Abstract
This study examines the impact of inward foreign direct investment (FDI) on income inequality in Egypt over the period from 1975 to 2017. We find that a one per cent increase in FDI inflows (as a percentage of gross fixed capital formation) results in 0. 0188 reduction of the Gini coefficient. The finding is robust to different specifications of the empirical model and potential endogeneity of FDI inflows. The negative impact of FDI inflows suggests that Egyptian policymakers shall continue and strengthen the open-door policy, which has the added benefit of improving income inequality.
Highlights
As a key component of globalisation, foreign direct investment (FDI) is likely to influence income inequality in the host country
Where Gini represents the Gini coefficient; FDI stands for the FDI inflows; t is the time trend; TO denotes trade openness; GDP represents the gross domestic product per capita; FD denotes financial development; INF stands for the annual inflation rate, calculated from the GDP deflator; NSE represents the secondary school enrollment as a percentage of gross enrollment; urbanisation rate (URB) is the urbanization rate; DYear is a dummy variable, taking a value of 1 if it is after 2000; and ɛ is the error term
Little attention has been devoted to exploring the impact of FDI inflows on income inequality in Egypt, despite some previous studies of the distributional effect of FDI include Egypt as part of their panel data
Summary
As a key component of globalisation, foreign direct investment (FDI) is likely to influence income inequality in the host country. Economists and policymakers believe that FDI can improve income inequality by contributing to the growth and development of host countries, through such channels as transfer of management skills and modern technology, exporting market access, and human. This study examines the impact of inward FDI on income inequality in Egypt. A number of studies have explored the impact of inward FDI on income inequality in Egypt, primarily in situations that use panel data, where Egypt is one member of the cross-section. It is likely that the impact of FDI is different across different countries In light of these challenges, this research focuses on a single country, Egypt, from 1975 to 2017. The findings from this study present significant policy implications for Egypt, and other developing countries. The rest of the paper is organized as follows: Sect. 2 reviews the related literature; Sect. 3 presents a brief overview of Egypt’s FDI and income inequality; Sect. 4 discusses the method; Sect. 5 contains a description of the data, and the empirical results are presented in Sect. 6; Sect. 7 draws policy implications and concludes
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
