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Inequality, Fdi And Economic Development: Evidence From Developing Countries

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  • MUHAMMAD TARIQ MAJEED

    (School of Economics, Quaid-i-Azam University, Islamabad 44000, Pakistan)

Abstract

This paper empirically investigates the impact of Foreign Direct Investment (FDI) on inequality using a panel data set of 65 developing counties. While the existing literature mainly examines the impact of FDI on growth, this study explores the importance of domestic conditions of the host countries in determining the distributional effects of FDI. The results show that the impact of FDI is not homogenous on host countries as FDI inflows exert inequality-narrowing effect only in countries that have stronger investment in human capital, better financial sector and a high level of economic development. While FDI accentuates not ameliorates inequality in countries with low level of economic development, findings of the study are robust to the use of different specifications, different estimation methods, inclusion of regional effects and time specific effects.

Suggested Citation

  • Muhammad Tariq Majeed, 2017. "Inequality, Fdi And Economic Development: Evidence From Developing Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(05), pages 1039-1057, December.
    • Handle: RePEc:wsi:serxxx:v:62:y:2017:i:05:n:s0217590815500678
    DOI: 10.1142/S0217590815500678
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    4. Aurora A. C. Teixeira & Ana Sofia Loureiro, 2019. "FDI, income inequality and poverty: a time series analysis of Portugal, 1973–2016," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 18(3), pages 203-249, October.

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