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Trade, foreign direct investments (FDI) and income inequality: Empirical evidence from transition countries

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  • Chiara Franco
  • Elisa Gerussi

Abstract

The aim of the article is to verify whether trade and inward foreign direct investments (FDI) may affect income distribution in a sample of 17 Transition Countries (TCs) over the period 1990-2006. In line with most of the previous literature, FDI do not have significant effects on income inequalities, whereas trade, especially when occurs with developed countries, seems to be more relevant. Different results are found when we take into consideration the educational system which represents an important channel through which FDI and trade may affect inequality.

Suggested Citation

  • Chiara Franco & Elisa Gerussi, 2013. "Trade, foreign direct investments (FDI) and income inequality: Empirical evidence from transition countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(8), pages 1131-1160, December.
    • Handle: RePEc:taf:jitecd:v:22:y:2013:i:8:p:1131-1160
    DOI: 10.1080/09638199.2011.647048
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    8. Imran Khan & Zuhaba Nawaz & Bilal Bin Saeed, 2021. "Does trade openness and FDI reduce inequality? Evidence from South Asia," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6459-6470, October.
    9. Anghel Ionuţ-Marian, 2017. "Measuring income inequality: comparative datasets and methodological deficiencies. An overview of income inequality in Romania during postsocialism," Social Change Review, Sciendo, vol. 15(1-2), pages 55-82, December.
    10. McLaren, John & Yoo, Myunghwan, 2017. "FDI and inequality in Vietnam: An approach with census data," Journal of Asian Economics, Elsevier, vol. 48(C), pages 134-147.
    11. Quoc Hoi Le & Quynh Anh Do & Hong Chuong Pham & Thanh Duong Nguyen, 2021. "The Impact of Foreign Direct Investment on Income Inequality in Vietnam," Economies, MDPI, vol. 9(1), pages 1-15, March.
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    14. Stefan Jestl & Sandra M. Leitner & Sebastian Leitner, 2022. "The relative impact of different forces of globalization on wage inequality: A fresh look at the EU experience," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1003-1037, September.
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    16. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).
    17. Ribeiro, Ana Paula & Carvalho, Vitor & Ferreira, Mariana, 2020. "The effect of globalization on wage inequality: an application to the European Union before the Great Recession," MPRA Paper 110697, University Library of Munich, Germany.
    18. Acheampong, Alex O. & Dzator, Janet & Shahbaz, Muhammad, 2021. "Empowering the powerless: Does access to energy improve income inequality?," Energy Economics, Elsevier, vol. 99(C).
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