Analyses & Alternatives 2023 KCI Impact Factor : 1.46
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pISSN : 2508-822X / eISSN : 2508-8238
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The Impact of Foreign Direct Investment on Income Inequality and Growth in South Korea
- Analyses & Alternatives
- Abbr : A&A
- 2021, 5(2), pp.3~38
- DOI : 10.22931/aanda.2021.5.2.001
- Publisher : Korea Consensus Institute
- Research Area : Social Science > Social Science in general
- Received : August 4, 2021
- Accepted : September 24, 2021
- Published : September 30, 2021
Hwang， Wonjae 1, Jungin Jo 2
1Univ. of Tennessee - Knoxville
2숙명여자대학교
Accredited
ABSTRACT
Does Foreign Direct Investment (FDI) exacerbate income inequality in South Korea? If so, does rising income inequality come for the sake of economic growth? This study explores the impact of FDI on income inequality and growth in South Korea. To this end, we collect data on FDI and income inequality/economic growth at both national and provincial levels and empirically test their relationships in South Korea. The empirical results confirm our expectation that FDI magnifies income inequality. Furthermore, we fail to find a positive relationship between FDI and economic growth, implying that income inequality as a consequence of FDI does not come for the sake of economic growth in Korea. Findings suggest that more systematic research and nuanced policy design is necessary to circumvent the mechanisms at play that link the surge of FDI inflows and the exponential expansion of economic inequality.
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