This study aims to establish whether outward foreign direct investment (FDI) replaces exports, thereby thwarting domestic industries. Outward FDI from Korea, beginning in 1968, did not show much progress until they started to upsurge with the de-regulation of FDI-related rules in 1986, surpassing inward FDI to Korea by the 1990s. The geographical distribution showed the same pattern with those of Korea’s exports. In their early stages, outward FDI and exports were mostly into the Asian region, then in the 1980s moved towards the North American countries, and recently they are centered in the Asian markets–including China—again. Analyzing by sectors reveals textile/clothing industry increased its share in total outward FDI, with its share diminishing in total exports; the portions of food/beverage industry diminished in both terms; and metal/machinery rose in both of them.
Data of Korea and Japan in 1989 and 1992 reveal that, in both countries, outward FDI has not led to a statistically significant increase or decrease in exports, but exports tended to lead FDI. A time series analysis of data for the two countries from the late 1970s to the early 1990s shows, in both nations, a positive correlation between FDI and exports in their chemical sectors while producing a negative correlation in their textile sectors. In most Korean industries except food/beverage, FDI has affected exports. In contrast, in the case of Japan, exports were revealed to have affected FDI.
Empirical analysis of Japanese industries where FDI was liberalized in the 1970s shows FDI did not diminish exports. This study suggests that Korea should liberalize its FDI-related regimes by abolishing its licensing system to help Korean firms to make swift decisions regarding FDI based on prediction of export trends.
- 글로벌화 시대에서의 수출과 해외직접투자
글로벌화 시대에서의 수출과 해외직접투자
|Series Title; No||정책자료 / 94-16|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade
Economy < Direct Investment
|Holding||Korea Institute Economic Policy|