The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach
Inequality in general and income inequality in particular have existed for a long time and tend to increase daily. Foreign direct investment (FDI) is expected to be an important factor contributing to mitigating that situation. However, the results of previous empirical studies on the impact of FDI...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Universitas Muhammadiyah Yogyakarta
2023-05-01
|
| Series: | Jurnal Ekonomi & Studi Pembangunan |
| Subjects: | |
| Online Access: | https://journal.umy.ac.id/index.php/esp/article/view/18164 |
| _version_ | 1797232682250272768 |
|---|---|
| author | To Thi Hong Gam Dao Le Kieu Oanh Nguyen Mau Ba Dang |
| author_facet | To Thi Hong Gam Dao Le Kieu Oanh Nguyen Mau Ba Dang |
| author_sort | To Thi Hong Gam |
| collection | DOAJ |
| description | Inequality in general and income inequality in particular have existed for a long time and tend to increase daily. Foreign direct investment (FDI) is expected to be an important factor contributing to mitigating that situation. However, the results of previous empirical studies on the impact of FDI on income inequality have not reached a consistent conclusion. Therefore, this study evaluated the impact of foreign direct investment on income inequality in developing economies. The study has provided evidence that the relationship is nonlinear through data from a sample of 36 developing countries between 2008 and 2020 and the Monte-Carlo algorithm according to the Bayesian approach. We document a U-shaped effect of FDI on income inequality. Besides, other factors, including trade openness and migration, obviously impact income inequality. Different results were found when FDI interacted with trade or migration, representing important channels through which inequality is affected. With these results, we suggest that policymakers in developing countries should develop appropriate policies on FDI attraction encourage trade openness and migration to reduce income inequality. |
| first_indexed | 2024-03-12T22:54:08Z |
| format | Article |
| id | doaj.art-98319f3b9ca6433a8225ffedf4ace8c0 |
| institution | Directory Open Access Journal |
| issn | 1411-9900 2541-5506 |
| language | English |
| last_indexed | 2024-04-24T16:04:09Z |
| publishDate | 2023-05-01 |
| publisher | Universitas Muhammadiyah Yogyakarta |
| record_format | Article |
| series | Jurnal Ekonomi & Studi Pembangunan |
| spelling | doaj.art-98319f3b9ca6433a8225ffedf4ace8c02024-04-01T05:57:10ZengUniversitas Muhammadiyah YogyakartaJurnal Ekonomi & Studi Pembangunan1411-99002541-55062023-05-0124112714310.18196/jesp.v24i1.181646760The impact of foreign direct investment on income inequality in developing countries: The Bayesian approachTo Thi Hong Gam0Dao Le Kieu Oanh1Nguyen Mau Ba Dang2Faculty of Finance and Banking, University of Finance – Marketing, Ho Chi Minh CityFaculty of Finance and Banking, University of Finance – Marketing, Ho Chi Minh CityFaculty of Finance and Banking, University of Finance – Marketing, Ho Chi Minh CityInequality in general and income inequality in particular have existed for a long time and tend to increase daily. Foreign direct investment (FDI) is expected to be an important factor contributing to mitigating that situation. However, the results of previous empirical studies on the impact of FDI on income inequality have not reached a consistent conclusion. Therefore, this study evaluated the impact of foreign direct investment on income inequality in developing economies. The study has provided evidence that the relationship is nonlinear through data from a sample of 36 developing countries between 2008 and 2020 and the Monte-Carlo algorithm according to the Bayesian approach. We document a U-shaped effect of FDI on income inequality. Besides, other factors, including trade openness and migration, obviously impact income inequality. Different results were found when FDI interacted with trade or migration, representing important channels through which inequality is affected. With these results, we suggest that policymakers in developing countries should develop appropriate policies on FDI attraction encourage trade openness and migration to reduce income inequality.https://journal.umy.ac.id/index.php/esp/article/view/18164foreign direct investmentincome inequalitydeveloping countriesbayesian |
| spellingShingle | To Thi Hong Gam Dao Le Kieu Oanh Nguyen Mau Ba Dang The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach Jurnal Ekonomi & Studi Pembangunan foreign direct investment income inequality developing countries bayesian |
| title | The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach |
| title_full | The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach |
| title_fullStr | The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach |
| title_full_unstemmed | The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach |
| title_short | The impact of foreign direct investment on income inequality in developing countries: The Bayesian approach |
| title_sort | impact of foreign direct investment on income inequality in developing countries the bayesian approach |
| topic | foreign direct investment income inequality developing countries bayesian |
| url | https://journal.umy.ac.id/index.php/esp/article/view/18164 |
| work_keys_str_mv | AT tothihonggam theimpactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach AT daolekieuoanh theimpactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach AT nguyenmaubadang theimpactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach AT tothihonggam impactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach AT daolekieuoanh impactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach AT nguyenmaubadang impactofforeigndirectinvestmentonincomeinequalityindevelopingcountriesthebayesianapproach |