— Capital scarcity is known to be one of the main causes of many countries’ entrapment in vicious cycle of poverty and underdevelopment. In addition, the existence of appropriate institutional quality has an impact on the poverty rates in these countries. This paper examines the effects of foreign direct investment and institutional quality (rule of law) on reducing poverty. To do so, 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 appropriate institutional quality have significant positive effects on reducing poverty and increasing welfare.
— Poverty, foreign direct investment, institutional quality, human development index.
Ahmad Assadzadeh is with the Faculty of Economics, University of Tabriz, Tabriz, Iran (e-mail: Assadzadeh@gmail.com).
Javad Pourqoly is with Tabriz Business Training Center and a consultant in East Azerbaijan Industry, Mine and Trade Organization.
Cite: Ahmad Assadzadeh and Javad Pourqoly, " The Relationship between Foreign Direct Investment, Institutional Quality and Poverty: Case of MENA Countries," Journal of Economics, Business and Management vol. 1, no. 2, pp. 161-165, 2013.