BALANCING GROWTH AND EQUITY: THE IMPACT OF FOREIGN DIRECT INVESTMENT ON POVERTY AND INCOME INEQUALITY IN MIDDLE-INCOME COUNTRIES

Abstract

This article examines the complex correlation between Foreign Direct Investment (FDI), poverty, and income inequality in middle-income countries from 1972 to 2024. We use a detailed analysis along with visual data to show how foreign direct investment (FDI) has led to substantial economic growth in countries like China, India, and Brazil, especially during the 1990s and 2000s. Although there have been economic gains, the positive effects of Foreign Direct Investment (FDI) have not been distributed equally, leading to varied results in reducing poverty and often worsening income inequality. The results of our research suggest that Foreign Direct Investment (FDI) has made a significant contribution to the creation of jobs and improvement in living standards. However, it is important to note that the effects of FDI differ significantly depending on the specific regions and economic structures. The analysis highlights the significance of local ability to absorb and utilize foreign direct investment (FDI) and the need for specific economic policies to optimize its positive impacts. Therefore, we suggest various policy recommendations, such as increasing investments in education and infrastructure, implementing progressive social policies, and promoting regional cooperation to ensure a fairer distribution of benefits from foreign direct investment (FDI). These strategies are essential for effectively utilizing foreign direct investment (FDI) to achieve inclusive and sustainable development, with the goal of reducing poverty and narrowing income inequalities in middle-income countries.