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| FDI, Market Segmentation and the Income Gap——An Empirical Study of the Provincial Panel Data in China |
| SONG Yongchao,ZHU Yanfu |
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Abstract This paper is based on China’s 1995-2010 provincial panel data. It examines the relationship between the foreign investment, the degree of market segmentation and the income gap. The results show that: first, Gini coefficient of various regions in China has increased in recent years, and income gap significantly expanded. Second, FDI affects the host country income gap through technology spillover effect, employment structure effect, economic growth effect and international trade effect. The income distribution effects of FDI were in the inverted U-shape, with an initial rise and a follow-up drop, and there are regional differences. Third, the industrial protection of the local government show different degrees, thus the market segmentation factors will influence income distribution, and the income distribution effect is also regionally different. At the same time, market segmentation, by limiting labor, capital and commodity flows, and technological overflow, inhibit the income distribution effects of FDI.
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Received: 03 December 2012
Published: 15 July 2013
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Corresponding Authors:
SONG Yongchao
E-mail: sonyc1987@163.com
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2013, Vol. 
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