Impact of Economic Growth Per Capita and Foreign Direct Investment on Income Inequality in Indonesia

Abstract

Income inequality is an important issue in Indonesia. Currently the income inequality in Indonesia is worse than in Thailand, Vietnam, Cambodia and Laos, although it is better than the Philippines and China. This study aimed to analyze the influence of economic growth per capita and foreign direct investment on income inequality in Indonesia.The study period was from 2007 to 2016. This study used a multiple linear regression. The results showed that economic growth per capita and foreign direct investmenthad positive influence onincome inequality. Therefore, the role of economic growth per capita and foreign direct investment will remain high in the future.

Regional Income Inequality in Indonesia: The Role of Public and Private Investment

“…Triyono et al (2021) did not find any effect of FDI on regional income inequality. Meanwhile, several other studies such as Halmos (2011), Figini and Görg (2011), Clark andHighfill (2011), Herzer et al (2014), Irma et al (2018), and Khan and Nawaz (2019), mentioned that FDI exacerbated income inequality. Basu and Guariglia (2007) mentioned that FDI increases income inequality and economic growth but reduces the agricultural sector's contribution to GDP.…”

Fdi, Income, and Environmental Pollution in Indonesia

“…Indonesia has experienced various development opportunities through the rise and development of its industrial sector based on FDI through various international organisations expanding to the country (Irma et al, 2018). This may include various organisations belonging to different sectors that started their operations in Indonesia that, as a result, impacted and facilitated the economic growth of the country in a positive manner.…”