The Effect of FDI, Exports and GDP on Income Inequality in 15 Eastern European Countries

In this paper I explore the relationship between FDI, exports, GDP and income inequality in Eastern European countries. The empirical test shows positive and significant relations between increasing income inequality and increasing level of FDI stock in Eastern-European states. In general, supporting previous publications in this area, I found that export intensity acts to decrease wage dispersion, while the local effects could be different from the regional effects. Higher levels of GDP has only a slight effect on the GINI index. Besides between FDI inflow and GINI index, the relation was not demonstrable. In common with previous empirical analysis, I found evidence of the higher level of high-technology export's diverting effect on income inequality.