• Korea Trade Review
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• 제44권5호
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• pp.143-159
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• 2019

This study explores the relationship between outward foreign direct investment (FDI) and innovation in 61 industries of Korea between 1999 and 2016. In order to mitigate the endogeneity problem due to potential reverse causality between FDI and innovation, we use the GMM (generalized method of moments). Our results are as follows. First, FDI has a positive effect on innovation. A possible explanation is that through FDI, multinational companies may assimilate host countries' technologies and knowledge by learning, and then recreating new technologies. Furthermore, this positive effect appears greater, as industrial competition becomes fiercer. This result provides empirical evidence that by recreating technology and knowledge learned through FDI with their own intangible assets, such as patents, they may gain a competitive edge over competitors. Second, this study confirms the greater positive effects of FDI in developed countries, as well as countries with higher technology levels. Finally, strategic asset seeking FDI has the greatest positive impact on innovation in Korean industries. In summary, our findings provide empirical evidence that Korean multinationals can learn technology and knowledge of host countries through FDI to secure a competitive edge in the Korean market.

• The Journal of Asian Finance, Economics and Business
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• 제8권3호
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• pp.111-118
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• 2021

The purpose of this paper is to study the impact of trade openness on foreign direct investment (FDI) inflows into Vietnam, an emerging country with relatively high trade openness in recent years. The study used the vector autoregression (VAR) model to examine the impact of trade openness on FDI in Vietnam, in the period from 2005 to 2019. The research data are time-series data, with quarterly frequency, from 2005:Q4 to 2019:Q3. The FDI data were collected by International Financial Statistics. The data of trade openness were calculated based on Vietnam's export, import, and GDP data collected by the General Statistics Office of Vietnam. The estimated result shows that the trade openness has a positive effect on FDI. The current FDI is heavily influenced by FDI in the past with an average explanation of 74%. The main findings indicate that trade openness has a positive effect on FDI inflows into Vietnam. The findings also show that FDI in Vietnam is significantly affected by the shocks of the FDI itself in the past. The findings of the study suggest the Vietnamese Government improves the quality of trade openness and FDI, continues and maintains economic relations with other countries to increase trade openness.

• Journal of Korea Trade
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• 제25권6호
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• pp.1-19
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• 2021

Purpose - This paper aims at analyzing the functions and effectiveness of the cooperation agenda in Free Trade Agreements (FTAs), focusing on the cases of Asian countries. This paper estimates the contribution of this agenda to the sustainable development in Asia by providing the 'side payment' of the economic integration that encourages foreign investment and change in global value chains (GVC). Design/methodology - This study analyzes the functions of the cooperation chapter in FTAs by applying the cooperative game theory and reviewing the structures of the related FTAs. Also, as an empirical study, the existing FTA provisions and related development assistant programs in Asia are reviewed in this paper, especially focusing on the FTAs signed by Korea. Findings - Our main findings can be summarized as follows: The drawback of the economic integration, which would be the imbalanced economic benefit, can be redressed by the cooperation chapter in FTAs functioning as a 'side payment'. Indeed, as the examples of Korean FTAs show, more foreign investment and the GVC expansion in Asian countries have been encouraged thanks to the implementation of the cooperation chapters. Originality/value - This paper attempts to find how a legally binding agreement would influence the cooperation agenda in Asia which has never been analyzed despite the increasing number of so-called 'cooperation' chapters in the FTAs.

• Proceedings of the Safety Management and Science Conference
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• 대한안전경영과학회 2005년도 추계학술대회
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• pp.569-579
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• 2005

International capital movement has made progress at global liberalization of finance and foreign exchange, international monetary norm changing into floating exchange rate system, easiness of collection of information and trade at improvement of information communication technology from early of 1970's. Results of empirical test for relation between foreign exchange rate or various determination factors of foreign exchange rate and interest rate are followed by next sentences. First, according to relation between foreign exchange rate and interest rate, correlation for each of variables after OECD entrance is increased. 'But, long-term & short-term interest rate is affected by Hanbo & Kia's bankruptcy, continuous large scale coporates bankruptcy and crisis of foreign exchange. Therefore, financial instability is occured. If portfolio investment fund has been inflow as it is mollified by continuous shortage of foreign exchange and fall of country's credit rating, it is expected to have positive effect for long-term & short-term interest rate from appreciation of won against dollar. Second, results from relation between determination factor of foreign exchange rate and interest rate are followed by next sentences. If surplus of current account and goods account is continued, yield of corporate bond is to be stable. But, margin of surplus is expected to diminish after second quarter 98, and difference between external and domestic interest (after adjusting foreign exchange rate) is to be diminished. And if net inflows of foreign investor's fund (stock and bond) is diminished, it is to have negative effect for yield of corporate bond. According to foreign investor's investment movement of previous years, hedge fund were stayed at least during two years in Mexico. It means that sudden capital outflow is not to be happened at Korea.

• Korea Trade Review
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• 제45권2호
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• pp.51-65
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• 2020

According to an analysis of 560 foreign-invested companies investing in South Korea's manufacturing industry, the following three facts were found. First, the proportion of sales by manufacturing foreign-invested companies is divided into 68.5 percent of domestic sales and 31.5 percent of exports. From 68.5 percent of domestic sales, sales to Korean companies are 60.5 percent, including 37.1 percent for large companies and 23.4 percent for small and medium-sized companies, while only 8.0 percent for domestic consumers. Second, the investment sectors of manufacturing foreign-invested enterprises are 'machine and equipment manufacturing', 'chemical and chemical-chemical material manufacturing-excluding pharmaceuticals', 'electronic components, computers, video, sound and communication equipment manufacturing' and 'vehicle and trailer manufacturing'. It overlaps with electric·electronics, petro-chemicals and automobiles, which are Korea's main industries and areas of Korean global companies. Third, 31.5 percent of the sales of foreign-invested companies in the manufacturing sector are exported. Foreign-invested companies export their products to use them for their parents or affiliates or to the third countries. The analysis shows that foreign-invested companies invested in Korea for B2B transactions with Korean companies. The implications are that Korea can attract foreign investments by utilizing Korean companies' demand for intermediate goods. Foreign-invested companies can invest in Korea in order to use Korea, which has signed free trade agreements with the US, the EU and ASEAN, as an export platform.

• Journal of Korea Trade
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• 제25권4호
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• pp.37-59
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• 2021

Purpose - Although models of innovation and exporting dominate recent studies of relations between innovation and access to foreign markets, relations between innovation and foreign direct investment (FDI) are less explored. This is especially true of relations between types of innovation and FDI. We fill that gap in the literature with empirical evidence that clarifies whether firms enter foreign markets through exports or FDI. Design/methodology - In order to assess the role of innovation in firms' international engagement strategies, we develop research hypotheses and present new empirical evidence on firms' choice of entry - exports and FDI - based on firm-level data. Findings - Our empirical results suggest that the impact of product innovation is more significant in transition from being a purely domestic firm to an exporter, while process innovation more significantly affect transition from being an exporter to a multinational enterprise. Our results also support 'self-selection into FDI' rather than 'learning-by-performing FDI' in the relationship between innovation and firms' overseas expansion. Originality/value - Recent literature on the relationship between innovation and firms' participation in foreign markets is dominated by models of innovation and export behavior. However, foreign direct investment by multinational enterprises may also be associated with firms' innovative activities. We first analyze how product and process innovations influence firms' choices to initiate exports or FDI.

• The Journal of Asian Finance, Economics and Business
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• 제9권2호
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• pp.133-140
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• 2022

The impact of State management factors on transfer pricing activities of foreign direct investment enterprises in Vietnam is examined in this study. This adds to the empirical evidence on factors affecting transfer pricing activities of foreign-invested enterprises in Vietnam. A questionnaire survey of officials directly involved in the inspection of transfer pricing activities is used as the research method. The study yielded 226 questionnaires. The author chose 210 questionnaires after deleting those that were ineligible due to a large number of blank cells. The following procedures are used to process the data from the satisfied votes: Cronbach's Alpha test to measure the reliability of the scale; Exploratory factor analysis to break down data into smaller sets of variables to discover the underlying structure; Descriptive analysis to describe the underlying quantitative features of the data; Correlation and regression analysis to evaluate the relationship between variables with the support of SPSS 25 software. Inspection pressure, professional inspector qualifications, and inspector role, State control organization, inspector professionalism, legal corridor on transfer pricing control, macroeconomic situation, and investment environment have a positive impact on state management on transfer price operations, according to research findings. The author has provided solutions to increase the efficiency of State management on transfer pricing operations of foreign-invested businesses in Vietnam based on the research findings.

• International Area Studies Review
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• 제17권4호
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• pp.43-63
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• 2013

This paper investigates the impact of free trade agreement (FTA) on the performance of Korea's foreign direct investment (FDI) firms. We use plant- and firm-level data to examine the trends of FDI patterns of Korean firms between 2002 and 2010 by dividing firms based on their sizes - large and small firms. Analyzing firms' FDI activities worldwide, we find that small firms account for large share of investment cases especially in countries where FTA became effective with Korea during our sample period. Using these facts, we estimate the changes of productivity and performance of large and small firms and their foreign affiliates before and after FTA became effective. Our results show that FTA increases productivity of small firms and their foreign affiliates after its formation. In particular, we provide evidence that productivity improvement by small firms and their foreign affiliates may result from an increase in production and capital during FTA period.

• Journal of Digital Convergence
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• 제22권3호
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• pp.1-7
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• 2024

This study provides an in-depth analysis of the impact of the deepening reform and opening-up policies announced at the 20th CPC Central Committee's Plenary Session, particularly focusing on the <Foreign Investment Law> and its effects on the tax decisions and organizational restructuring of Korean companies operating in China. Using a comprehensive literature review and policy analysis, the study compares the dual legal structure and tax differences before and after the implementation of the law, assessing how legal unification has influenced the organizational forms and tax strategies of Korean companies. The findings indicate that the <Foreign Investment Law> has played a crucial role in enhancing legal consistency and tax equity between foreign-invested enterprises and domestic enterprises, thereby enabling Korean companies to manage their operations in the Chinese market more stably and efficiently. Additionally, in the context of the ongoing U.S.-China trade conflict, the law's provision of national treatment and tax benefits has proven to be a significant factor in the survival strategy of Korean companies in China. Future research should focus on empirically examining the long-term effects of this law and its impact on actual corporate performance.

• Asia Pacific Journal of Business Review
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• 제5권1호
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• pp.11-19
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• 2020

This study is a review on Risk analysis of foreign direct investments in innovative projects of Uzbekistan. The study will examine SWOT and PESTL analysis as an effective situation analysis tool which plays an important role in the fields of management, marketing, and in any fields of requiring strategic planning. SWOT is an analysis method used to evaluate the 'strengths', 'weaknesses', 'opportunities', 'threats' and PESTL is an analysis tool used for measuring the 'political', 'economical', 'social', 'technological' and 'low' risks involved in a various sphere of economy. In this study, firstly the essence of SWOT and PESTL analysis is explained, secondly the components of SWOT and PESTL analysis is examined. The paper includes risk analysis for further investigation to innovation sector of Uzbekistan economy.