Distributional Effects of FDI: How the Interaction of FDI and Economic Policy Affects Poor Households in Bolivia

22 Pages Posted: 18 Jun 2007

See all articles by Peter Nunnenkamp

Peter Nunnenkamp

University of Kiel

Rainer Schweickert

University of Kiel - Institute for World Economics (IfW)

Manfred Wiebelt

University of Kiel - Institute for World Economics (IfW)

Abstract

This article provides a CGE analysis of the medium to long-run impact of FDI inflows on poverty and income distribution in Bolivia. The simulation results suggest that FDI inflows enhance economic growth and reduce poverty. However, the income distribution typically becomes more unequal. In particular, FDI widens disparities between urban and rural areas. The Bolivian government may promote the growth-enhancing and poverty-alleviating effects by overcoming labour-market segmentation and providing complementary public investment in infrastructure. But simulated policy reforms or alternative productivity scenarios are hardly effective in reducing the economic divide.

Suggested Citation

Nunnenkamp, Peter and Schweickert, Rainer and Wiebelt, Manfred, Distributional Effects of FDI: How the Interaction of FDI and Economic Policy Affects Poor Households in Bolivia. Development Policy Review, Vol. 25, No. 4, pp. 429-450, July 2007. Available at SSRN: https://ssrn.com/abstract=993283 or http://dx.doi.org/10.1111/j.1467-7679.2007.00379.x

Peter Nunnenkamp (Contact Author)

University of Kiel ( email )

D-24100 Kiel
Germany

Rainer Schweickert

University of Kiel - Institute for World Economics (IfW) ( email )

Duesternbrooker Weg 120
D-24118 Kiel
Germany

Manfred Wiebelt

University of Kiel - Institute for World Economics (IfW) ( email )

Duesternbrooker Weg 120
D-24118 Kiel
Germany

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