FDI and Income Inequality—Evidence from Latin American Economies

Dierk Herzer, Philipp Hühne and Peter Nunnenkamp

Review of Development Economics, 2014, vol. 18, issue 4, 778-793

Abstract: This paper analyzes whether foreign direct investment (FDI) has contributed to the wide income gaps in Latin America. Panel cointegration techniques as well as regression analysis are performed to assess the impact of inward FDI stocks on income inequality among households in Latin American 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.

Date: 2014
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Working Paper: FDI and income inequality: Evidence from Latin American economies (2012)
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