Income Inequality, Renewable Energy Consumption, Non-Renewable Energy Consumption and Per Capita Income on Poverty: Evidence from BRICS Economies

“…The variables used in the study are measured as follows: different variables are used as measures of poverty in empirical studies. Headcount-based data for the poor (Omar and Inaba, 2020;Baloch et al, 2020;Kousar and Shabbir, 2021;Solarin, 2021;Ogbeide-Osaretin, 2021), income (Adekoya, 2018), infant mortality (Tsaurai, 2018;Magombeyi and Odhiambo, 2018;Khobai, 2021;Solarin, 2021), life expectancy (Magombeyi and Odhiambo, 2018;Tsaurai, 2018), multidimensional poverty index (Aziz et al, 2020;Osinubi and Olomola, 2020) and human development index (Nwani and Osuji, 2020) are used as proxy for poverty in some studies. Some other studies used per capita consumption expenditure as proxy for poverty due to the lack of data on poverty (Quartey, 2008;Odhiambo, 2009;Odhiambo, 2011;Nayasha, Gwenhure and Odhiambo, 2017;Sehrawat and Giri, 2018;Adeleye et al, 2020;Dada and Fanowopo, 2020;Garidzirai and Matiza, 2020).…”