The impact of FDI on income inequality in Egypt

Abstract

AbstractThis study examines the impact of inward foreign direct investment (FDI) on income inequality in Egypt over the period from 1975 to 2017. We find that a one per cent increase in FDI inflows (as a percentage of gross fixed capital formation) results in 0. 0188 reduction of the Gini coefficient. The finding is robust to different specifications of the empirical model and potential endogeneity of FDI inflows. The negative impact of FDI inflows suggests that Egyptian policymakers shall continue and strengthen the open-door policy, which has the added benefit of improving income inequality.