Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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Effects of Trade and FDI on Income Inequality in Vietnam

베트남에서 무역과 FDI가 소득불평등에 미친 영향

  • Tuoi, Do Thi Hong (Department of International Trade, Chungnam National University) ;
  • Oh, Keun Yeob (Department of International Trade, Chungnam National University) ;
  • Wang, Jingbu (Department of International Trade, Chungnam National University)
  • Received : 2019.12.07
  • Accepted : 2019.12.16
  • Published : 2019.12.31
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Abstract

This study investigates the impacts of international trade and foreign direct investment (FDI) on income distribution both nationally as well as provincially in Vietnam. This study uses panel data of 63 provinces in Vietnam for the period of 2008-2016 and a time series dataset from 1992 to 2016. We found the following results. First, the income distribution is significantly affected by per capita income. When we consider the Kuznets hypothesis, the intra-provincial income inequality of Vietnam's 63 provinces follows a regular U-shaped relationship. In contrast, the income distribution in Vietnam exhibits an inverted U-shaped relationship between the Gini coefficient and per capita income. Second, the inward FDI tends to reduce income gaps in each province through the employment of predominantly low-skilled workers. FDI, however, seems to increase income inequality throughout Vietnam. This result is potentially due to the strong concentration of FDI into a very few areas. Third, the effect of trade openness exhibits a decrease in inequality both within each province and in the whole country of Vietnam.

Keywords

Acknowledgement

This work was supported by research fund of Chungnam National University.

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