Nexus between Foreign Direct Investment and Poverty Reduction: A case of Pakistan

Abstract

The key objective of this paper is to examine the direct and causal association between foreign direct investment (FDI) and the reduction of poverty in Pakistan. Poverty reduction is the fundamental task and issue for developing economies like Pakistan. This study uses annual data set from 1987 to 2018 and implies the ARDL method for data analysis. The data has been taken from economic surveys of the Federal statistics house (FSH) of Pakistan. The finding shows the bidirectional causality between poverty and FDI. The outcome of this study also reveals that the causal effects of FDI on reducing poverty are stronger than poverty reduction effects on FDI.