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Effect of Inward Foreign Direct Investment on Income Inequality in Transition Countries

Year: 2007

Type: article

Abstract: This 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.

Source: Journal of Economic Integration

DOI: 10.11130/jei.2007.22.4.888

Author: Bornali Bhandari

Institution: Fitchburg State University

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Reduced inequalities, Decent work and economic growth

Open Access status: bronze

OpenAlex ID: W2007184404