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TO WHAT EXTENT ARE THE SOCIAL INEQUALITY IMPACTS OF FDI IN THE SELECTED ASEAN?

Abdul Rahim Ridzuan, Abdul Halim Mohd Noor and Elsadig Ahmed ()

Applied Econometrics and International Development, 2014, vol. 14, issue 1, 189-202

Abstract: This study attempts to answer the research question of what and to what extent are the social (inequality) impacts of FDI in the selected ASEAN countries namely Malaysia, Indonesia, Thailand, Singapore and Philippines by referring it to different school of thoughts. The income inequality variable in this study would be able to lend insight as to how FDI improves or worsens income distribution in each selected ASEAN countries in the long term. This study is conducted by using time series analyses by utilizing the Autoregressive Distributive Lag (ARDL) techniques. Overall, based on the result driven from the long run coefficient analysis, the FDI for each of the country tested are supporting the Mundell Hypothesis which means that increase in FDI inflow can reduce the income inequality problems for the nations. Besides FDI, the country’s GDP also plays important role to decrease the GINI index and therefore invalidate the Kuznets Hypothesis. In the short run, the countries tested showed a mix evidence of expected sign.

Keywords: FDI; GINI; Model of Income Distribution; ASEAN (search for similar items in EconPapers)
Date: 2014
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