Impact of Foreign Direct Investment on Poverty Reduction and Economic Development
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Date
2023
Authors
Muturi, Diana
Journal Title
Journal ISSN
Volume Title
Publisher
IPRJB
Abstract
Purpose: The aim of the study was to investigate the
impact of foreign direct investment on poverty
reduction and economic development
Methodology: This study adopted a desk
methodology. A desk study research design is
commonly known as secondary data collection. This
is basically collecting data from existing resources
preferably because of its low cost advantage as
compared to a field research. Our current study looked
into already published studies and reports as the data
was easily accessed through online journals and
libraries.
Findings: The study revealed that FDI significantly
contributes to poverty reduction and economic
development. FDI is linked to higher economic growth
rates, driven by its infusion of capital, technology, and
market access. This influx of investment creates jobs
in host countries, particularly in labor-intensive
sectors, effectively reducing unemployment and
improving living standards. Additionally, FDI
promotes technology transfer and innovation,
enhancing the competitiveness of domestic industries.
Furthermore, FDI's positive spillover effects extend to
human capital development through skill training and
improved employability, leading to higher wages and
overall poverty reduction. These findings underscore
FDI's multifaceted role in fostering sustainable
economic growth and social progress.
Unique Contribution to Theory, Practice and
Policy: Dependency Theory and Resource-Based may
be used to anchor future studies on Foreign Direct
Investment. Investment Promotion Agencies should
establish effective investment promotion agencies to
attract quality FDI, offering incentives, streamlined
regulations, and investor support services. Stringent
environmental regulations should be enforced to
prevent FDI from causing negative environmental
externalities and promote sustainable development
practices.
Description
Article
Keywords
Foreign Direct Investment, Poverty Reduction, Economic Development
Citation
Muturi, D. (2023). Impact of Foreign Direct Investment on Poverty Reduction and Economic Development. Journal of Poverty, Investment and Development, 8(2), 80–89. https://doi.org/10.47604/jpid.2073