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Is foreign direct investment good for the poor? New evidence from African countries

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  • Babajide Fowowe
  • Mohammed Shuaibu

Abstract

This paper conducts an empirical investigation of the relationship between foreign direct investment (FDI) inflows and poverty in selected African economies. Using system generalised method of moments, our findings showed that FDI inflows have significantly contributed to poverty reduction in African countries. Our results also showed that better institutional quality and human capital development are associated with reducing poverty. Furthermore, interacting FDI with financial development was found to significantly reduce poverty, thus providing support to the hypothesis that better functioning financial systems enhance the efficiency of FDI in reducing poverty. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Babajide Fowowe & Mohammed Shuaibu, 2014. "Is foreign direct investment good for the poor? New evidence from African countries," Economic Change and Restructuring, Springer, vol. 47(4), pages 321-339, November.
    • Handle: RePEc:kap:ecopln:v:47:y:2014:i:4:p:321-339
    DOI: 10.1007/s10644-014-9152-4
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    More about this item

    Keywords

    Poverty; Foreign direct investment; Africa; Panel data; System and difference GMM; C23; I32; O55; F21;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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