Does foreign direct investment reduce poverty? The case of Latin America in the twenty-first century

Over the last decades, foreign direct investment flows to Latin America have grown dramatically. Yet, there is no consensus on whether the region has actually benefited from such trend or not. Specifically, regarding the expected positive effect of foreign direct investment on poverty reduction, emp...

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Published inBusiness and economic horizons Vol. 14; no. 3; pp. 488 - 500
Main Authors Quiñonez, Pablo, Sáenz, Joselin, Solorzano, Jessica
Format Journal Article
LanguageEnglish
Published Prague Prague Development Center 01.01.2018
Subjects
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ISSN1804-5006
1804-1205
1804-5006
DOI10.15208/beh.2018.35

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Abstract Over the last decades, foreign direct investment flows to Latin America have grown dramatically. Yet, there is no consensus on whether the region has actually benefited from such trend or not. Specifically, regarding the expected positive effect of foreign direct investment on poverty reduction, empirical evidence is scant and ambiguous. In this context, this paper examines the effect of foreign direct investment on Latin America’s poverty incidence. For doing so, a panel data analysis was conducted, considering 13 economies from the region during the 2000-2014 period. We found that FDI is not significantly associated with the reduction of poverty in Latin America, in contrast with macroeconomic stability, infrastructure, human capital development and financial development which are significantly associated with the reduction of poverty in the region.
AbstractList Over the last decades, foreign direct investment flows to Latin America have grown dramatically. Yet, there is no consensus on whether the region has actually benefited from such trend or not. Specifically, regarding the expected positive effect of foreign direct investment on poverty reduction, empirical evidence is scant and ambiguous. In this context, this paper examines the effect of foreign direct investment on Latin America’s poverty incidence. For doing so, a panel data analysis was conducted, considering 13 economies from the region during the 2000-2014 period. We found that FDI is not significantly associated with the reduction of poverty in Latin America, in contrast with macroeconomic stability, infrastructure, human capital development and financial development which are significantly associated with the reduction of poverty in the region.
Author Sáenz, Joselin
Quiñonez, Pablo
Solorzano, Jessica
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Snippet Over the last decades, foreign direct investment flows to Latin America have grown dramatically. Yet, there is no consensus on whether the region has actually...
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SubjectTerms Economic models
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Foreign investment
Poverty
Title Does foreign direct investment reduce poverty? The case of Latin America in the twenty-first century
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