findings:FDI unlikely to generate equity-oriented welfare effects; trade openness not significantly related
channels:wrong targeting incentive structure for FDI
direction:1# -1 neg / 0 none / 1 pos
significance:2# 0 nsg / 1 msg / 2 sg
- intervention:regulation (labour)
institutional:1
structural:0
agency:0
inequality:income
type:0# 0 vertical / 1 horizontal
indicator:1# 0 absolute / 1 relative
measures:Gini coeff
findings:labour regulations and business regulations negatively related to equitable income distribution while credit market regulation has no effect in income distribution; FDI unlikely to generate equity-oriented welfare effects; trade openness not significantly related
notes:LM regulations defined as hiring/firing, minimum wage, severance pay; business reg. bureaucracy costs, business starting costs, licensing and compliance costs; credit market oversight of banks, private sector credit, interest rate controls
annotation:|
A study on the effects of labour, business and credit regulations, FDI and school enrolment on the income inequality in developing countries from 1970 to 2012.
It finds that in MENA, SSA, LAC and to some extend AP increased labour and business regulations are actually negatively related to equitable income distribution, with market regulation not having significant effects.
Similarly, FDI is negatively related and the authors suggest it is unlikely to generate general welfare effects in developing countries as it often has the wrong targeting incentive structure.
The authors identify developing countries lacking in institutional capability to accomplish regulatory policies optimized for benefits and see the need for policies requiring more specific targeting of inequality reduction as their agenda.
Onthe other, they find school enrolment and thus education-oriented policies to be positively related with an equitable income distribution,
suggesting it increases the capacity of public administration practitioners and in turn lead to more adapted policies specific to developing countries' institutional contexts.
Overall, the authors suggest that regulatory policy in developing countries needs to be built for their specific contexts and not exported from developed countries due to their different institutional capabilities and structural makeup.
The study is limited in its design focus that lying purely on the macro-level regional analyses and can thus, when finding correlations towards income inequality, also only identify far-reaching structural and institutional possible root causes.
