THE IMPACT OF FOREIGN DIRECT INVESTMENT ON INCOMES INEQUALITY: CASE STUDY WESTERN BALKANS
THE IMPACT OF FOREIGN DIRECT INVESTMENT ON INCOMES INEQUALITY: CASE STUDY WESTERN BALKANS

Summary/Abstract: The objective of this paper is to investigate empirically the impact of Foreign Direct Investment (FDI-henceforth) on income inequality for the period 2007 to 2021. Therefore, the research question is: Does FDI has an impact on income distribution? To answer this research question, we established the hypothesis that FDI has a negative impact on income inequality. For this purpose, we employ GMM (Generalized Method of Moments) model in order to check validity of hypothesis. Our findings shows that FDI has a significant effect on income inequality, that is measured by Gini-index. The effect of FDI is negative on income inequality, and statistically is significant. Therefore, the findings with GMM estimator conform the hypothesis that FDI has a positive effect on reducing inequality.

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