Original scientific paper
https://doi.org/10.1080/1331677X.2022.2163270
Foreign direct investment openness and income classes in Europe around the Great Recession
Philip Arestis
Elena Bárcena-Martín
Natalia Martín-Fuentes
Salvador Pérez-Moreno
Abstract
Distributional implications of capital account regulation is eminently
context-specific. This paper examines the distributional
effects of the openness of foreign direct investment (FDI) flows
across 27 European countries in different economic environments
around the Great Recession, covering the period 2007–2013. Our
multi-level approach allows us to combine country-level variables
and sociodemographic characteristics of individuals. The results
highlight that the openness of FDI flows heterogeneously affects
the income share of individual groups, favouring in particular the
highest income classes. This finding seems to be driven by the
educational level. We argue that even though highly educated
individuals are present along the entire distribution, the highest
income classes are especially favoured by the openness of FDI
flows. This biased distributional effect of the openness of FDI
flows persists throughout the years examined, regardless of the
economic environment; this is due, in part, to the fact that the
distribution of highly educated people is not sensitive to the business
cycle.
Keywords
Foreign direct investment; income distribution; income classes; multilevel analysis
Hrčak ID:
314020
URI
Publication date:
15.5.2023.
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