Foreign Capital and Poverty Reduction in West Africa

This paper investigates the effect of foreign capital on poverty reduction. For our analysis, we used recent panel data for ten West African countries* for the period 2000 - 2014. Results of the empirical test of the simultaneous equation model indicate that foreign capital affects poverty through growth and inequality. The total effect on poverty reduction is negative when the inequality effect outweighs the growth effect. Thus, foreign capital inflows promotion policies should necessary account for receiving countries socioeconomics mutations.