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FDI and Income Inequality—Evidence from Latin American Economies

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  • Dierk Herzer
  • Philipp Hühne
  • Peter Nunnenkamp

Abstract

This paper analyzes whether foreign direct investment (FDI) has contributed to the wide income gaps in Latin America. Panel cointegration techniques as well as regression analysis are performed to assess the impact of inward FDI stocks on income inequality among households in Latin American host countries. The panel cointegration analysis typically reveals a significant and positive effect on income inequality. There is no evidence for reverse causality. The findings are fairly robust to the choice of different estimation methods, sample selection and the period of observation.

Suggested Citation

  • Dierk Herzer & Philipp Hühne & Peter Nunnenkamp, 2014. "FDI and Income Inequality—Evidence from Latin American Economies," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 778-793, November.
    • Handle: RePEc:bla:rdevec:v:18:y:2014:i:4:p:778-793
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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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