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Financial Development And The Fdi-Inequality Nexus

Author

Listed:
  • Shu-Chin Lin
  • Dong-Hyeon Kim
  • Yi-Huey Lee

Abstract

type="main" xml:id="coep12085-abs-0001"> This article empirically investigates whether the link between foreign direct investment (FDI) and income inequality varies with financial development. Using a smooth transition regression model to a panel of developing and advanced countries over the period of 1976–2005, the results indicate that financial development indeed defines the relationship between FDI and inequality. FDI raises income inequality and the effect becomes stronger in magnitude with financial sophistication. The results also indicate a large variation in the FDI effect across countries and over time, contingent on financial development. ( JEL C23, F40, O15)

Suggested Citation

  • Shu-Chin Lin & Dong-Hyeon Kim & Yi-Huey Lee, 2015. "Financial Development And The Fdi-Inequality Nexus," Contemporary Economic Policy, Western Economic Association International, vol. 33(3), pages 513-534, July.
    • Handle: RePEc:bla:coecpo:v:33:y:2015:i:3:p:513-534
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    File URL: http://hdl.handle.net/10.1111/coep.2015.33.issue-3
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    Citations

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    Cited by:

    1. Albulescu, Claudiu Tiberiu & Ionescu, Adrian Marius, 2018. "The long-run impact of monetary policy uncertainty and banking stability on inward FDI in EU countries," Research in International Business and Finance, Elsevier, vol. 45(C), pages 72-81.
    2. Chi-Chuan Lee & Chien-Chiang Lee, 2018. "The Impact of Country Risk on Income Inequality: A Multilevel Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 136(1), pages 139-162, February.
    3. Metaxas, Theodore & Kechagia, Polyxeni, 2016. "Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015," MPRA Paper 71414, University Library of Munich, Germany.
    4. Hebatalla Rezk & Goma Amer & Nahla Fathi & Sizhong Sun, 2022. "The impact of FDI on income inequality in Egypt," Economic Change and Restructuring, Springer, vol. 55(3), pages 2011-2030, August.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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