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Income Inequality, US MNEs and Green Technology Innovation: Evidence from OECD

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  • João Bento

  • Miguel Matos Torres

  • Hicham Nachit

Abstract

We are exploring the interplay between inequality and foreign direct investment (FDI) and green technology innovation, an area that remains underexplored in international business (IB) research. This study examines how green technology innovation moderates the relationship between FDI, proxied by the performance and operational outcomes of majority-owned U.S. foreign affiliates, and income inequality, measured by the Gini coefficient of equivalised disposable income from the Luxembourg Income Study (LIS) database. We employ OECD patent data on green innovations to construct a panel dataset of 28 high-income OECD countries from 2000 to 2020. Using fixed-effects panel regressions and quantile models with bootstrapped inference, the results indicate that FDI has a significant inequality-reducing effect, and green innovation moderates this relationship, reducing income inequality. Firm investment, profitability, efficiency, and innovation interact with green innovation to reduce inequality, highlighting the role of MNEs in fostering equitable outcomes. These findings contribute to a better understanding of IB activity by unpacking the interdependent dynamics between firm performance and national competitiveness, offering policy insights to promote FDI and green innovation and mitigate inequality.

Suggested Citation

  • João Bento & Miguel Matos Torres & Hicham Nachit, 2026. "Income Inequality, US MNEs and Green Technology Innovation: Evidence from OECD," LIS Working papers 914, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:914
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