Abstract
AbstractThis study investigates the causal relationship between poverty reduction and foreign direct investment (FDI) inflows in South Africa using time-series data from 1980 to 2014. The main objective of this study is to establish the direction of causality between FDI and poverty reduction, which is important to policy-makers as it identifies which variable to target first. Gross domestic product is included as an intermittent variable giving a trivariate framework. Employing the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and ECM-based causality tests, the results from this study reveal a distinct unidirectional causality from poverty reduction to FDI in both the short run and the long run when poverty reduction is measured by life expectancy and infant mortality rate. However, the study failed to find any causality, irrespective of the time considered, when poverty reduction is measured by household consumption expenditure. It can be concluded therefore, that the ca...
Highlights
The causal relationship between poverty reduction and foreign direct investment (FDI) has received little coverage in the literature with only a few studies having analysed the causal relationship between the two variables
The results suggest that there is no Granger-causality between FDI and poverty reduction in South Africa irrespective of the time considered, when household consumption expenditure is used as a poverty reduction measure
Gross Domestic Product was included as a third variable in the analysis to form a tri-variate Granger-causality test
Summary
The causal relationship between poverty reduction and foreign direct investment (FDI) has received little coverage in the literature with only a few studies having analysed the causal relationship between the two variables. The current study, aims to establish the causal relationship between FDI and poverty reduction in South Africa between 1980 and 2014 using the Granger-causality test. The study investigates the causal relationship between FDI and poverty reduction using three poverty reduction proxies, which are household consumption expenditure (Pov1), infant mortality rate (Pov2), and life expectancy (Pov3).
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
