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Foreign Direct Investment and Poverty

The project tested the effects of Foreign Direct Investment (FDI) on poverty in two different ways in a number of countries in East Asia and Sub-Saharan Africa. First, we identified effects on the demand for skilled and unskilled labour, hence the potential direct effect on reducing poverty. Second, we examined the effect on relative wages of skilled and unskilled labour - such effects on wage inequality may have indirect implications for poverty. We have investigated the effects of foreign ownership on individual earnings by skill level in a number of Sub-Saharan African (SSA) countries.

The research will contribute to an understanding of the link between foreign direct investment (FDI), wages, employment and poverty in developing countries. This will help to formulate sound policies and illuminate strategies for pro-poor growth. This study can make an important contribution to understanding how developing countries are likely to be affected by increasing FDI in the future, informing the policy debate on how they should respond to foreign investment More broadly, this contributes to our understanding of the links between globalisation and poverty - how can FDI be managed to ensure that it contributes to poverty-reducing growth strategies?


Oliver Morrissey, Dirk Willem te Velde