THE IMPACT OF GLOBALIZATION ON INCOME INEQUALITY IN INDONESIA (1981-2010)

The Indonesian economy has grown through the globalization era, reducing poverty and increasing social welfare are priorities in growing a strong economy, while the effect of globalization has had on these issues remains contested. Globalization is believed to have a positive impact on economic growth but the impact of globalization on inequality has been debated in recent years. This thesis analyzes the impact of globalization on income inequality in Indonesia from the period of 1981 to 2010, with considering the variables, such as GDP per-capita, FDI and Trade Openness by using the time series analysis and OLS approach. The researcher uses the Standardize World Income Inequality Database (SWIID) to show the level of income inequality. The result shows that GDP per-capita and FDI have positive relationship with income inequality, while openness has negative relationship with income inequality. Keyword: Globalization, Income Inequality, Developing Country, OL