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Foreign Direct Investment and the Poverty Reduction Nexus in Southeast Asia

In: Poverty Reduction Policies and Practices in Developing Asia

Author

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  • Nathapornpan Piyaareekul Uttama

    (Mae Fah Luang University)

Abstract

This study attempts to empirically investigate the determinants of foreign direct investment (FDI) and related factors on Association of the Southeast Asian Nations’s (ASEAN) poverty reduction, and focuses on spatial quantitative empirical evidence available on the ASEAN region. The spatial specification model is constructed and estimated by using the spatial panel data modelSpatial panel data model technique. It is empirically estimated on the basis of a crucial assumption that the individual-country factors such as globalization factors, financial factors, political factors, and infrastructure factors and spatial FDI affect poverty reduction in ASEAN. Data at the country level for ASEAN-6 during the period 1995–2011 are collected from World Data Bank and International Country Risk Guide (ICRG). The analyses confirm the positive significant relationship between FDI inflows and poverty reduction in ASEAN in both individual and spatial aspects. Nevertheless, this relationship is significantly different between other factors and poverty reductionPoverty reduction in ASEAN. For instance, while the relationship remains positive and significant for GDP growth, openness, and foreign debt in ASEAN, it is significant negative for financial and infrastructure factors, and ambiguous for political factor. Our results are also robust to alternative model specifications. The study concludes that FDI is conducive to poverty reduction. It supports the notion that regional value chain enhancement on FDI flows is beneficial for this region. Providing a poverty model of spatial FDI to researchers, the study presents results that are beneficial to business sectors and policy makers who are related to the investment in ASEAN.

Suggested Citation

  • Nathapornpan Piyaareekul Uttama, 2015. "Foreign Direct Investment and the Poverty Reduction Nexus in Southeast Asia," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Almas Heshmati & Esfandiar Maasoumi & Guanghua Wan (ed.), Poverty Reduction Policies and Practices in Developing Asia, edition 127, chapter 0, pages 281-298, Springer.
    • Handle: RePEc:spr:esichp:978-981-287-420-7_15
    DOI: 10.1007/978-981-287-420-7_15
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    Citations

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    Cited by:

    1. Arogundade, Sodiq, 2021. "Be Nice to thy Neighbours: Spatial impact of Foreign Direct Investment on Poverty in Africa," MPRA Paper 111789, University Library of Munich, Germany.
    2. Shastri, Shruti & Giri, A.K. & Mohapatra, Geetilaxmi, 2022. "Foreign capital inflows and poverty linkages in South Asia: Do the forms of capital inflows matter?," Economic Systems, Elsevier, vol. 46(3).
    3. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    4. Mehmed Ganić, 2019. "Does Foreign Direct Investment (FDI) Contribute to Poverty Reduction? Empirical Evidence from Central European and Western Balkan Countries," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(1), pages 15-27, March.
    5. 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.
    6. 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.
    7. 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.
    8. Polyxeni Kechagia & Theodore Metaxas, 2022. "FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation," Economies, MDPI, vol. 10(4), pages 1-23, March.
    9. Eduardo Polloni‐Silva & Herick Fernando Moralles & Daisy Aparecida do Nascimento Rebelatto & Dominik Hartmann, 2021. "Are foreign companies a blessing or a curse for local development in Brazil? It depends on the home country and host region's institutions," Growth and Change, Wiley Blackwell, vol. 52(2), pages 933-962, June.
    10. Emeka Nkoro & Aham Kelvin Uko, 2023. "Foreign Direct Investment in the Quest for Poverty Reduction in Nigeria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 109-125.
    11. Hummera Saleem & Malik Shahzad Shabbir & Syed Ali Raza Shah & Jalal Shah, 2021. "Nexus between Foreign Direct Investment and Poverty Reduction: A case of Pakistans," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(3), pages 272-280, December.
    12. Aurora A. C. Teixeira & Ana Sofia Loureiro, 2019. "FDI, income inequality and poverty: a time series analysis of Portugal, 1973–2016," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 18(3), pages 203-249, October.
    13. Temilola Osinubi, Tolulope, 2020. "The Role Of Income Inequality In The Globalisation-Poverty Nexus: Empirical Evidence From Mint Countries," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 7(2), pages 67-89, June.
    14. Scott Hipsher, 2017. "Poverty Reduction, Wealth Creation, and Tourism in Ethnic Minority Communities in Mainland Southeast Asia," International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility (IJSECSR), IGI Global, vol. 2(1), pages 39-53, January.
    15. Taiwo Akinlo & James Temitope Dada, 2021. "The moderating effect of foreign direct investment on environmental degradation-poverty reduction nexus: evidence from sub-Saharan African countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 15764-15784, November.
    16. Fayyaz Ahmad & Muhammad Umar Draz & Lijuan Su & Ilhan Ozturk & Abdul Rauf & Shahid Ali, 2019. "Impact of FDI Inflows on Poverty Reduction in the ASEAN and SAARC Economies," Sustainability, MDPI, vol. 11(9), pages 1-24, May.
    17. McLean, Sheldon & Metzgen, Ydahlia & Singh, Ranjit & Skerrette, Nyasha, 2018. "Economic impact of de-risking on the Caribbean: Case studies of Antigua and Barbuda, Belize and Saint Kitts and Nevis," Studies and Perspectives – ECLAC Subregional Headquarters for The Caribbean 43310, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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