The Relationship Between FDI, Poverty Reduction and Environmental Sustainability in Tunisia

Ezzeddine Zouari,Marwa Lazreg

doi:10.30560/jems.v1n1p114

Ezzeddine Zouari, Marwa Lazreg

Open Access

https://doi.org/10.30560/jems.v1n1p114

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Abstract

Our goal in this paper is the study of the impact of FDI on poverty and sustainable development in the case of Tunisia and during the study period from 1985 to 2015. In addition, we use the test unit root of cointegration test, the model error correction of FMOLS and Granger causality. In the case of Tunisia, we find that all variables are integrated of order 1. Thus, we can use the cointegration test. Indeed, the result of the null hypothesis test of no cointegration was rejected at the 5% threshold, which explains the presence of a cointegration relationship between FDI, sustainable development and poverty. Finally, we present and interpreted the results of the estimated FMOLS model and Granger causality test to study the contribution of FDI to the poverty reduction and sustainable development in Tunisia. We find that the LIDE variable measuring foreign direct investment has a significant negative impact on the GINI index. We notice the LCO2 variable that measures the CO2 emissions has a negative and significant impact on poverty as measured by the poverty gap at $ 1.91. We prove that direct foreign investments have a significant negative impact on CO2 emissions. We find that the LIDE variable measuring foreign direct investment has a significant negative impact on the GINI index. We notice the LCO2 variable that measures the CO2 emissions has a negative and significant impact on poverty as measured by the poverty gap at $ 1.91. We prove that direct foreign investments have a significant negative impact on CO2 emissions. We found that the LIDE variable measuring foreign direct investment has a significant negative impact on the GINI index. We notice the LCO2 variable that measures the CO2 emissions has a negative and significant impact on poverty as measured by the poverty gap at $ 1.91. We prove that direct foreign investments have a significant negative impact on CO2 emissions.

Highlights

Developing countries in Asia, Africa and Latin America consider increasing foreign direct investment (FDI) as a source of economic development, modernization, income growth, employment and reduction poverty
We find that the LIDE variable measuring foreign direct investment has a significant negative impact on the GINI index
Our goal in this paper is the study of the impact of FDI on poverty and sustainable development in the case of Tunisia and during the study period from 1985 to 2015

Summary

Introduction

Developing countries in Asia, Africa and Latin America consider increasing foreign direct investment (FDI) as a source of economic development, modernization, income growth, employment and reduction poverty. Given appropriate policies of the host country and a basic level of development, the potential benefits of FDI are job creation, acquisition of new technologies and knowledge, the development of human capital through training employees to new companies, contribution to international trade integration, creating a more competitive business environment and local business development / national, flow of ideas and global best practice standards promoting international competitiveness and increased tax revenues by FDI All these forms of benefits should contribute to economic growth and a higher employment growth, which is the most important / most effective tool to improve human welfare and poverty reduction in the developing countries. In the literature on the growth of FDI, empirical studies have so far shown mixed results on the positive contribution of FDI to economic growth (Balasubramanyam et al, 1996; Borensztein et al, 1998)

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