The Impact of FDI on Income Inequalities in Resources' Rich Countries

This work investigates the impact of foreign direct investment on the income inequalities in the natural resources'' rich countries. The research do not analyse the impact in resources rich in isolation but compare it with the impact of FDI in a resources'' scarce one. The chosen countries are respectively Algeria and Tunisia over the time period of 2003- 2013. The analysis is based on economic indicators and taking into consideration the resources as a variable. The aim of this analysis is to define and elaborate a correlation between FDI''s impact on the income inequalities through natural resources as a channel. The theory is based on the Stopler and Samuelson model which claims that the rise in capital intensive commodity''s price leads to the increase of the return to capital and inversely to the fall of the return to labor and wages. The research also considers the Kuznet curve that argues that at early stages of development the income inequalities tend to increase. It was found in this analysis that resources'' endowment is responsible for some laws and regulations that are encouraging some types of FDI increasing Income Inequalities.