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FDI and Income Inequality—Evidence from L atin A merican Economies
Author(s) -
Herzer Dierk,
Hühne Philipp,
Nunnenkamp Peter
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12118
Subject(s) - economics , cointegration , economic inequality , foreign direct investment , causality (physics) , inequality , monetary economics , investment (military) , panel data , econometrics , demographic economics , macroeconomics , physics , politics , mathematics , political science , mathematical analysis , law , quantum mechanics
This paper analyzes whether foreign direct investment ( FDI ) has contributed to the wide income gaps in L atin A merica. Panel cointegration techniques as well as regression analysis are performed to assess the impact of inward FDI stocks on income inequality among households in L atin A merican 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.