Book Description

Foreign direct investment (FDI) has been identified as an important factor in stimulating economic growth and decreasing poverty. In particular, the relationship between FDI and economic growth has been extensively debated in the academic literature but with mixed results. Meanwhile, considerably less work has been done towards investigating the effects of FDI on poverty reduction. Evidence from the limited research linking on FDI and poverty levels is also mixed. Through a more comprehensive survey-based multi-scale method of assessing poverty, this empirical study investigates the contribution of FDI with respect to concurrent quantitative and qualitative assessment of changes in living standards and poverty reduction in Colombia, a country with one of the highest poverty rates in South America. Results indicate that FDI is perceived as a positive contributor to the wellbeing of employees working at foreign firms, and that FDI is generally beneficial to the economic development of Colombia. Interestingly, those who reported higher scores regarding perceptions of FDI’s contribution to their wellbeing also feel satisfied with their income. Eight percent of households surveyed in 2013 are classified as poor, who are deprived in 37% of the weighted indicators of the Multidimensional Poverty Index (MPI) Colombia assessment as developed by the National Planning Department of the Government of Colombia. The deprivation scores among employees at foreign firms are affected significantly by the number of years of education, household size and age.