Browsing by Subject "Vyö ja tie -hanke"

The aim of the study is to examine the interplay between foreign direct investment (FDI) and host nation-state income inequality. The particular topic of interest is extending the understanding of the Chinese Belt and Road Initiative (BRI) and its potential relationship to the developing world’s income inequality. This study is relevant, because of the continuous and unquestionable rise of China. The research question is whether there is a correlation between an increase in Chinese FDI and an increase in income inequality. The hypothesis is that as FDI increases, income inequality increases. Theoretically, the research relies on critical global political economy. The chosen research method is empirical quantitative research, including both descriptive and inferential statistics and an expert interview. An unbalanced dataset of 50 BRI nation-states between the years 2010 to 2017 was used. This secondary data came from a variety of sources, including the UNDP, World Bank, World Inequality Database, and AidData. This thesis conducted a variable ranking and three different types of statistical correlation calculations. The results of this study are largely inconclusive. The correlation coefficients in all cases that included FDI inflow data do not provide empirical support for the hypothesis of an increase in Chinese FDI being positively correlated with an increase in income inequality. Even when lagging the income inequality variables with a variety of delays, no statistically significant relationships were found. This is largely explained by the non-linearity of the FDI flow data. Therefore, this thesis estimated FDI stock variables to test the relationship between more linear data with the income inequality variables, which are by nature more linear. At last, with the estimated FDI stock statistically significant relationships were found. It is noteworthy, however, that the results were also inconsistent; as there were both positive and negative correlation coefficients. Providing support not only for the initial hypothesis but also against it. Despite the inconclusiveness of the results, the majority of the relationships lean towards the null hypothesis. Regardless, it is important to realize, that despite the FDI inflow calculations not providing statistically significant results, it does not necessarily indicate that the Chinese FDI project is without potential serious implications for the income inequality of host nation-states. The results of this study are important for policymakers and researchers alike. As such, this thesis concludes that more research is needed to draw more decisive conclusions about the relationship between FDI and income inequality.