• Korea Trade Review
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• v.44 no.6
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• pp.345-361
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• 2019

In recent years, Chinese firms have explosively increased outward foreign direct investment (oFDI). While state-owned enterprises (SOEs) are still dominant in Chinese oFDI, privately-owned enterprises (POEs) are also accelerating their internationalization. These two types of Chinese firms differ in their behavior regarding oFDI. The objective of this paper is to analyze the differences in the choice of oFDI locations between Chinese SOEs and POEs by considering host country factors. By integrating the literature on Chinese firms' oFDI and on FDI locations, we developed six hypotheses concerning how host country factors affect their choice of location. We tested our hypotheses by conducting multiple regression analysis with recent secondary data on 413 Chinese MNEs in 88 countries between 2005 and 2016. The results of the test show that in selecting oFDI locations, Chinese SOEs invest relatively more in countries with richer natural resources, more abundant strategic assets, less production efficiency, higher political risk, and lower institutional quality compared with Chinese POEs. It is our hope that the empirical results of this paper will contribute to research on Chinese oFDI.

• International Commerce and Information Review
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• v.16 no.4
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• pp.151-167
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• 2014

The aim of this study is to examine the relationship between globalization and income distribution in Korea. In order to identify the key determinants, the study investigates the effects of trade openness, inward and outward FDI flows, and per capita GDP on income distribution. The study uses methodology of unit root and co-integration technique as well as an error correction model over 1992 to 2011 by using annual data. The empirical findings showed that income inequality is reduced as trade openness and the per capita GDP increase. Meanwhile, income inequality is deteriorated as inward and outward FDI flows increased. In addition, the study revealed that the negative effect of inward FDI flows on income inequality is greater than that of outward FDI flows. This result supports the Feenstra and Hanson (1997) hypothesis. Overall the globalization process can be beneficial for the Korean economy, but its nature should be closely monitored regarding income distribution.

• KDI Journal of Economic Policy
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• v.36 no.1
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• pp.1-42
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• 2014

This study analyzes how heterogeneous across firms' productivity level the effects of foreign direct investment (FDI) on the productivity of firms in a host country are. The study uses firm level data over 2000~2009 in South Korea and takes a quantile regression approach to estimate FDI's heterogeneous effects on the invested firm ('direct effects') and other domestic firms in the industry to which the invested firm belongs ('intra-industry spillover effects'). Major empirical results are as follows. In manufacturing sector, FDI has positive and statistically significant direct effects on the invested firm. In addition, the higher the quantiles of firms' productivity level are, the larger the positive productivity effects are. FDI also has positive and statistically significant intra-industry spillover effects on domestic firms in low quantiles of productivity while it has negative and statistically significant or insignificant spillover effects on those in high productivity quantiles. In service sector, on the other hand, Sufficient evidence is not found that FDI has statistically significant direct effects or intra-industry spillover effects. Taken together, the study suggests that FDI has heterogeneous effects on the productivity of firms in host country, depending on the firms' productivity level and sector.

• Korea Trade Review
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• v.43 no.1
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• pp.177-197
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• 2018

This paper aims to analyze the effects of external uncertainty on the entry modes decision of multinational firms. On the basic assumption that the entry modes of the firms are dependent on ex-ante or ex-post perceived risk, we empirically analyzed the impacts of perceived risk factors on the investment patterns of firms. We found that the larger the population, the higher the level of GDP per capita, and the larger the trade volume as a ratio of GDP resulted in increased M&A FDI and greenfield FDI. The economic growth rate variables were found to be significantly positive effect on only greenfield entry mode. Regarding the main variables, lower levels of corruption and increased stability regarding political issues resulted in the host country receiving increased M&A investment. However, we found only a positive statistical significance of the political stability variable on the explaining greenfield FDI. Results show that M&A entry mode is affected by both corruption and political instability level. However, the greenfield FDI featuring sunk costs, seems more responsive to political instability.

• The Korean Journal of Financial Management
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• v.25 no.2
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• pp.103-135
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• 2008

We test the hypothesis whether foreign direct investments(hereafter "FDI") can affect the changes of the firm value. In this study, we use a newly developed event study technique, referred to as value-based event study approach(hereafter "VESA"), which is based on the seminal papers of M&M(1958, 1961, 1963) and Lee(2006, 2007). The empirical findings about the effects of FDI's on the intrinsic firm values, which can be measured by intrinsic Q(hereafter "IQ") values of the VESA, are as follows; First, the FDI's are carried out by healthy firms in terms of high IQ's. The IQ values become higher during the post-FDI period than prior to performing FDI's. Second, among the four components of IQ values, the value of assets-in-place, the value of intangible assets, and the value of growth opportunities are all increased during the post-FDI period, except the value of current earnings. Third, the same results are observed in all the samples classified by industry. In sum, thanks to the above findings in this study, we can conclude that the announcements of the FDI's are good and reliable indicators for the firm to signal to the market that the FDI firms are healthy in intrinsic firm values, and also that they have good chances to increase their firm values through the new investments abroad.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.3
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• pp.151-162
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• 2019

The paper examines the effects of Foreign Direct Investment (FDI) on the economic growth of Lao People's Democratic Republic (Lao PDR) between 1993 and 2015. The investigation is based on the influence of growth and economic absorptive capability determinants such as human capital, trade openness, and institutional quality. The methodological analysis uses a multivariate framework accounting capital stock, labor stock, FDI, human capital, trade openness, and institutional quality in regression of the Vector Autoregressive model. Augmented Dickey-Fuller unit root test, Johansen Cointegration test, and Granger Causality test were applied as parts of the econometric time-series analysis approach. The empirical results demonstrate the positive effects of FDI and trade openness, and the negative effects of human capital and institutional quality on the economic growth of the Lao PDR over the 1993 to 2015 period. The findings confirm that trade openness complemented by a sufficient level of infrastructure, education, quality institutions, and transparency significantly influence economic growth and attract more FDI. Research results lend credence to the need for the Lao PDR's government to focus on improving its economic absorptive capability and economic competitiveness regionally and globally by improving wealth and resource management strategies, as failure to take this course of action could lead to the Dutch Disease effects.

• International Commerce and Information Review
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• v.14 no.1
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• pp.87-114
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• 2012

The purpose of this paper is to analyze the economic effects of Foreign Direct Investment(FDI) and human capital using VECM in Korea from 1970 to 2009. Empirical results through VECM show that the coefficients of GDP, GFO(gross fixed capital), LAB(total labor), EXO(export), PCDB(public and commercial loan) and FDI have had a positive impact on Korean economic growth. In contrast, the effects of PCDB and FDI were not as significant as the other variables. In particular, the interaction effect, $FDI^*EDU$(the college graduation variable), was more important than that of the FDI alone. However, the coefficient of $FDI^*EDU$ was not so big. Korean government needs to attract more FDI to enhance Korean economic growth rate by the improvement of investment environment. There are a big amount gap between notification FDI and arrival FDI in Korea. So Korean government and companies should actively persuade foreign investors to invest after their investment notification. Also the Korean college authorities should emphasize more on curriculum which adapts to company skill in the field work.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.4
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• pp.55-67
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• 2021

This study aims to measure the lower tail dependence as risk contagion from the U.S. economy to 18 developing countries affecting FDI inflows using time-series data from 2005 to 2019. Firstly, we utilize four dynamic copula models, namely, Student-t, Clayton, rotated survival Gumbel, and rotated survival Joe, to measure the tail dependence structure between the U.S. and each developing country's real GDP growth. Secondly, we use the regression model to explore the contagion effects on FDI inflows. The results show that there is evidence of the tail dependence between the U.S and developing economies, indicating the presence of the contagion effects. Primarily, we observe that the degree of contagion effects of the global financial crisis varies across countries; a strong impact is observed in Chinese, South African, Russian, Colombian, and Mexican economic growth. Furthermore, we found significant contagion risk affecting FDI inflows positively in China, Indonesia, Columbia, Morocco, and negatively in the Philippines, Bulgaria, and South Africa. This study demonstrates the usefulness of the copulas model in terms of examining contagion. Our findings shed light on the influence of sound policies and regulations to cope with both positive and negative consequences of the contagion on the capital movement.

• Asia Pacific Journal of Business Review
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• v.7 no.1
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• pp.1-21
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• 2022

This research aimed to clarify the impacts casted by inwards FDI on New venture creation, industrialization, and the economic growth of Russia. For all of these variables, data was taken about Russia from the site of The World Bank, and the selected duration was from 1995 to 2019. The total duration of the data taken was from 24 years. The time duration was well enough for applying the A.R.D.L. approach to the time series data of the study. This research used the unit root test to know the presence of the unit root for each variable, the lag order selection was made for the data, the bounds cointegration test was also applied, and ARDL Model was used to know about the different effects. With the help of the results derived, it was observed that the impact of private sector investment on new venture creation is significant. In contrast, foreign direct investment and research and development (R&D) effects on new venture creation are insignificant. It was also observed from the results that the impact of R&D on industrialization in Russia is significant, while the effects of FDI and the impact of private sector investment on industrialization in Russia is insignificant. We have fund that the effect of FDI and the impact of private sector investment on the economic growth of Russia is significant. In contrast, the impact of R&D is insignificant to the economic growth of Russia. The study is of great significance as it has raised the importance of R&D for industrialization, FDI, and PSI for economic growth and new venture creation for developing countries.