Abstract
This study aims to examine the impact of foreign direct investment (FDI), investment in construction and poverty in various countries. The Russian Federation invests heavily in construction and it is located both in Europe and Asia. Russia is usually described as a European country (while 70% of its territory is in Northern Asia, 80% of the population resides in Europe). That is why in this document both developed and emerging countries are considered; the former are represented by the EU members of different economic levels and the latter by BRICS countries. We looked at economically different countries to determine the best differentiated data in order to answer the question: “Why does a high level of poverty persist in Russia if Russian officials have repeatedly reaffirmed their commitment to the implementation of the Sustainable Development Goals (SDGs) by investing heavily in construction and attracting FDI?”. For the estimation, we used an autoregressive distributed lag (ARDL), considering cointegration and heteroscedasticity, in which the current values of the series depend both on the past values of this series and on the current and past values of other time series. Having received statistical data, we were able to compare the economic development of countries with some economic growth theories. 4–5% FDI share of the GDP helps to contain the negative impact of financial crises. Investment in construction supports the economies of countries in the long term and maintains or reduces the poverty level by increasing the assets of the population. Empirical data also helped us to evaluate the economic growth patterns and poverty in these seven countries. China and the Russian Federation will find themselves at different “poles”. China uses several theories and models simultaneously for economic development and poverty reduction and the Russian Federation does not keep to an established theory or a model of economic growth.
Highlights
We carried out the research in three stages: 1. An assessment of the dynamics of the variables over 2005–2020 and the factor countries (Denmark, Italy, Germany, Romania, China, India, Russian Federation); 2
We expanded the traditional indicators of the gross domestic product (GDP) and poverty by observing the inflow of foreign direct investment (FDI) and investment in construction (CONST)
We studied countries located on different continents and with different levels of poverty: four EU countries, Denmark, Italy, Germany, Romania, and China, India, and the Russian Federation from 2005 to 2020
Summary
Foreign direct investment (FDI) and investment in construction (CONST) are directly related to economic growth and poverty reduction in many countries. Financial crises impede the flow of FDI and reduce productive investment opportunities in construction. In the last 15 years (2005–2020), financial crises have become frequent, and the COVID-19 crisis was an economic shock. All countries change their economic behavior as a result of financial crises, so we need to take a closer look at the recent crises (2008, 2014, 2020)
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