Income inequality and foreign direct investment: An empirical investigation on selected developing

In this study, the hypothesis that foreign direct investments increase income inequality in developing countries, which is proposed by the dependency hypothesis, is tested. In this respect, the data set covering the period of 1999-2018 belonging to 20 selected devoloping countries were estimated with the System Generalized Method of Moments which is the dynamic panel data analysis method. As a result of the analysis, the hypothesis of the study is seen in accordance that foreign direct investments in the developing countries increase the income inequality. In addition, The Dependency Hypothesis in the theory is supported by the analysis findings. Accordingly, there is a significant and positive relationship between foreign direct investment and income inequality. In addition, it is seen that there is a statistically significant positive relationship between goverment expenditure which constitutes other explanatory variables of the model and the lag value of the gini index and income inequality. On the other hand, there is a negative relationship between technology and inflation and income inequality and finally, there is no systematic relationship between income inequality and GDP per capita and education variables added to the model. Keywords: Income inequality, Foreign direct investment, System generalized method of moments, Panel data