Effect of Inward Foreign Direct Investment on Income Inequality in Transition Countries
AbstractThis paper empirically tests the link between FDI and income inequality for transitional countries in Eastern Europe and Central Asia for the period of 1990 to 2002. The theoretical motivation comes from a model developed in a previous paper, which predicts that inward FDI reduces income inequality for an economy where wage earners outnumber capital owners. Using fixed effects, there is no evidence that FDI inward stocks affect overall income inequality. However, breaking the effect into its components, the statistical evidence suggests that FDI inward stocks exacerbated wage income inequality, while reducing capital income inequality.
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Bibliographic InfoArticle provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.
Volume (Year): 22 (2007)
Issue (Month): ()
Development; Foreign Direct Investment; FDI; Globalization; Income Inequality; Transition Countries;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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