Effect of Foreign Direct Investment and Trade Openness on the Poverty Alleviation in Burundi – Sub African Country: ARDL (Co-integration) Approach

Abstract

International Trade and Foreign Direct Investment openness are crucial for economic growth and development. These are equally significant for developed and under-developed countries. The study’s major goal was to look at how foreign direct investment, inflation, GDP and trade openness affected the poverty alleviation in Sub-Saharan African Countries. A country where half of the population lives below the poverty. Annual data for the period 1990 to 2021 gathered from World Development Indicators database to investigate the long run & short run effects of the independent variables for the Sub-Saharan African countries by using Auto-regressive and Lag distributive (Co-integration) model. The findings revealed negative long run influence of foreign direct investment and GDP to poverty head count ratio. The shreds of Evidence also showed that FDI has not shown any distinctive effect on poverty in a shorter period. Moreover, GDP, trade openness and inflation are also effective in reducing poverty in short run. While inflation urges the investors to do more investment in production sector that reduces unemployment and poverty in the end. The study suggested the government officials, policymakers, and investors, to invest more in the poor countries. As FDI is crucial in creating jobs for the unemployed population that lead to the rise in income and living standard of the people. Moreover, the study suggested questioning some other factors causing poverty.