Does foreign investment reduce poverty? Empirical evidence from Tanzania
Loading...
Authors
Magombeyi, Mercy T
Issue Date
2017-05
Type
Working Paper
Language
en
Keywords
Tanzania; Poverty Reduction; Foreign Direct Investment; Household Consumption Expenditure;Infant Mortality Rate;Life Expectancy
Alternative Title
Abstract
This paper investigates the direct impact of foreign direct investment (FDI) inflows on poverty reduction
in Tanzania between 1980 and 2014. The paper attempts to answer one critical question: Does FDI reduce
poverty in Tanzania? The study employs three poverty reduction proxies, namely, household consumption
expenditure (Pov1), infant mortality rate (Pov2), and life expectancy (Pov3). The three poverty reduction
proxies have been selected based on the need to capture poverty in its multidimensional nature. Using the
autoregressive distributed lag (ARDL) bounds testing approach, the study finds that FDI has a short-run
positive impact on poverty reduction when infant mortality rate is used as a proxy for poverty reduction.
However, when infant mortality rate and life expectancy are used as poverty reduction proxies, FDI has no
impact on poverty reduction. This applies irrespective of whether the analysis is conducted in the short run
or in the long run. The study, therefore, concludes that the impact of FDI on poverty reduction is sensitive
to the proxy used to measure the level of poverty reduction, and varies over time.
Description
Does foreign direct investment reduce poverty ?Empirical evidence from Tanzania