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The role of digitalization in the FDI – income inequality relationship in developed and developing countries

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  • Van Bon Nguyen

Abstract

Purpose - The study aims to use individuals using the internet and fixed broadband subscriptions as a proxy for digitalization to empirically assess the effects of Foreign Direct Investment (FDI), digitalization and their interaction on income inequality in developed and developing countries from 2002 to 2019. Design/methodology/approach - The paper used the system general method of moments estimators for 30 developed and 35 developing countries. Findings - FDI increases income inequality in developed countries but decreases it in developing countries, digitalization reduces income inequality in both groups and interaction term narrows income inequality in developed countries but widens it in developing countries. Originality/value - The paper is the first to introduce digitalization into the FDI – income inequality relationship. Furthermore, it provides empirical evidence to show the difference in the role of digitalization in this relationship between developed and developing countries.

Suggested Citation

  • Van Bon Nguyen, 2023. "The role of digitalization in the FDI – income inequality relationship in developed and developing countries," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 28(55), pages 6-26, April.
    • Handle: RePEc:eme:jefasp:jefas-09-2021-0189
    DOI: 10.1108/JEFAS-09-2021-0189
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    Citations

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    Cited by:

    1. Bon Van Nguyen & Tuong My Cat Vu & Thao Thi Thanh Nguyen & Nhi Buu Duong & Khoa Ngoc Anh Pham & Toa Trieu Kim Le, 2025. "Does foreign aid reduce income inequality in developing countries?," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 15(1), pages 70-80.
    2. Yulong Jie & Shuigen Hu & Siling Zhu & Lieen Weng, 2024. "How Digitalization and Its Context Affect the Urban–Rural Income Gap: A Configurational Analysis Based on 274 Prefecture-Level Administrative Regions in China," Land, MDPI, vol. 13(12), pages 1-41, December.

    More about this item

    Keywords

    FDI inflows; Digitalization; Income inequality; Developed countries; Developing countries; C33; D31; J31; O33;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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