Relationship Between Foreign Direct Investment and Income Inequality: Literature Review

In the literature, it is possible to come across studies examining the effect of foreign direct investment (FDI) on income inequality. In this study, a literature review has been conducted in order to better consideration the effect of FDI on income inequality. In this context, the main purpose of the study is to reveal the effect of FDI on income inequality within the framework of theoretical approaches based on empirical study findings. In addition, the study aims to contribute to the debates on the effects of foreign direct investment on income inequality. The findings of the studies on the relationship between FDI and income inequality shows differences. In some of the studies examined, there are findings supporting that FDI increases income and wage inequality. On the other hand, some other studies have found evidences that FDI reduces income inequality. Otherwise, there are also studies showing that FDI does not have a significant effect on income inequality.