Recent research indicates that globalization promotes the growth of average incomes in developing countries, but the standard of living of the poor in these societies could decline if integration into the global economy adversely affects the distribution of income. While much of the current debate is largely focused on openness to trade, this chapter pays special attention to the influence of foreign direct investment on the distribution of income in developing countries, using data recently published by UNCTAD (2000) and the World Bank (2000). It reviews previous research and various theoretical arguments on the effect of globalization on income inequality, and justifies authors' focus on the stock of foreign investment as the principal measure of a country's integration into the global economy and their method of calculating this variable which distinguishes their study from others. Finally, the chapter identifies other influences that might affect the distribution of income within countries.
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