A comment on the multifaceted relationship between multinational enterprises and within-country inequality
Rajneesh Narula & Khadija van der Straaten
#2019-035
The capacity of Multinational Enterprises (MNEs) to upgrade economic
activity in the host country is a key objective of an MNE-assisted
development agenda, arguably having contributed to reducing income
inequalities between countries. However, the limited evidence available
suggests the gains of FDI are rarely evenly distributed within recipient
countries. How do MNEs affect the extant within-country inequalities?
Whether by direct or indirect action (or by inaction), MNEs can have
both a positive and a negative effect on within-country social and
economic inequality. We broaden our engagement with inequality beyond
income levels, as this is just one aspect of inequality that shapes or
impedes human development. We believe it is necessary - for both MNEs
and policymakers - to have a more nuanced understanding of how, and
under what circumstances, the presence of MNEs affects inequality in
host economies. We therefore highlight some key issues and avenues for
future research.
JEL Classification: D63, F23, F63, O17, J31
Keywords: inequality, gender, FDI, employment, linkages, informality, spillovers