Analyzing the Effect of Foreign Direct Investment, Trade Openness, and Economic Growth on Income Inequality in Selected ASEAN Countries

Date

6-2022

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Niño Alejandro Q. Manalo

Committee Member

Paul Joseph B. Ramirez, Ma. Angeles O. Catelo, Agham C. Cuevas

Restrictions

Restricted: Not available to the general public. Access is available only after consultation with author/thesis adviser and only to those bound by the confidentiality agreement.

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Abstract

Globalization channels, specifically Foreign Direct Investment (FDI) and international trade are being adopted by economies for they are drivers of economic growth. Considering the importance of globalization to boost an economy’s performance, it is imperative to understand how it affects income inequality since the disparity in the distribution of income impedes sustained economic growth and undermines poverty-reduction efforts; however, studies centered on its distributional effect are scarce. Thus, this study aims to establish the relationship and examine the effect of foreign direct investment, trade openness, and economic growth on income inequality in selected ASEAN countries namely Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam from 2000 to 2019 using panel fixed-effects regression.

The results of the study indicate that for the said period, income inequality worsens as the countries pursue a higher volume of exports and imports with the rest of the world, while it improves as foreign direct investment inflows increase. The study did not find evidence to confirm the existence of the Kuznets’ curve hypothesis which implies an inverted-U shaped relationship between economic growth and income inequality. Therefore, the study recommends that in pursuing a more liberalized trade to boost economic growth, a more in-depth assessment and understanding of how countries will realize more equal income distribution should also be assessed.

Language

English

LC Subject

Economic development, Income distribution, Usages of trade

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 E2 R37

Notes

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Document Type

Thesis

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