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FDI inflows and poverty reduction in Botswana: an empirical investigation

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  • M. T. Magombeyi
  • N. M. Odhiambo

Abstract

This study investigates the impact of foreign direct investment (FDI) inflows on poverty reduction in Botswana from 1980 to 2014. The main objective of this study is to establish whether FDI plays a positive role in poverty reduction. The study employs autoregressive distributed lag (ARDL) bounds test approach to co-integration and the error correction model to investigate the relationship. To ensure robustness, the study uses three poverty reduction proxies which are household consumption expenditure (Pov1), infant mortality rate (Pov2), and life expectancy (Pov3). The findings from this study revealed that FDI has a positive impact on poverty reduction in the short run and a negative impact in the long run when life expectancy is used as a poverty reduction measure. When infant mortality rate is used as a poverty reduction proxy, an insignificant relationship is registered in both the long run and the short run. A negative impact of FDI on poverty reduction is confirmed in the short run when household consumption expenditure is used as a poverty reduction proxy, while in the long run an insignificant relationship is reported. The study concludes that the impact of FDI on poverty reduction is sensitive to the poverty reduction proxy used.

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  • M. T. Magombeyi & N. M. Odhiambo, 2018. "FDI inflows and poverty reduction in Botswana: an empirical investigation," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1480302-148, January.
    • Handle: RePEc:taf:oaefxx:v:6:y:2018:i:1:p:1480302
    DOI: 10.1080/23322039.2018.1480302
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    1. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    2. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    3. Linus Nyiwul & Niraj P. Koirala, 2022. "Role of foreign direct investments in agriculture, forestry and fishing in developing countries," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
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    5. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    6. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    7. Dhahri, Sabrine & Omri, Anis, 2020. "Foreign capital towards SDGs 1 & 2—Ending Poverty and hunger: The role of agricultural production," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 208-221.
    8. Ehouma Jacques Allou & Bosede Ngozi Adeleye & Jianhua Cheng & Rehman Abdul, 2020. "Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure," African Development Review, African Development Bank, vol. 32(3), pages 499-510, September.
    9. Clement Olalekan Olaniyi & James Temitope Dada & Nicholas Mbaya Odhiambo & Xuan Vinh Vo, 2023. "Modelling asymmetric structure in the finance-poverty nexus: empirical insights from an emerging market economy," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 453-487, February.
    10. AIGHEYISI Oziengbe Scott & OLIGBI O. Blessing, 2019. "Trade Openness, Foreign Direct Investment And Life Expectancy In Nigeria," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 351-365, December.
    11. Stéphane Mbiankeu Nguea & Issidor Noumba & Armand Gilbert Noula, 2020. "Does Foreign Direct Investment Contribute to Poverty Reduction in Cameroon? An ARDL-Bounds Testing Approach," Working Papers halshs-02570072, HAL.
    12. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    13. Muhirwa, Fabien & Shen, Lei & Elshkaki, Ayman & Hirwa, Hubert & Umuziranenge, Gloriose & Velempini, Kgosietsile, 2023. "Linking large extractive industries to sustainable development of rural communities at mining sites in Africa: Challenges and pathways," Resources Policy, Elsevier, vol. 81(C).
    14. Furqan Sikandar & Vasilii Erokhin & Hongshu Wang & Shafiqur Rehman & Anna Ivolga, 2021. "The Impact of Foreign Capital Inflows on Agriculture Development and Poverty Reduction: Panel Data Analysis for Developing Countries," Sustainability, MDPI, vol. 13(6), pages 1-22, March.
    15. MT Musakwa & N.M. Odhiambo, 2021. "The Impact of Foreign Capital Inflows on Poverty in Vietnam: An Empirical Investigation," Working Papers AESRI-2021-10, African Economic and Social Research Institute (AESRI), revised Oct 2021.
    16. Sabrine Dhahri & Anis Omri, 2020. "Are international capital flows really matter for achieving SDGs 1 and 2: ending poverty and hunger?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 731-767, November.
    17. Kunofiwa Tsaurai & Bester Chimbo, 2020. "Technology, Poverty, and Education within the BRICS’ Context," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 471-487.
    18. Kunofiwa TSAURAI, 2018. "Investigating The Impact Of Foreign Direct Investment On Poverty Reduction Efforts In Africa," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 27(2), pages 139-154.

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