Foreign Direct Investment and the Poverty Reduction Nexus in Southeast Asia

Nathapornpan Piyaareekul Uttama ()
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Nathapornpan Piyaareekul Uttama: Mae Fah Luang University

Chapter Chapter 15 in Poverty Reduction Policies and Practices in Developing Asia, 2015, pp 281-298 from Springer

Abstract: Abstract This study attempts to empirically investigate the determinants of foreign direct investment (FDI) and related factors on Association of the Southeast Asian Nations’s (ASEAN) poverty reduction, and focuses on spatial quantitative empirical evidence available on the ASEAN region. The spatial specification model is constructed and estimated by using the spatial panel data modelSpatial panel data model technique. It is empirically estimated on the basis of a crucial assumption that the individual-country factors such as globalization factors, financial factors, political factors, and infrastructure factors and spatial FDI affect poverty reduction in ASEAN. Data at the country level for ASEAN-6 during the period 1995–2011 are collected from World Data Bank and International Country Risk Guide (ICRG). The analyses confirm the positive significant relationship between FDI inflows and poverty reduction in ASEAN in both individual and spatial aspects. Nevertheless, this relationship is significantly different between other factors and poverty reductionPoverty reduction in ASEAN. For instance, while the relationship remains positive and significant for GDP growth, openness, and foreign debt in ASEAN, it is significant negative for financial and infrastructure factors, and ambiguous for political factor. Our results are also robust to alternative model specifications. The study concludes that FDI is conducive to poverty reduction. It supports the notion that regional value chain enhancement on FDI flows is beneficial for this region. Providing a poverty model of spatial FDI to researchers, the study presents results that are beneficial to business sectors and policy makers who are related to the investment in ASEAN.

Keywords: Foreign direct investment; Poverty; ASEAN; Spatial panel data model (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:esichp:978-981-287-420-7_15

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DOI: 10.1007/978-981-287-420-7_15

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