ABSTRACT
Income distribution problem is an enduring economic research topics, the income gap between urban and rural residents in China has the greatest impact. Research shows that there are many factors that can influence the income gap between urban and rural areas. In recent years, China’s international economic cooperation is increasing and foreign direct investment scale expands constantly. The regional distribution, industry distribution and the various advantages for resources of FDI may affect the employment and income level. So FDI is becoming one of the hot spots in studying the influence on income gap. Pandej Chintrakarn etc (2012) using the panel cointegration analyze the relationship between FDI and income cap. They concluded that FDI had narrowed the income gap in the United States. Liu Yulin etc (2013) found that the relationship between FDI and income gap between urban and rural areas in China is inverted U-shaped. Most provinces in eastern and central had entered the right part of the parabola, while most western region is in the left half. Christian Lessmann (2013) used the panel data of 55 countries and they concluded that FDI widened the low and middle income countries, but not to narrow the income gap in high-income countries. As a coastal open city, Jiangsu has a superior location advantage, investment environment and huge market potential; it
FDI choosing different types of labor factor has different impact on the marginal benefit; Secondly, FDI can promote the optimization of the industrial structure, making the different income in different industry. Thirdly, FDI affects income gap by foreign trade. Total imports and exports of foreignfunded enterprises accounted for the proportion of total imports and exports of Jiangsu Province about 75% in 2011, it has become the important part of Jiangsu international trade. Fourthly, FDI affects income gap by TFP. Technology diffusion of FDI inflows will promote technological progress and productivity of the host country, and this will improve the region’s income. But the effect is related to the degree of spillover effects.
