Foreign Direct Investment, Income Inequality and Poverty in Portugal, 1973-2014: What does cointegration analysis tell us?
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Data: 10 Setembro, 2019
Ano: 2019
The empirical evidence on how inflows of foreign direct investment impact on income inequality and poverty of a country is scarce and produces divergent results. Moreover, most existing studies look into underdeveloped or developing countries. The aim of this study is to contribute to the empirical literature on the relationship between foreign direct investment (FDI), poverty and income inequality, focusing on a little explored context, a developed country, Portugal, characterized by having relatively high levels of inequality and poverty. Using time series estimates (cointegration), in particular, the Johansen test and Granger causality, for the period between 1973 and 2014, the results show that there is a longstanding relationship between inflows of foreign investment and the indicators of inequality and poverty.