Research On The Threshold Effect Of FDI On Poverty Alleviation

Poverty is one of the social problems that many countries need to solve urgently.It has a major impact on the economic development and social stability of a country.Poverty remains a problem in the economic development of our country.With the continuous development of global integration,FDI plays an increasingly important role in global economic growth and development.China has become the world’s largest FDI inflow country.Whether FDI inflow plays a vital role in poverty reduction while promoting China’s economic growth,and what role does finance play as the core of modern economy,have important theoretical and practical significance for the study of this issue.Based on the theme of FDI’s impact on poverty reduction,this paper studies the role of financial development in FDI poverty reduction from both theoretical and empirical perspectives.Firstly,this paper combs the relevant literature at home and abroad,uses poverty theory and FDI theory to analyze the mechanism of FDI affecting poverty reduction,and further explores how financial development affects the poverty reduction effect of FDI.On the basis of theoretical analysis,based on panel data of 31 provinces and cities in China from 2001 to 2015,this paper uses the fixed-effect panel threshold model to conduct empirical research,and analyze the impact of FDI on poverty reduction under different financial development levels.Secondly,considering that there are regional imbalances in FDI inflow,poverty distribution and financial development level in China,this paper divides 31 provinces and cities into eastern,central and Western regions.The empirical research results show that:(1)For the country,under different financial development levels,the impact of FDI on poverty reduction is different,and there is a double threshold effect.When the level of financial development is low,FDI is positive for poverty reduction;when the level of financial development is high,FDI is negatively correlated with poverty reduction.(2)This kind of non-linear relationship has different manifestations in different regions.The threshold value in the east is higher than that in the middle,and there is no threshold effect in the west;the effect of western FDI on poverty reduction is higher than that of the eastern and central regions.(3)When the level of financial development is low and high in the eastern region,FDI is positive to poverty reduction;when the level of financial development is low in the central region,FDI is positive to poverty reduction;when the level of financial development is high in the central region,FDI is negatively correlated with poverty reduction.Finally,based on the results of this study,some policy suggestions are put forward,such as formulating a reasonable investment policy,speeding up the reform of financial market,building a multi-level financial market system,and implementing poverty reduction through education in an all-round way.