IDEAS home Printed from https://ideas.repec.org/a/taf/jitecd/v30y2021i8p1123-1137.html
   My bibliography  Save this article

The difference in the FDI inflows – Income inequality relationship between developed and developing countries

Author

Listed:
  • Van Bon Nguyen

Abstract

Foreign direct investment (FDI) plays a crucial role in the fight against poverty and income inequality in countries worldwide. How does the governance environment decisively contribute to the difference in the FDI – income inequality relationship between developed and developing countries? To answer this question, the study empirically assesses the effect of FDI on income inequality for a group of 24 developed countries with the good governance environment and a group of 37 developing countries with the poor one from 2005 to 2018 using the two-step system GMM Arellano-Bond estimator. The estimated results indicate some interesting findings. First, FDI increases income inequality in developed countries but reduces it in developing countries. Second, in both groups of countries governance and education narrow income inequality while economic growth widens it. In particular, the robustness of estimates is checked by the PMG estimator. These findings suggest some policy implications for central governments about policies and regulations relating to the fight against income inequality.

Suggested Citation

  • Van Bon Nguyen, 2021. "The difference in the FDI inflows – Income inequality relationship between developed and developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(8), pages 1123-1137, November.
  • Handle: RePEc:taf:jitecd:v:30:y:2021:i:8:p:1123-1137
    DOI: 10.1080/09638199.2021.1925331
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09638199.2021.1925331
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/09638199.2021.1925331?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ofori, Isaac K. & Asongu, Simplice A., 2022. "Repackaging FDI for Inclusive Growth: Nullifying Effects and Policy Relevant Thresholds of Governance," MPRA Paper 111359, University Library of Munich, Germany.
    2. Manwar Hossein Malla & Pairote Pathranarakul, 2022. "Fiscal Policy and Income Inequality: The Critical Role of Institutional Capacity," Economies, MDPI, vol. 10(5), pages 1-16, May.
    3. Kwamivi Gomado, 2023. "Financial reforms and income inequality: evidence from developing countries," WIDER Working Paper Series wp-2023-88, World Institute for Development Economic Research (UNU-WIDER).
    4. Ofori, Isaac K., 2024. "Frontier Technology Readiness, Democracy, and Income Inequality in Africa," EconStor Preprints 298788, ZBW - Leibniz Information Centre for Economics.
    5. Isaac K. Ofori & Toyo A. M. Dossou & Simplice A. Asongu & Mark K. Armah, 2021. "Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa?," Working Papers of the African Governance and Development Institute. 21/098, African Governance and Development Institute..
    6. Ofori, Isaac K. & Dossou, Marcel A.M. & Asongu, Simplice A. & Armah, Mark K., 2023. "Bridging Africa’s income inequality gap: How relevant is China’s outward FDI to Africa?," Economic Systems, Elsevier, vol. 47(1).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:30:y:2021:i:8:p:1123-1137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJTE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.