Foreign Direct Investment and Income Inequality in ASEAN - 5
Keywords:
Balanced Panel Data Analysis, Foreign Direct Investment, Gini Index, GovernanceAbstract
The analysis of the impacts of the governance in focusing Foreign Direct Invesment(FDI) attention associated with income inequality on the spatial and temporal dynamics in ASEAN-5 was conducted under Fixed Effect Model (FEM) and Random Effect Model (REM) using the balanced panel data analysis over the period of 2002-2018. One of the main findings indicated that ASEAN-5 countries with different economic conditions not only tended to have different effects of FDI on income distribution nevertheless, also contributed to increasing in income inequality. In addition, GDP per capita, Trade openness, Gross Capital Formation, and Governance which are important indicators for economic growth and development would not reduce inequality, rather they led to an income disparity especially in the middle-income countries. The findings revealed that the dispersion of income can be mitigated by increasing FDI productivities which might help to optimize these countries’ potential in the good governance. We concluded that ASEAN-5 countries could achieve better economic growth and development with higher quality of governance. The adoption of national and regional policies should be balanced with FDI-related measures and good governance to create better sustainable economic development and to ensure more equitable distribution of income.
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