Journal Article

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

Authors

  • Peter Nunnenkamp
  • Rainer Schweickert
  • Manfred Wiebelt
Publication Date

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.

Info

JEL Classification
C68, D3, F21, O5
DOI
10.1111/j.1467-7679.2007.00379.x

Key Words

  • ausländische Direktinvestitionen
  • Bolivia
  • computable general equilibrium (CGE) analysis
  • foreign direct investment
  • poverty and income distribution