FDI inflows and poverty reduction in Botswana: an empirical investigation

Figures & data

Table 1. Unit root test results

ADF-GLS Test					PP Test				PPU(root) Test
Variable	Stationarity of variable in levels		Stationarity of variable in first difference		Stationarity of variable in levels		Stationarity of variable in first difference		Stationarity of all variables in levels		Stationarity of all variables in first difference
	Without trend	With trend	Without trend	With trend	Without trend	With trend	Without trend	With trend	Without trend	With trend	Without trend	With trend
Pov1	0.3101	−1.6834	−3.3884***	−4.0486***	1.3915	−1.4722	−3.6249**	−3.986**	−3.4651	−3.8583	−5.5122**	−5.8573**
Pov2	−1.4923	−3.7760***	−2.5819**	^–	−5.4574**	−7.0294***	^–	^–	−3.5099	−3.4544	−5.6275**	−5.6766**
Pov3	−3.2170***	−4.0536***	–	–	−5.4574**	−7.0294***	–	–	−5.3438**	−6.4219**	–	–
FDI	−2.0556**	−3.5211**	–	–	−7.6039***	−3.5258*	–	–	−2.0697	−3.7092	−7.9948***	−7.8471***
HK	−5.0376***	−3.5367*	–	–	−5.0552***	−3.5268*	–	–	−3.7728	−3.6926	−6.6889***	−6.8612***
TOP	−1.3683	−1.4212	−5.8520***	−6.0774***	−1.6144	−0.8638	−5.7635***	−6.1730***	−2.2649	−2.9423	6.6783***	−7.0319***
CPI	−1.6320*	−3.0676*	–	–	8.9875***	1.0739	–	−4.2593**	−2.0121	−2.9262	6.1979***	−6.2723**
FTL	−0.6823	−1.9411	−2.9058***	−3.0126*	−0.6902	−1.5857	−2.9202*	−7.7360***	−3.2912	−3.9225	−5.9789***	−5.8747**

Note: *, **, and *** denote stationarity at 10%, 5%, and 1% significance levels, respectively.

Table 2. Co-integration results and critical values

Model	Independent variables	Function		F-statistic		Co-integration status
1	Pov1	F(FDI, HK, TOP, INF, FTL)		4.8086***		Co-integrated
2	Pov2	F(FDI, HK, TOP, INF, FTL)		3.6931*		Co-integrated
3	Pov3	F(FDI, HK, TOP, INF, FTL)		9.1131***		Co-integrated
Asymptotic Critical values (unrestricted intercept and no trend)
Pesaran et al. (2001, p. 300) critical values (Table CI(iii) Case III		10%		5%		1%
		I(0)	I(1)	I(0)	I(1)	I(0)	I(1)
		2.26	3.35	2.62	3.79	3.41	4.68

Note: *, **, and *** denote statistical significance at 10%, 5%, and 1% levels, respectively.

Table 3. Long-run and short-run coefficients: Models 1–3

Panel A: long-run coefficients (dependent variables)
Model	Model 1 (dependent variable is Pov 1)		Model 2 (dependent variable is Pov 2)		Model 3 (dependent variable is Pov 3)
Regressor	Coefficient	T-ratio	Coefficient	T-ratio	Coefficient	T-ratio
C	0.4415	−0.3030	11.2368**	2.6702	0.0591	0.3867
FDI	−0.0013	−0.6400	−0.0086	−1.1329	−0.5956*	1.8081
HK	0.0166	1.3571	−0.0646*	−1.8772	−0.0019	−1.6615
TOP	−0.3433	−0.9470	−0.3359	−0.0373	0.0089	1.5591
CPI	0.0232***	11.1035	−0.0114*	−1.9936	0.7067**	2.5184
FTL	−0.6164**	−2.8145	0.0227**	6.2546	0.0591	0.3867
Panel B: short-run results
	Coefficient	T-value	Coefficient	T-value	Coefficient	T-value
ΔPov1	0.6836***	5.0760	–	–	–	–
ΔPov1(1)	–	–	–	–	–	–
ΔPov1(2)	^–	–	–	–	–	–
ΔPov2	–	–	0.3980**	2.1637	–	–
ΔPov2(1)	–	–	–	–	–	–
ΔPov3	–	–	–	–	0.9654***	3.9538
ΔFDI	−0.0024***	−3.0389	−0.0018	−1.4208	−0.9681	−0.8302
ΔFDI(1)	–	–	0.8424	0.2656	0.2686**	2.4576
ΔFDI(2)	–	–	0.4416	0.1797	–	–
ΔHK	0.0095	1.4139	−0.0605*	−2.0254	0.1032	0.4843
ΔHK(1)	–	–	–	–	0.2662	1.2031
ΔHK(2)	–	–	–	–	–	–
ΔTOP	0.5139*	1.9795	0.1504	0.3171	−0.1382	−0.485 1
ΔTOP(1)	–	–	–	–	−0.7804**	−2.5135
ΔCPI	0.0132***	4.4621	−0.0057	−1.7009	0.6416**	2.3540
ΔCPI(1)	–	–	–	–	^–	^–
ΔCPI(2)	–	–	–	–	^–	^–
ΔFTL	0.0389	0.8688	0.0114*	2.0595	0.3909	1.5689
ΔFTL(1)	0.1015*	2.0513	–	–	–	–
ΔFTL(2)	–	–	–	–	–	–
ΔFTL(3)	–	–	–	–	–	–
ECM(−1)	−0.5715***	−5.0829	0.5016**	−2.2010	−0.0908***	−7.5954
	Model 1		Model 2		Model 3
R^2	0.7237		0.7139		0.9926
R-bar-squared	0.4474		0.5332		0.9869
F-statistic	3.2742		5.2669		226.4561
Prob (F-statistic)	0.012		0.001		0.000
DW statistic	1.8988		2.1987		1.8079
SE of regression	0.2748		0.1030		0.1030
Residual sum of squares	0.0748		0.2016		0.7558
Akaike info. criterion	31.6425		22.6729		174.1465
Schwartz Bayesian criterion	20.1706		13.1456		164.1086

Notes: *, **, and *** denote stationarity at 10%, 5%, and 1% significance levels, respectively; ∆ = first difference operator.

Table 4. Diagnostic test results: Models 1–3

LM test statistic	Diagnostic results
	Model 1	Model 2	Model 3
Serial correlation (CHSQ 1)	1.1546	1.454	0.262
	[0.283]	[0.228]	[0.609]
Functional form (CHSQ 1)	0.2763	0.884	10.263
	[0.599]	[0.664]	[0.001]
Normality (CHSQ 2)	0.4323	3.435	0.028
	[0.806]	[0.179]	[0.986]
Heteroscedasticity (CHSQ 1)	1.4447	0.563	0.125
	[0.229]	[0.453]	[0.724]

Figure 1. Plot of CUSUM and CUSUMSQ for Models 1–3.

Notes: Straight lines represent critical bounds at 5% level of significance.The CUSUM and CUSUMQ plots show that parameters in the models are stable at 5% bounds.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. doi:10.1002/(ISSN)1099-1255

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