FDI, Local Financial Markets, Employment and Poverty Alleviation
37 Pages Posted: 13 Jul 2010 Last revised: 20 Oct 2014
Date Written: March 18, 2010
Abstract
This 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 important. FDI inflows vary across international borders and conditioned 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 regularly to be a key source of employment and has a favorable effect on economic growth of low income countries if interacted with monetary and nonmonetary variables.
Keywords: FDI, Financial Market, Poverty, Employment
JEL Classification: F23, F36, F43, E24, I32, O16
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Financial Dependence and Growth
By Raghuram G. Rajan and Luigi Zingales
-
Stock Markets, Banks, and Growth: Panel Evidence
By Thorsten Beck and Ross Levine
-
Stock Markets, Banks, and Growth: Panel Evidence
By Thorsten Beck and Ross Levine
-
Stock Markets, Banks, and Economic Growth
By Ross Levine and Sara Zervos
-
Financial Development and Economic Growth: Views and Agenda
By Ross Levine
-
Stock Markets, Banks, and Growth: Correlation or Causality
By Thorsten Beck and Ross Levine
-
By Thorsten Beck, Asli Demirgüç-kunt, ...
-
Finance, Firm Size, and Growth
By Thorsten Beck, Asli Demirgüç-kunt, ...
-
Finance, Firm Size, and Growth
By Thorsten Beck, Asli Demirgüç-kunt, ...
-
Financial Intermediation and Growth: Causality and Causes
By Ross Levine, Norman Loayza, ...