International Journal of Business and Economics Volume 19, No. 3 December, 2020

Effects of FDI Flows and Trade Openness on Income Inequality: Evidence from Australia and the G7 Countries

Anna Ploszaj

Griffith Business School, Griffith University, Australia

Tarlok Singh

Griffith Business School, Griffith University, Australia

Jen-Je Su

Victoria University, Melbourne, Australia

Abstract

This study uses the time-series data to examine the long-run effects of FDI and trade openness on income inequality in Australia as well as in the G7 countries. The model is estimated using annual data for the period 1984–2014 (Canada: 1981–2011). The estimation is carried out using the ARDL-Bounds test. The results, which suggest a long-run relationship among the model variable, would be useful for the policy makers who seek to promote the international trade and expand the flow of foreign investment, while at the same time attempting to have more equal income distribution within the country.

Keywords：ARDL Model, FDI, Income Inequality, Trade Openness.

JEL Classifications：D63, F16, F21, F60.

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