The impact of foreign direct investment on urban-rural income inequality

2016 ◽  
Vol 8 (3) ◽  
pp. 480-497 ◽  
Author(s):  
Chunlai Chen
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Income Inequality ◽  
Fixed Effects ◽  
Knowledge Spillovers ◽  
Employment Creation ◽  
Content Type ◽  
Rural Income ◽  
Urban Rural ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of foreign direct investment (FDI) on urban-rural income inequality in China. Design/methodology/approach This study uses the provincial-level panel data and employs the fixed-effects instrumental variable regression technique to investigate empirically the impact of FDI on urban-rural income inequality in China. Findings The study finds that while FDI has directly contributed to reducing urban-rural income inequality through employment creation, knowledge spillovers and contribution to economic growth, FDI has also contributed to increasing urban-rural income inequality through international trade. Practical implications The study has some policy implications. First, as the study finds that FDI not only contributes to reducing urban-rural income inequality through employment creation, knowledge spillovers and contribution to economic growth, but also contributes to increasing urban-rural income inequality through international trade, therefore, apart from improving local economic and technological conditions to attract more FDI inflows, China should re-design FDI policies by shifting away from encouraging export-oriented FDI to encouraging FDI flows into the industries and sectors in line with China’s overall economic structural adjustments and industrial upgrading. Second, policies should focus on increasing investment in infrastructure development and in public education, which not only can reduce urban-rural income inequality but also can attract more FDI inflows. And finally policies should be designed to accelerate urbanisation development by focusing on urban-rural integrated development, household registration system reform and proper settlement of rural migrants in urban areas, thus reducing urban-rural income inequality. Originality/value The paper makes two major contributions to the literature. First, the paper adopts the fixed-effects instrumental variable regression technique to deal with the endogeneity issues in estimating the impact of FDI on urban-rural income inequality, producing more consistent estimates. Second, the paper investigates not only the direct impact of FDI on urban-rural income inequality through the effects of employment creation, knowledge spillovers and contribution to economic growth, but also the indirect impact of FDI on urban-rural income inequality through its activities in international trade, adding new empirical evidence to the sparse literature on the impact of FDI on income inequality in China.

scholarly journals How does the urban–rural income gap affect the quality of China’s economic growth?

2018 ◽  
Vol 1 (1) ◽  
pp. 136-148 ◽  
Author(s):  
Baoping Ren ◽  
Xiaojing Chao
Keyword(s):  
Economic Growth ◽  
Industrial Structure ◽  
Empirical Test ◽  
Theoretical Interpretation ◽  
Content Type ◽  
Income Gap ◽  
Rural Income ◽  
Urban Rural ◽  
Growth Quality

Purpose Based on the theoretical definition of the quality of economic growth as well as the availability and reliability of the given data, the purpose of this paper is to build an evaluation system of a regional economic growth quality on three levels: conditions, processes and results. Design/methodology/approach From the perspective of economic quality, this paper offers a theoretical interpretation on how the urban–rural income gap affects the quality of economic growth and takes an empirical test on the sample panel data from 30 provinces and regions through difference GMM and system GMM models. Findings The results show that the excessively large income gap will influence economic growth in terms of the foundation, operation and the outcome, thereby, restricting the quality of economic growth. In addition, investments in human and physical capital and improvements in terms of transport infrastructure, industrial structure and economic openness play an active role in economic growth quality, whereas government expenditure scale, financial development and the deviation of industrial structure have a negative effect. Originality/value There has been a substantial amount of experience and evidence on the research about the issue of China’s income distribution and the quantity of economic growth, whereas there are relatively fewer discussions about the income distribution and the quality of economic growth. This paper, based on what has been mentioned above, tries to give a theoretical interpretation and an empirical test to describe the relationship between urban–rural income gap and the quality of economic growth from the quality point of view.

scholarly journals Are some taxes better for growth in Pakistan? A time series analysis

2018 ◽  
Vol 45 (10) ◽  
pp. 1439-1452 ◽  
Author(s):  
Kashif Munir ◽  
Maryam Sultan
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
International Trade ◽  
Sales Tax ◽  
Tax Base ◽  
Content Type ◽  
Long Run ◽  
Indirect Taxes ◽  
Short Run ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of taxes on economic growth in the long run as well as in the short run. Design/methodology/approach The study uses simple time series model, where real GDP is dependent variable and different forms of taxes are explanatory variables under ARDL framework from 1976 to 2014 at annual frequency for Pakistan. Findings Direct taxes have positive relation with economic growth in the long run. Sales tax, tax on international trade (tariffs) and other indirect taxes have positive impact on economic growth of Pakistan in the long run as well as in the short run. However, sales tax and other indirect taxes impact negatively on economic growth in the short run after one year because people realize decline in their real income. Practical implications Government should increase direct taxes by increasing tax base. Indirect taxes usually indicate negative impact after one and two years; therefore, government should decrease its reliance on indirect taxes. Government should promote tax awareness among the people which increase the tax morale of people and increase the tax base. Originality/value Taxes are disaggregated into direct and indirect taxes, while indirect taxes have been further disaggregated into excise duty, sales tax, surcharges, tax on international trade and other indirect taxes. This study provides useful insight for policy makers in designing taxes and their effect on growth.

What precipitates growth in CO2 emissions?

2019 ◽  
Vol 13 (2) ◽  
pp. 277-297 ◽  
Author(s):  
Abimelech Paye Gbatu ◽  
Zhen Wang ◽  
Presley K. Wesseh ◽  
Vamuyan A. Sesay
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Fixed Effects ◽  
Developing Economies ◽  
Natural Habitat ◽  
Pollutant Emissions ◽  
Real Output ◽  
Fixed Effects Model ◽  
Content Type ◽  
The Impact

Purpose The degradation of the natural habitat at the expense of economic development is a harmful growth that warrants environmental policy actions. For instance, the economic impacts of environmental pollution are quite visible in developed and developing economies, where human health is compromised by rapid economic growth and energy induced pollution. Therefore, the purpose of this study is to investigate the impact of CO2 emissions on economic development. Design/methodology/approach This paper investigates the correlation between pollutant emissions and key economic variables within the economic community of West African states (ECOWAS) region by applying fixed effects model to unbalanced time-series panel data for the period 1980-2014. This paper examines the full ECOWAS panel and sub-panels with export-and-import-dependent countries. Findings The authors argue that energy consumption (EC) and real output exert causal influences on CO2 emissions for the full ECOWAS panel and the sub-panels with export-and-import-dependent countries. Practical implications The results imply that increase in EC is the main factor that promotes economic growth in the region. Additionally, growth in EC and real output stimulates CO2 emissions growth. Originality/value Therefore, it is argued that technological innovations that increase energy efficiency through new carbon-free technologies that minimize CO2 emissions growth without impairing economic growth and development must be introduced in the region.

Clustering, growth and inequality in China

2020 ◽  
Vol 20 (5) ◽  
pp. 1207-1239
Author(s):  
Di Guo ◽  
Kun Jiang ◽  
Chenggang Xu ◽  
Xiyi Yang
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Income Inequality ◽  
Instrumental Variables ◽  
Industrial Clusters ◽  
Regional Economic Growth ◽  
County Level ◽  
Cluster Development ◽  
Rural Income ◽  
Urban Rural

Abstract This study examines the effects of China’s industrial clusters on regional economic growth and urban–rural income inequality within a region. A density-based index (DBI) is developed to capture the unique features of cluster development in China. From a county-level DBI panel data constructed based on firm- and county-level datasets, we find that clusters enhance local economic growth substantially. Moreover, the existence of entrepreneurial clusters (clusters mainly consist of nonstate-owned firms) helps to reduce local urban–rural income inequality by increasing the income of local rural residents. We also find that the clustering effects on growth and reduction of inequality are less significant in more urbanized regions or megacities. Identification issues are carefully addressed by deploying two-stage estimations with instrumental variables and Granger test.

scholarly journals The Effect of Exchange Rate Volatility on Economic Growth: Case of the CEE Countries

2020 ◽  
Vol 13 (8) ◽  
pp. 177
Author(s):  
Fatbardha Morina ◽  
Eglantina Hysa ◽  
Uğur Ergün ◽  
Mirela Panait ◽  
Marian Catalin Voica
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Fixed Effects ◽  
Exchange Rate Volatility ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Real Economy ◽  
The Exchange Rate ◽  
The Impact

The exchange rate is a key macroeconomic factor that affects international trade and the real economy of each country. The development of international trade creates conditions where volatility comes with the exchange rate. The purpose of this paper is to examine the effect of real effective exchange rate volatility on economic growth in the Central and Eastern European countries. Additionally, the effect, through three channels of influence on economic growth which vary on the measurement of exchange rate volatility, is examined. The study uses annual data for fourteen CEE countries for the period 2002–2018 to examine the nature and extends the impact of such movements on growth. The empirical findings using the fixed effects estimation for panel data reveal that the volatility of the exchange rate has a significant negative effect on real economic growth. The results appear robust with alternative measures of exchange rate volatility such as standard deviation and z-score. This paper suggests that policymakers should adopt different policies to keep the exchange rate stable in order to foster economic growth.

Does foreign direct investment affect economic growth? The case of Turkey

2014 ◽  
Vol 41 (6) ◽  
pp. 434-449 ◽  
Author(s):  
Birgül Cambazoglu ◽  
Hacer Simay Karaalp
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Trade ◽  
Direct Investment ◽  
Growth Strategy ◽  
Volume Index ◽  
Outward Fdi ◽  
Content Type ◽  
The Real ◽  
The Impact

Purpose – The purpose of this paper is to analyze the impact of inward foreign direct investment (FDI) and international trade on economic growth in Turkey for the post-liberalization period (1980-2010). Design/methodology/approach – The paper employs the vector auto-regression model with four variables: real GDP growth, real inward FDI, the real import volume index and the real export volume index. Findings – Empirical results suggest a relationship between economic growth, inward FDI and exports. Practical implications – The results derived in this paper shed light on the relationship between FDI and international trade on economic growth for Turkey, which has been applying an export-led growth strategy since 1980, and has been implementing many regulations to attract foreign capital. It is evident that although Turkey's efforts and the importance of this issue, new policies and stabilization regulations must be established for the Turkish economy. Originality/value – This study contributes to the literature in at least two aspects. First, a comparative analysis of Turkey's inward and outward FDI with respect to different country groups was analyzed. Second, apart from other studies, the effect of inward FDI and international trade on Turkey's economic growth was tested utilizing an econometric method from 1980 to 2010, which is a relatively long time period for Turkey.

scholarly journals Spatial Effects of Domestic Tourism on Urban-Rural Income Inequality

2021 ◽  
Vol 13 (16) ◽  
pp. 9394
Author(s):  
Zhixin Zeng ◽  
Xiaojun Wang
Keyword(s):  
Income Inequality ◽  
Rural Areas ◽  
Spillover Effect ◽  
Eastern Region ◽  
Spatial Effects ◽  
Rural Income ◽  
Domestic Tourism ◽  
Urban Rural ◽  
The Impact ◽  
Tourism Revenue

Although much of the recent research has explored the relationship between domestic tourism and income inequality among regions, provinces, and cities, few studies have examined the impact of domestic tourism on income inequality between urban and rural areas within a region. This paper uses a panel dataset covering China’s 31 provinces for 21 years to investigate the spatial spillover effect of domestic tourism on urban-rural income inequality. An increase in domestic tourism revenue in neighboring provinces leads to a reduction in the local province’s urban-rural income inequality. Innovatively, we decompose domestic tourism revenue and consider the circumstances in different provinces. An increase in the number of neighboring provinces’ domestic tourists’ arrival decreases the local province’s urban-rural income inequality in western provinces but increases the inequality in eastern provinces; the effect is insignificant in central provinces. In order to improve urban-rural income inequality by attracting domestic tourists, this study suggests a collaborative strategy for the western region, a low-priority strategy for the central region, and a mitigation strategy for the eastern region.

scholarly journals Income inequality and financialization: a not so straightforward relationship

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantinos Alexiou ◽  
Emmanouil Trachanas ◽  
Sofoklis Vogiazas
Keyword(s):  
Income Inequality ◽  
Gini Coefficient ◽  
Trade Unions ◽  
Fixed Effects ◽  
Credit Market ◽  
Market Regulation ◽  
Cross Sectional ◽  
Content Type ◽  
Panel Fixed Effects ◽  
The Impact

PurposeThe authors explore the impact of financialization on income inequality for a panel of 19 OECD countries over the period 2000–2017. The authors control for the effect of banking crises, credit market regulation and globalization, among other factors.Design/methodology/approachThe authors use three proxies for income inequality and four proxies for financialization. The authors employ a panel fixed effects approach using Driscoll and Kraay’s (1998) nonparametric covariance matrix estimator, which produces standard errors that are robust to general forms of cross-sectional dependence.FindingsThe authors provide evidence which to a great extent supports the view that the process of financialization has increased income inequality. In the disposable Gini specifications, two out of the four financialization measures are found to significantly contribute to rising inequality whilst in the specification with the market income Gini coefficient, three out of the four financialization proxies appear to adversely affect inequality. In the specification with the Gini coefficient based on manufacturing pay, the evidence is weak. Furthermore, trade unions appear to play a significant role in reducing inequality in two out of the three Gini specifications while the effect of credit market regulation is rather ambiguous.Originality/valueThe authors’ findings suggest a positive relationship between financialization and income inequality; however, the results depend on the proxies used to measure financialization and income inequality. The authors conclude that the process of financialization in triggering income inequality is complex and merits additional research.

Can foreign aid contribute to sustained growth? A comparison of selected African and Asian countries

2020 ◽  
Vol 16 (4) ◽  
pp. 249-270
Author(s):  
John Adams ◽  
Ola Elassal
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Fixed Effects ◽  
Literature Analysis ◽  
Fixed Effects Model ◽  
Content Type ◽  
Two Samples ◽  
Growth Divergence ◽  
Different Characteristics ◽  
The Impact

PurposeIdentifying if aid flows have contributed to economic growth or growth divergence between a sample of Asian and African countries is the purpose of this paper. Using data over the period of 1980–2015, the paper attempts to establish whether aid, in any of its forms, has played a role in economic growth in these countries.Design/methodology/approachA comprehensive literature analysis over the past 70 years sets the scene for the paper. A panel data fixed-effects model is applied for each sample (Africa and Asia) between 1980 and 2015. Both theoretical predictions and empirical studies are used to derive the independent variables selected for modelling.FindingsThe findings strongly suggest that aid flows in both the Asian and African samples have no relation at all to either long-run growth paths or growth divergence. However, there is a suggestion in the case of the Africa sample that governance decline may well be the primary source of growth divergence.Research limitations/implicationsThis result cannot be generalised because it only focuses on six countries but as demonstrated in the paper, other possible samples (from both regions) actually make no difference to the results. It could also be argued (given the comprehensive literature analysis presented here) that it is not essential to have a theoretical relationship between aid and growth because aid is given to different countries with very different characteristics, needs, governance and policy environments.Practical implicationsDonor countries must play a more supervisory role to ensure aid flows are directed to the right channels in recipient countries. Aid should be given to countries which have a certain degree of macroeconomic stability and “good” policy to ensure effectiveness. They also need to pay attention to the sectoral distribution of aid as do recipient countries to better allocate aid flows to productive sectors that contribute to both short- and long-term growth.Social implicationsThese are not given much emphasis in this paper.Originality/valueMost aid–growth studies are based on a large number of countries from different regions with different characteristics or on a single country case. This paper compares between two samples of countries sharing the same characteristics to overcome the heterogeneity problem. This paper is based on a more protracted time series from 1980 to 2015 to capture more accurately the impact of foreign aid on economic growth.

scholarly journals How Does Income Inequality Influence Environmental Regulation in the Context of Corruption? A Panel Threshold Analysis Based on Chinese Provincial Data

2021 ◽  
Vol 18 (15) ◽  
pp. 8050
Author(s):  
Shi Wang ◽  
Wen Zhang ◽  
Hua Wang ◽  
Jue Wang ◽  
Mu-Jun Jiang
Keyword(s):  
Income Inequality ◽  
Environmental Regulation ◽  
Political Stability ◽  
Threshold Effect ◽  
Rural Income ◽  
Key Factor ◽  
Urban Rural ◽  
Threshold Regression Model ◽  
The Impact ◽  
Official Corruption

The question of how the income inequality of residents affects the level of environmental regulation in the context of official corruption was the core research issue of this study. We analyzed this problem using the panel threshold regression model from 26 provinces in China from 1995 to 2017. We found that when there is no official corruption, the widening of the residents’ income inequality promotes stricter environmental regulations; when the corruption problem is serious, the expansion of the residents’ income inequality leads to the decline in environmental standards; that is, the impact of residents’ income inequality on environmental regulation has a threshold effect due to corruption. In addition, the threshold effect due to corruption of all residents’ income inequality on environmental regulation is mainly generated by the urban residents’ income inequality and the urban–rural income inequality. This paper contributes to the literature that concentrates on the relationship between income inequality and environmental regulation, and shows that corruption is a key factor that can deeply influence that relationship. The research conclusion shows that increasing anti-corruption efforts can not only maintain national political stability, social fairness, and justice, but also be a powerful measure for environmental pollution governance.

Sign in / Sign up

Export Citation Format

Share Document