FDI, local Financial Markets, Employment and poverty alleviation
AbstractThis paper examines the indirect linkages among foreign direct investment (henceforth, FDI) and poverty reduction, where so far there are few studies attempted to analyze empirically these linkages. Yet I have a question: do we believe that FDI inflows are able to contribute to higher growth and employment in poor countries? I argue yes. Behavior of FDI says something fundamental. FDI inflows vary across international borders and condition by host country environment; therefore, FDI can contribute to higher growth and employment in poor countries but only under certain circumstances, “Roll out the red carpet for foreign investors and they will come”. Countries with better financial systems, healthy business environment and human development are able to attract more FDI and exploit it more efficiently. Empirical analysis using panel data of 62 countries, from 1996 to 2007, shows that FDI appears regular to be a key source of employment and has a favorable impact on economic growth of low-income countries if interacted with monetary and non monetary variables.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 29717.
Date of creation: 18 Mar 2010
Date of revision:
FDI; Financial market; Poverty; Employment.;
Other versions of this item:
- Abdel Aal Mahmoud, Ashraf, 2010. "FDI, local Financial Markets, employment and poverty alleviation," MPRA Paper 23608, University Library of Munich, Germany, revised Jul 2010.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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