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Impact of foreign direct investment liberalization : The case of Korea

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  • Impact of foreign direct investment liberalization
  • Kim, June-Dong
  • Korea Institute for International Economic Policy


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Title Impact of foreign direct investment liberalization
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Sub Title

The case of Korea

Material Type Reports
Author(English)

Kim, June-Dong

Publisher

Seoul:Korea Institute for International Economic Policy

Date 1997-08
Series Title; No KIEP Working Paper / 97-01
ISBN 89-322-4012-4
Pages 47
Language English
File Type Link
Subject Economy < Direct Investment
Holding Korea Institute for International Economic Policy

Abstract

This paper seeks to investigate the impact of Korea's foreign direct investment (FDI) liberalization on its economy. Estimation of externalities in production using the available aggregate data reveals that increased production of foreign invested enterprises (FIEs) has a significantly positive effect on the production of domestic firms during 1984-86. Through technology transfer, FIEs helped the semiconductor industry to develop into a world-wide dominance in memory chips. They also contributed to the pharmaceutical industry in inventing new drugs by raising research capabilities. Besides technology transfer, opening-up of the domestic market to FDI is changing Korea's industrial structure. The FDI liberalization in the retail industry has replaced the manufacturer-dominated structure with the retailer-dominated ones.