Foreign Direct Investment, Social Factors & Poverty Reduction In West Africa (1980-2015)

Abstract

The study investigated the effect of Foreign Direct Investment (FDI) and social factors on poverty reduction and the joint effect of social factors and FDI on poverty reduction in West Africa, between 1980 and 2015. Ordinary Least Square (OLS), Mean Group estimator, Common Correlated Effects Mean Group estimator (CCEMGE), and Average correlation coefficients (ACC) methods were used for the analysis of the data collected. The results show that FDI reduced poverty in West Africa. These results were not statistically significant when OLS and CCEMGE methods were used, but it was significant when ACC method was used. We found that population that is working reduced poverty, while population not working promoted poverty level. This result was statistically significant under the non-working population. Life expectancy on its own failed to reduce poverty except on the average and when CCEMGEE method was used and the result was statistically significant. Our results also show that working population, and life expectancy rate enhanced the performance of FDI in reducing poverty in West Africa. The study suggested that improvement in social factors as well as provision of employment for the non working population in West African Countries will go a long way in reducing poverty level among the populace.

Keywords: Foreign Direct Investment, Social Factors, Poverty, West Africa