Foreign direct investments (FDI) is an important determinant of economic growth. FDI does not only contribute to the growth and economic development but also affects income through contributing to economic development and the impact on employment and salary structure of developing countries. The aim of this paper is to analyze the impact of FDI on income inequality in Vietnam. This study is the first attempt to examine the impact of FDI on income inequality under the constraints of the institution and education levels. To address the potential endogeneity problem, this study adopts Genernalized Method of Moment (GMM) model to conduct the estimation. A two-step GMM model with robust standard errors is used in the study. Empirical results show that FDI tends to increase income inequality in Vietnam and the existence of a non-linearity relationship between FDI and income inequality is also validated. Moreover, the study finds that the effects of FDI on income inequality are different depending on the level of education and institutions of the host provinces in Vietnam. The results of this study imply that, in order to ensure sustainable development, Vietnam’s policies should focus on improving the quality of economic governance and the administrative reform efforts of the government of the provinces and cities. Besides, policies should focus on increasing investment in public education and improving human capital, which not only can reduce income inequality but also can attract more FDI inflows.

In this study, we analyze the spatial effect of foreign direct investment (FDI) on poverty reduction in Vietnam. This study uses the provincial-level panel data and the fixed-effects regression and the spatial econometric model to investigate empirically the impact of FDI on poverty reduction in Vietnam. The study finds that FDI has contributed to poverty reduction not only directly but also indirectly through human capital. However, FDI has indirectly worsened poverty through international trade. In addition, empirical results from the spatial econometric model show that FDI tends to decrease poverty in provinces. Finally, the study has some policy implications to decrease the negative effects of FDI on poverty reduction in Vietnam.

Foreign direct investment (FDI) can bring many benefits to the host country's economy, but not all citizens in that country benefit equally. This study aimed to analyze the impact of FDI on wage inequality between skilled and unskilled workers in Vietnam. The study used an econometric model, applying systematic generalized method of moments (GMM) estimation to panel data from 63 Vietnamese provinces in the period from 2010 to 2018 to analyze the impact of FDI on wage inequality. The empirical results from the econometric models using systematic GMM showed that FDI tends to increase wage inequality in localities. The results of this study suggest that to ensure sustainable development, policies to attract and use FDI need to be linked with social security policies and efforts to reduce wage inequality. Based on the research results, the study proposes some policy implications to minimize the negative impact of FDI on wage inequality in Vietnam.