cite: Xu2021
author: Xu, C., Han, M., Dossou, T. A. M., & Bekun, F. V.
year: 2021
title: "Trade openness, FDI, and income inequality: Evidence from Sub-Saharan Africa"
publisher: African Development Review
uri: https://doi.org/10.1111/1467-8268.12511
pubtype: article
discipline: development

country: Angola; Benin; Botswana; Burkina Faso; Burundi; Cabo‐Verde; Cameroon; Central African Republic; Chad; Comoros; Congo; D.R. of the Congo; Ethiopia; Gabon; Ghana; Guinea; Guinea Bissau; Côte d'Ivoire; Kenya; Lesotho; Liberia; Madagascar; Malawi; Mali; Mauritania; Mozambique; Namibia; Niger; Nigeria; Rwanda; Senegal; Seychelles; Sierra Leone; South Africa; Tanzania; Togo; Uganda; Zambia
period: 2000-2015
maxlength:
targeting: implicit
group: workers
data: UNDP income equality; UN Conference on Trade and Veleopment FDI; World Bank WDI; World Bank World Governance Indicators

design: quasi-experimental
method: generalized method of moments
sample: 38
unit: country
representativeness: national, census
causal: 0 # 0 correlation / 1 causal

theory:
limitations: contains a variety of institutional-structural context within region
observation:
  - intervention: trade liberalization (FDI)
    institutional: 0
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: Gini coeff
    findings: increased income equality through FDI (p < .1)
    channels: primarily goes to agriculture which can employ low-skilled labour
    direction: -1 # -1 neg / 0 none / 1 pos
    significance: 1 # 0 nsg / 1 msg / 2 sg
  - intervention: trade liberalization
    institutional: 0
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: Gini coeff
    findings: significantly decreased income equality through trade liberalization; equally for political stability, corruption, rule of law increase
    channels: higher import than export, creating jobs in other countries
    direction: 1 # -1 neg / 0 none / 1 pos
    significance: 2 # 0 nsg / 1 msg / 2 sg
  - intervention: education
    institutional: 1
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: Gini coeff
    findings: education significantly decreases income equality in the region
    channels: potentially inequal access to education through exclusion (e.g. spatial/gender/financial); differentiated quality of education
    direction: 1 # -1 neg / 0 none / 1 pos
    significance: 2 # 0 nsg / 1 msg / 2 sg

notes:
annotation: |
  A study on the effects of trade liberalization and FDI on income inequality in 38 countries in the Sub-Saharan region.
  It finds that increased FDI is negatively correlated with income inequality measured through the Gini coefficient, while trade liberalization is positively correlated with income inequality ---
  as are corruption, political stability, rule of law and education, which contradicts a variety of previous studies.
  The authors suggest this may be due to the difference in sample and variables used, and the periods under study.
  They suggest that FDI may primarily go to the agricultural sector which can employ low-skilled labour and thereby reduce inequalities,
  while trade openness in fact creates jobs in other countries through higher import than export rates.
  They do not provide clear channels through which education positively correlates with inequality, though some possibilities are an unequal access to education (through excluding factors such as those based on spatial, gender or financial inequalities), as well as a differentiated quality of education.
  Limitations of the study are the region-wide level of analysis which may obscure context-dependent mechanisms within the different institutional-structural contexts of the countries and potential hidden unobservables which may bias the results.