Foreign Direct Investment and Income Inequality revisited

Hemmer, Hans-Rimbert; Krüger, Ralf; Seith, Jennifer

doi:10.1007/978-3-322-82092-1_7

Cited by 2 publications

(1 citation statement)

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“…Aside from Milanovic (2002), there are many other later studies that have found similar results. In the study on the relationship between FDI and income inequality, Hemmer et al (2005) did not find any evidence that FDI affects inequality at the general level or has a significant impact on income distribution. Using data on 29 developing countries for the period 1970-1989, Sylwester (2005 also found no evidence of the distributional effect of FDI on income inequality.…”

Section: Literature Reviewmentioning

confidence: 84%

The Impact of Foreign Direct Investment on Income Inequality in Vietnam

et al. 2021

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Foreign direct investments (FDI) is an important determinant of economic growth. FDI does not only contribute to the growth and economic development but also affects income through contributing to economic development and the impact on employment and salary structure of developing countries. The aim of this paper is to analyze the impact of FDI on income inequality in Vietnam. This study is the first attempt to examine the impact of FDI on income inequality under the constraints of the institution and education levels. To address the potential endogeneity problem, this study adopts Genernalized Method of Moment (GMM) model to conduct the estimation. A two-step GMM model with robust standard errors is used in the study. Empirical results show that FDI tends to increase income inequality in Vietnam and the existence of a non-linearity relationship between FDI and income inequality is also validated. Moreover, the study finds that the effects of FDI on income inequality are different depending on the level of education and institutions of the host provinces in Vietnam. The results of this study imply that, in order to ensure sustainable development, Vietnam’s policies should focus on improving the quality of economic governance and the administrative reform efforts of the government of the provinces and cities. Besides, policies should focus on increasing investment in public education and improving human capital, which not only can reduce income inequality but also can attract more FDI inflows.

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Section: Literature Reviewmentioning

confidence: 84%

The Impact of Foreign Direct Investment on Income Inequality in Vietnam

et al. 2021

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FDI-related meritocratic elite and income inequality in post-communist EU countries

Supic,

Josifidis,

Bodor

2024

IJOEM

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PurposeThe aim of this paper is to shed more light on the foreign direct investment (FDI) - income inequality nexus in the post-communist EU countries. Special attention is paid to the emergence of a new meritocratic elite related to foreign capital that tends to replace the old elite inherited from the transition period at the top end of the income distribution.Design/methodology/approachThe macroeconomic model of the relationship between income inequality and FDI is estimated by using the generalized method of moments (GMM) technique. The sample includes 10 post-communist EU member states during the period 1993 to 2020.FindingsThe results suggest that the concentration of the highest level of human capital in foreign-owned enterprises, in the institutional environment under which foreign-owned enterprises are less numerous and pay a higher wage than domestic ones, contributes to the change of the effect of FDI and human capital on income distribution from an initial decrease to a later increase in income inequality.Originality/valueThis paper adds to the existing literature by exploring the distributive impacts of sectoral reallocation of FDI inflows from manufacturing to service sectors from the perspective of heterodox economics. It specifically examines how this shift has facilitated the emergence of a new meritocratic elite associated with foreign capital, which in turn diminishes the overall anti-inequality effect of FDI in the post-communist new EU countries.

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Foreign Direct Investment and Income Inequality revisited

Cited by 2 publications

References 10 publications

The Impact of Foreign Direct Investment on Income Inequality in Vietnam

The Impact of Foreign Direct Investment on Income Inequality in Vietnam

FDI-related meritocratic elite and income inequality in post-communist EU countries

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