Mercy T Magombeyi

FDI inflows and poverty reduction in Botswana: an empirical investigation

Abstract This study investigates the impact of foreign direct investment (FDI) inflows on poverty reduction in Botswana from 1980 to 2014. The main objective of this study is to establish whether FDI plays a positive role in poverty reduction. The study employs autoregressive distributed lag (ARDL) bounds test approach to co-integration and the error correction model to investigate the relationship. To ensure robustness, the study uses three poverty reduction proxies which are household consumption expenditure (Pov1), infant mortality rate (Pov2), and life expectancy (Pov3). The findings from this study revealed that FDI has a positive impact on poverty reduction in the short run and a negative impact in the long run when life expectancy is used as a poverty reduction measure. When infant mortality rate is used as a poverty reduction proxy, an insignificant relationship is registered in both the long run and the short run. A negative impact of FDI on poverty reduction is confirmed in the short run when household consumption expenditure is used as a poverty reduction proxy, while in the long run an insignificant relationship is reported. The study concludes that the impact of FDI on poverty reduction is sensitive to the poverty reduction proxy used.

Foreign Direct Investment And Poverty Reduction

Abstract This paper provides a detailed survey of the literature on the impact of foreign direct investment (FDI) on poverty reduction, outlining the theoretical and empirical relationship between these variables. Although a number of studies have been done on the impact of FDI on poverty reduction, the majority of these studies have focused on the indirect impact of FDI on poverty reduction. The bulk of the literature reviewed supports the positive effects of foreign direct investment on poverty reduction, although a few studies have also found foreign direct investment to have an adverse or insignificant effect on poverty reduction. This study differs fundamentally from previous studies in that it focuses on the direct impact of FDI on poverty reduction, giving a detailed review of the nature of this relationship.

Causal relationship between FDI and poverty reduction in South Africa

Abstract This study investigates the causal relationship between poverty reduction and foreign direct investment (FDI) inflows in South Africa using time-series data from 1980 to 2014. The main objective of this study is to establish the direction of causality between FDI and poverty reduction, which is important to policy-makers as it identifies which variable to target first. Gross domestic product is included as an intermittent variable giving a trivariate framework. Employing the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and ECM-based causality tests, the results from this study reveal a distinct unidirectional causality from poverty reduction to FDI in both the short run and the long run when poverty reduction is measured by life expectancy and infant mortality rate. However, the study failed to find any causality, irrespective of the time considered, when poverty reduction is measured by household consumption expenditure. It can be concluded therefore, that the causal relationship between FDI and poverty reduction is sensitive to the proxy used to measure the level of poverty reduction.

Poverty dynamics in Botswana: Policies, trends and challenges

Abstract This paper provides an overview of poverty dynamics in Botswana from 1980 to 2014. It highlights, poverty-alleviation policies that have been implemented, the trends in poverty as well as the challenges that have been faced in reducing poverty. The main objective of this article is to discuss the successes that have been achieved and the challenges that have been faced in Botswana on poverty alleviation, with the view that other countries facing poverty challenges can learn from the dynamics. Poverty-reduction policies implemented in Botswana are three-pronged. Firstly, there are policies that increase income and livelihood for the poor. Secondly, there are policies that support infrastructure development especially in basic service provision like health and education. Thirdly, there are policies that focus on short term relief—targeting the poor and the vulnerable through social welfare programmes. Despite all the policies that have been implemented, it can be concluded that Botswana (like many other developing countries) still faces a number of challenges related to poverty reduction.