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Distributional effects of FDI: How the interaction of FDI and economic policy affects poor households in Bolivia

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  • Nunnenkamp, Peter
  • Schweickert, Rainer
  • Wiebelt, Manfred

Abstract

This paper provides a computable general equilibrium 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 income disparities between urban and rural areas. The Bolivian government may promote growth-enhancing and poverty-alleviating effects of FDI by overcoming labour market segmentation and providing complementary public investment in infrastructure. Yet, simulated policy reforms or alternative productivity scenarios are hardly effective in reducing the divide between urban and rural areas.

Suggested Citation

  • Nunnenkamp, Peter & Schweickert, Rainer & Wiebelt, Manfred, 2006. "Distributional effects of FDI: How the interaction of FDI and economic policy affects poor households in Bolivia," Proceedings of the German Development Economics Conference, Göttingen 2007 35, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec07:6558
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    Citations

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    Cited by:

    1. Jean-Louis COMBES & Christian EBEKE & Mathilde MAUREL, 2011. "Remittances and the Prevalence of Working Poor," Working Papers 201109, CERDI.
    2. Mahmood, Haider & Chaudhary, A. R., 2013. "Impact of FDI on Income Inequality in Pakistan," MPRA Paper 109460, University Library of Munich, Germany.
    3. Pablo Quinonez & Joselin Saenz & Jessica Solorzano, 2018. "Does foreign direct investment reduce poverty? The case of Latin America in the twenty-first century," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 488-500, June.
    4. Svilena MIHAYLOVA, 2015. "Foreign direct investment and income inequality in Central and Eastern Europe," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(603), S), pages 23-42, Summer.
    5. repec:agr:journl:v:2(602):y:2015:i:2(602):p:23-42 is not listed on IDEAS
    6. Aliaga Lordemann, Jevier & Villegas Quino, Horacio, 2011. "Poverty, Indigence and Public Investment in Bolivia: A Simulation Analysis," Documentos de trabajo 5/2011, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    7. Ahsen Mukhtar & Muhammad Asif & Ghamz-e-Ali Siyal & Khalid Zaman, 2014. "Institutional-Macroeconomic Nexus: Inducement on Foreign Direct Investment (FDI) in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(11), pages 465-479, November.
    8. Muneza Munir & Ambreen Fatima, 2020. "Financing Inclusive Growth through FDI: Incorporating the Role of Institutional Quality," Global Economics Review, Humanity Only, vol. 5(2), pages 29-46, June.

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    More about this item

    Keywords

    Poverty and income distribution; Bolivia; Computable general equilibrium analysis; Foreign direct investment;
    All these keywords.

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D3 - Microeconomics - - Distribution
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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