This paper attempts to distinguish two modes of FDI – cross-border mergers & acquisitions (M&As) and greenfield FDI and examine whether the two modes of FDI have differential effects on income inequality. MNCs can undertake FDI between building its own establishment (greenfield investment) or to acquire an existing firm (cross-border M&As) (Nocke and Yeaple, 2007). The two forms of investment are different in nature (Wang and Wong, 2009). Economic studies suggest that greenfield FDI and M&As may have different economic consequences in the host country. The United Nations Conference on Trade and Development (UNCTACD) in the World Investment Report (WIR) (2000)