The Relationship between Foreign Direct Investment and Institutional Quality on Poverty (Case of MENA’S Countries)

Authors

1 Associate professor of Economics, University of Tabriz, Tabriz, Iran.

2 M.A. of Economics, University of Tabriz, Tabriz, Iran.

Abstract

The lack of capital is known to be one of the main causes of many countries’ entrapment in the vicious cycle of poverty and underdevelopment. In addition, the presence or absence of appropriate institutional quality has an impact on poverty rates in these countries. This paper examines the effects of foreign direct investment and institutional quality (rule of law) on reducing poverty. To this end, a random effect panel econometric technique is applied using MENA countries’ data for 2000–2009. The Human Development Index is used as an indicator of poverty reduction. The findings show that the foreign direct investment and the appropriate institutional quality have significant positive effects on reducing poverty and increasing welfare.

Keywords

References

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History

  • Receive Date: 25 May 2015
  • Revise Date: 15 August 2015
  • Accept Date: 25 January 2016

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