The aim of this paper is to study the relationship between income distribution and patterns of trade and foreign investment. So, the first chapter presents a model which combines consumers with nonhomothetic preferences and firms that are heterogenous in productivity, which can serve foreign markets either through exports or horizontal FDI. Chapters two and three test the theoretical predictions linking bilateral exports and sales of foreign afiliates of luxury goods and necessities to income distribution in the origin and destination countries. The empirical results confirm part of the theoretical predictions.
