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Productivity and timing of foreign direct investment : Evidence based on Korean direct investment in China

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  • Productivity and timing of foreign direct investment
  • Kim, Sangho
  • Bank of Korea


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Title Productivity and timing of foreign direct investment
Similar Titles
Sub Title

Evidence based on Korean direct investment in China

Material Type Reports
Author(English)

Kim, Sangho

Publisher

[Seoul]:Bank of Korea

Date 2010
Subject Country China(Asia and Pacific)
South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Direct Investment
Industry and Technology < General
Holding European Trade Study Group

Abstract

This study investigated the value of waiting with regard to firms’ decision-making about foreign direct investment (FDI) in the context of productivity. To this end, a Cox (1972) proportional hazards model was applied to FDI data gathered from Korean manufacturing firms in China. Empirical results reveal that firms with average production led FDI, followed by more productive firms (which delayed their FDI to lower the probability of FDI failure) and by less productive firms (which had insufficient resources to implement such investment). The findings suggest that FDI delay time is a non-linear function of a firm’s productivity. Industry-wide regression analysis of two industries showed that the results held for the chemical industry.