IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Distributional Effects of FDI: How the Interaction of FDI and Economic Policy Affects Poor Households in Bolivia

  • Peter Nunnenkamp
  • Rainer Schweickert
  • Manfred Wiebelt

This article provides a CGE analysis of the medium to long-run impact of FDI inflows on poverty and income distribution in Bolivia. The simulation results suggest that FDI inflows enhance economic growth and reduce poverty. However, the income distribution typically becomes more unequal. In particular, FDI widens disparities between urban and rural areas. The Bolivian government may promote the growth-enhancing and poverty-alleviating effects by overcoming labour-market segmentation and providing complementary public investment in infrastructure. But simulated policy reforms or alternative productivity scenarios are hardly effective in reducing the economic divide. Copyright 2007 Blackwell Publishing Ltd.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Overseas Development Institute in its journal Development Policy Review.

Volume (Year): 25 (2007)
Issue (Month): 4 (07)
Pages: 429-450

in new window

Handle: RePEc:bla:devpol:v:25:y:2007:i:4:p:429-450
Contact details of provider: Postal: 111 Westminster Bridge Road, London SE1 7JD
Phone: +44 (0)20 7922 0300
Fax: +44 (0)20 7922 0399
Web page:

More information through EDIRC

Order Information: Web:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Dani Rodrick, 2003. "Growth Strategies," Economics working papers 2003-17, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810.
  3. Jann Lay & Rainer Thiele & Manfred Wiebelt, 2004. "Pro-poor Growth in Bolivia: Accounting for External Shocks and Policy Reforms," Kiel Working Papers 1231, Kiel Institute for the World Economy.
  4. Eduardo Lora, 2001. "Structural reforms in Latin America: What has been reformed and how to measure it?," Research Department Publications 4287, Inter-American Development Bank, Research Department.
  5. Giovanni S.F. Bruno & Rosario Crinò & Anna M. Falzoni, 2004. "Foreign Direct Investment, Wage Inequality, and Skilled Labor Demand in EU Accession Countries," Development Working Papers 188, Centro Studi Luca d\'Agliano, University of Milano.
  6. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
  7. Manfred Wiebelt, 2004. "GEM-PIA: A Real-Financial General Equilibrium Model for Poverty Impact Analysis ; Technical Description," Kiel Working Papers 1230, Kiel Institute for the World Economy.
  8. Jemio, Luis Carlos & Wiebelt, Manfred, 2003. "¿Existe Espacio para Políticas Anti-Shocks en Bolivia? Lecciones de un Análisis basado en un Modelo de Equilibrio General Computable," Documentos de trabajo 1/2003, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  9. Willem te Velde , Dirk, 2003. "Foreign Direct Investment and Income Inequality in Latin America," Documentos de trabajo 4/2003, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  10. Carr, Marilyn & Chen, Martha Alter, 2002. "Globalization and the informal economy : how global trade and investment impact on the working poor," ILO Working Papers 354172, International Labour Organization.
  11. Drusilla K. Brown & Alan Deardorff & Robert Stern, 2004. "The Effects of Multinational Production on Wages and Working Conditions in Developing Countries," NBER Chapters, in: Challenges to Globalization: Analyzing the Economics, pages 279-330 National Bureau of Economic Research, Inc.
  12. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4301, Inter-American Development Bank, Research Department.
  13. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  14. Manuel Agosin & Roberto Machado, 2005. "Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?," Oxford Development Studies, Taylor & Francis Journals, vol. 33(2), pages 149-162.
  15. Richard Baldwin, 1989. "The Growth Effects of 1992," NBER Working Papers 3119, National Bureau of Economic Research, Inc.
  16. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers 95-21, Columbia - Graduate School of Business.
  17. Edward M. Graham, 2000. "Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 91.
  18. Zhao, Yaohui, 2001. "Foreign direct investment and relative wages: The case of China," China Economic Review, Elsevier, vol. 12(1), pages 40-57.
  19. Rainer Thiele & Daniel Piazolo, 2003. "A Social Accounting Matrix for Bolivia Featuring Formal and Informal Activities," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(120), pages 285-318.
  20. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  21. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  22. Martin Rama, 2002. "Globalization and Workers in Developing Countries," Economics Study Area Working Papers 41, East-West Center, Economics Study Area.
  23. Gemio, Luis Carlos & Wiebelt, Manfred, 2003. "¿Existe espacio para políticas anti-shock en Bolivia?," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 1, pages 37-68, Septiembr.
  24. Easterly, William-R, 2004. "Globalization, Inequality, and Development: The Big Picture," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 22(S1), pages 57-87, December.
  25. Julius Spatz & Susan Steiner, 2002. "Post-Reform Trends in Wage Inequality: The Case of Urban Bolivia," Kiel Working Papers 1126, Kiel Institute for the World Economy.
  26. Stephan Klasen & Melanie Grosse & Rainer Thiele & Jann Lay & Julius Spatz & Manfred Wiebelt, 2004. "Operationalizing Pro-Poor Growth - Country Case Study: Bolivia," Ibero America Institute for Econ. Research (IAI) Discussion Papers 101, Ibero-America Institute for Economic Research.
  27. repec:rus:hseeco:121599 is not listed on IDEAS
  28. Bussmann, Margit & de Soysa, Indra & Oneal, John R., 2002. "The Effect Of Foreign Investment On Economic Development And Income Inequality," Discussion Papers 18718, University of Bonn, Center for Development Research (ZEF).
  29. Pan-Long Tsai, 1995. "Foreign direct investment and income inequality: Further evidence," World Development, Elsevier, vol. 23(3), pages 469-483, March.
  30. Robert Lipsey & Fredrik Sjöholm, 2004. "FDI and wage spillovers in Indonesian manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(2), pages 321-332, June.
  31. Kevin Sylwester, 2005. "Foreign direct investment, growth and income inequality in less developed countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 289-300.
  32. Peter Nunnenkamp, 2004. "To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?," The World Economy, Wiley Blackwell, vol. 27(5), pages 657-677, 05.
  33. Spatz, Julius & Steiner, Susan, 2002. "Post-Reform Trends in Wage Inequality: The Case of Urban Bolivia," Documentos de trabajo 9/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  34. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, vol. 73(1), pages 415-422, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:devpol:v:25:y:2007:i:4:p:429-450. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.