Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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How Have Financialization and Offshoring Affected the Firm's Investment in Korea?

  • Lee, Woocheol (Department of Economics and Finance, RMIT University) ;
  • Kim, Joonil (Department of Economics, Mokwon University)
  • Received : 2019.08.30
  • Accepted : 2019.09.24
  • Published : 2019.09.30
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Abstract

This paper examines how firm's investment has been affected by offshoring and financialization in Korea over the period 2000-2014 by using industry-level data collected from World Input Output Database (WIOD) and firm-level data collected from the KIS-Value Database. The findings are summarized as follows. First, offshoring index as expected shows a negative relationship with real investment. This negative impact is stronger in a large firm group. Second, there is a positive relationship between dividend payments and real investment. The positive relationship is greater in a small & medium-sized firm group. Third, the purchase of financial assets and the income generated from financial assets are positively related to real investment. The positive relationship is stronger in the small & medium-sized firm group. The empirical results show that firm size is a factor that effectively affects firm's real investment. This paper suggests that the influence of financialization and offshoring on firm's real investment should be assessed in various contexts rather than in a unilateral context.

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References

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