Impact of FDI Inflows on Poverty Reduction in the ASEAN and SAARC Economies

Fayyaz Ahmad,Ilhan Ozturk,Muhammad Umar Draz,Abdul Rauf,Shahid Ali,Lijuan Su

doi:10.3390/su11092565

Abstract

The aim of this paper is to reinvestigate the impact of foreign direct investment (FDI) inflows on welfare or poverty reduction in the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) economies. We used FDI net inflows per capita and the United Nations Development Program’s Human Development Index (HDI) as the principal variables ranging from 1990 to 2014. Our analyses confirm the positive and strongly significant relationship between FDI net inflows and poverty reduction in Asia. However, it indicates significant differences between South Asia and Southeast Asia. Generally, we find that FDI has a greater impact on welfare in SAARC countries than in ASEAN countries. Our results hold true for both HDI and real gross domestic product (GDP), and are shown to be robust using both panel and pool model specifications.

Highlights

Being a comprehensive subject, sustainability is applicable to numerous sectors and genres
We explore two research questions: (1) Does foreign direct investment (FDI) reduce poverty in Southeast Asia and South Asia? (2) Does impact of FDI to reduce poverty differ in both regions? We consider two associations: the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC)
This paper aims to investigate the impact of FDI on welfare in Asia and explore the regional differences while focusing on South and Southeast Asia

Summary

Introduction

Sustainability is applicable to numerous sectors and genres. The origins of social sustainability are linked with significant mobilization of resources to developing nations. Various nations of the world have started focusing on sustainable development (SD) [2]. The very first SDG focuses on eradication and reduction of poverty; the achievement of this goal can provide the basis for sustainable development with the help of mobilization of resources from developed to developing economies. This practice can provide basic goods and services to one-third of the world population and help to generate profit for corporations. In this way, CSR can reduce poverty and promote sustainable development in developing countries [4]

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Conclusion