• Korea Trade Review
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• v.41 no.4
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• pp.1-19
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• 2016

This paper analyzed what determines affected FDI inflow of developing countries by using panel data from 65 lower-middle income and low income countries(Asia, Africa and Latin America). Empirical results showed that economic growth has a more positive impact on a middle income country than a lower one, and has a better impact on the Asian continent than others. Trade has similar effect on lower and middle income countries, respectively. ODA, however, has a negative effect on both sides, regardless of the continent. Industrial value added rate and labor force have a positive effect on FDI in low and middle income countries. Infrastructure was found to be a significant impact on FDI inflows in lower-middle income countries than in low income countries. There is no geographically significant difference except Africa.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.655-663
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• 2021

This paper aims to develop a conceptual framework for determinants of spillover effects of FDI on technology innovation of Vietnamese enterprises. The research proposes a logistic regression model for assessing how enterprises' ability to implement technological innovation is affected by the presence of FDI enterprises as well as other factors that show the change through the indirect influence of FDI such as the size of the enterprise, the type of enterprise, and the skill level of the labor force or its research and development activities. Five forms of technology innovation are considered: improving production process; product quality improvement; product expansion; expanding business activities into a new field of production; and changing business activities into a new field of production. General Statistics Office of Vietnam provided survey data to collect information from 3,166 enterprises in the manufacturing and processing industry in Hanoi, which were valid for analysis. The results show that all variables of enterprise type, size, R&D, and industry have a positive impact on the selection of one of the innovation forms. Several recommendations are further suggested to take advantage of the positive effects and minimizing the negative effects of FDI for technological innovation of Vietnamese enterprises.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.1
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• pp.203-211
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• 2022

Foreign direct investment (FDI) has increased at an exponential rate during the last two decades. It is now a feature of emerging market economies as well. Foreign direct investment and financial development are important factors in an economy's growth. Various studies have examined the impact of foreign direct investment and financial development on economic growth in different countries and areas. However, the findings are currently inconclusive. Using updated data from 1970 to 2020, this study will examine the relationships between FDI, financial development, and economic growth in 30 rising economies.GDP is the dependent variable, while FDI, financial development, trade openness, infrastructure, exchange rate, and GDP growth are the independent factors. To estimate the panel data, we used the most recent econometric models. The study's major findings suggest that FDI and financial development are critical determinants in emerging economies' economic progress. Furthermore, multiple robustness checks supported the study's empirical findings. The results of this study include various practical recommendations for investors, governments, and policymakers, given the increased interest in global economic integration and member states' reliance on FDI as a critical aspect of sustaining prosperity.

• International Commerce and Information Review
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• v.10 no.2
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• pp.411-432
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• 2008

This study presents the pattern and determinants of intra-industry trade in Korea's machinery and transport equipment industry focusing the influence of foreign direct investment on intra-industry trade. Using an OLS regression model the determinants of intra-industry trade are investigated. Results indicate that a statistically significant negative relationship is found between intra-industry trade and foreign direct investment, and show that intra-industry trade is positively affected by the degree of product differentiation and export structure similarity. Intra-industry trade is also positively associated with the economies of scale, the level of trade barrier, and transportation costs, although this is not statistically significant. The study found strong evidence that the propensity of foreign direct investment toward export specialized industry makes the negative relationship between intra-industry trade and foreign direct investment.

• 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.

• Korea Trade Review
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• v.41 no.3
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• pp.177-198
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• 2016

China has retained economic growth rate of average 9% for more than ten years recently after China introduced capitalistic market economy system in 1979 by Deng Xiaoping. China has attracted foreign direct investment for a long time because it has retained very high economic growth rate, low labor cost, and various policies for foreign investors. This paper tries to analyse the determinants of foreign direct investment inflow after reform-opening of China with empirical analysis methods utilizing each province·city's specific characteristics by using the panel data from 1985 to 2013. For the empirical analysis we use random effect model, fixed effect model, pooled OLS, and random coefficient model. The results by pooled OLS and random coefficient model are presented for the comparison with the main results in the process of research. The research shows the results by fixed effect model are better than those by random effect model after doing Hausman's test. The results shows that GRDP, capital stock, and telecommunication exert a positive relationship with foreign direct investment, while express way variable exerts a negative one. China's education level surprisingly does not attract foreign direct investment even though it is not at a critical level. Therefore, the Chinese government should try to increase national income level as it symbolizes market size; encourage domestic investment; and construct high quality telecommunication infrastructure.

• 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.

• Korea Trade Review
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• v.46 no.2
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• pp.337-354
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• 2021

Several previous studies have not been able to derive consistent research results on the impact of the level of corruption in local countries on foreign direct investment. Therefore, in order to suggest that this study should consider the relative level of corruption rather than the level of absolute corruption, 1) first, examine the moderating effect of the absolute level of corruption on the determinants of foreign direct investment, and 2) examine the moderating effect of the relative corruption on the determinants of foreign direct investment. This study collected 9-year data from 2012 to 2020 based on the Corruption Perceptions Index (CPI) published by Transparency International. A total of 549 observations (country-year) from 82 countries were sampled and a generalized estimation equation (GEE) analysis was performed. As a result of empirical analysis, it was found that the moderating effect of absolute corruption did not appear, whereas the moderating effect of relative corruption reversed the negative (-) relationship between cultural distance and foreign direct investment into a positive (+) relationship. Based on these empirical results, this study suggest that Korean companies need to consider the relative level of corruption with Korea instead of the absolute level of corruption of the investee when conducting foreign direct investment.

• Journal of Korea Trade
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• v.23 no.5
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• pp.1-26
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• 2019

Purpose - We examine the disclosures on foreign divestment from China by 77 Korean firms between 2007 and 2016 to identify the effects (and their determinants) on parent firm value. Design/methodology - We analyze how divestment affects firm value by examining the disclosure of divestment from China by Korean firms. Then, we examine the determinants of these disclosure effects using cross-sectional regression analyses. Findings - We find negative effects on parent firm value in the short and medium term, and both the KOSPI and KOSDAQ stock markets show negative correlations between foreign divestment and firm value. The parent firm's financial condition and profitability and the reason for divesting are statistically significant determinants. Practical implications - Most Korean firms in China belong to the manufacturing industry. As a result, divestment signifies a loss of important manufacturing bases and assets. Originality/value - We analyze foreign direct divestment, which has not been studied in detail previously owing to a lack of data. In addition, this research is the first to compare the disclosure effects in the KOSPI market with those in the KOSDAQ market for the same period.

• International Area Studies Review
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• v.15 no.3
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• pp.145-174
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• 2011

Attracting foreign direct investment in the mining sector becomes a key factor for the continuing economic growth for mining-dependent developing countries. This paper attempts to identify the determining factors that attract FDI inflows into the mining sector. Based on previous conceptual studies, the authors have attempted empirical analyses on a panel of 40 mining countries for the period 1996-2009. These empirical results are the first of their kind given the variables employed are arguably the most comprehensive and exhaustive to date. The empirical results show that market size, trade openness, quality of mined products, quality of infrastructure, regulatory quality, and perceived economic risk associated with the country are positively related to investments in mining. Whereas, tariff rate, corporate tax rate, extent of corruption, and political instability are negatively related to FDI inflows in the mining sector. The empirical results also show that developing countries tend to attract greater amounts of FDI in the mining sector compared to their developed counterparts.