Abstract
Foreign direct investment (FDI) not only contributes to economic growth and development but also affects the way income is distributed in host countries, especially in developing countries. The objective of this research is to analyze the effect of FDI on income distribution in developing countries. The research adopted a fixed effects model, using panel data from fourteen developing countries for the period 2000-2020. The estimated model took into account the effect of the unemployment rate, government spending as a percent of GDP, and inflation rate, in addition to the FDI as a percent of GDP, to explain income distribution expressed as the share of the poorest 40% as a percent the share of the richest 20%. The empirical results showed that FDI exacerbates income distribution in developing countries, but its effect is very weak.
