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Fdi And Poverty Reduction: A Critical Reappraisal Of The Arguments

Author

Listed:
  • Andrew MOLD

    (Trade and Regional Integration Division, Economic Commission for Africa, Addis Ababa)

Abstract

Over the last two decades, enormous efforts have been made by developing countries to attract Foreign Direct Investment (FDI). It is commonly agreed upon that, by accelerating economic growth, FDI is a determining feature in poverty reduction. This paper argues that this view needs to be qualified by considering the stylistic facts and existing empirical evidence on the contribution of FDI to growth and poverty reduction. Echoing work by trade economists on the impact of trade on poverty reduction, a simplified framework is suggested which breaks down the influence of FDI into its "growth enhancing" and "distributional" effects. Contrary to the (now) conventional wisdom, little evidence is found that FDI is a major instrument for poverty reduction.

Suggested Citation

  • Andrew MOLD, 2004. "Fdi And Poverty Reduction: A Critical Reappraisal Of The Arguments," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 20, pages 91-122.
  • Handle: RePEc:tou:journl:v:20:y:2004:p:91-122
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    File URL: http://region-developpement.univ-tln.fr/fr/pdf/R20/R20_Mold.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andrew Mold and Annalisa Prizzon, 2010. "Fragile States, Commodity Booms And Export Performance: An Analysis Of The Sub-Saharan African Case," RSCAS Working Papers 2010/21, European University Institute.
    2. McLaren, John & Yoo, Myunghwan, 2017. "FDI and inequality in Vietnam: An approach with census data," Journal of Asian Economics, Elsevier, vol. 48(C), pages 134-147.
    3. Marinela GEAMANU & Lavinia Stefania TOTAN & Barbu Bogdan POPESCU, 2014. "The impact of FDI on economic growth in Romania and EU countries during the current economic crisis," Romanian Statistical Review, Romanian Statistical Review, vol. 62(1), pages 35-43, March.
    4. Gheorghe Zaman, 2012. "Ways Of Improving Foreign Direct Investment (Fdi) Contribution To Romania‘S Sustainable Development," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(14), pages 1-30.
    5. Léonce Ndikumana & Sher Verick, 2007. "The Linkages between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment," UMASS Amherst Economics Working Papers 2007-13, University of Massachusetts Amherst, Department of Economics.
    6. Léonce Ndikumana & Sher Verick, 2008. "The Linkages Between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub-Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 26(6), pages 713-726, November.

    More about this item

    Keywords

    FOREIGN DIRECT INVESTMENT; POVERTY REDUCTION; LEAST DEVELOPED COUNTRIES; MULTINATIONALS;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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