Financial development and the fdi-inequality nexus

Shu Chin Lin; Dong-Hyeon Kim; Yi Huey Lee

doi:10.1111/coep.12085

Financial development and the fdi-inequality nexus

Shu Chin Lin, Dong-Hyeon Kim, Yi Huey Lee

Department of Food and Resource Economics

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	513-534
Number of pages	22
Journal	Contemporary Economic Policy
Volume	33
Issue number	3
DOIs	https://doi.org/10.1111/coep.12085
Publication status	Published - 2015 Jul 1

ASJC Scopus subject areas

Economics and Econometrics
Public Administration
Business, Management and Accounting(all)

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1111/coep.12085

Cite this

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AB - 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.

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Financial development and the fdi-inequality nexus

Abstract

ASJC Scopus subject areas

UN SDGs

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