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The Impact of Foreign Direct Investment on Trade in Korea

  • Journal of Asia-Pacific Studies
  • Abbr : JAPS
  • 2017, 24(1), pp.73-103
  • DOI : 10.18107/japs.2017.24.1.003
  • Publisher : Institute of Global Affairs
  • Research Area : Social Science > Social Science in general
  • Received : January 25, 2017
  • Accepted : March 21, 2017
  • Published : March 30, 2017

Lee Jaimin 1 Kim, Dongwook 2 Lee, Chung-Ki 3

1경북대학교
2한국무역협회
3한국방송통신대학교

Accredited

ABSTRACT

The purpose of this study is to investigate the impact of foreign direct investment on trade and exports in Korea using gravity equation. Since the 2000s, Korea has concluded free trade agreements in the strategic investment area selection based on the global value chain structure, and foreign direct investment for building overseas production bases has been made, and exports have been expanding. This study attempts to analyze whether foreign direct investment has a negative or positive effect on the amount of trade and export. Recently, foreign direct investment(FDI) and free trade agreements(FTA) have been combined to create a synergistic effect, and various econometric methodologies were used to reflect recent trends in this study. In particular, we analyze the effect of foreign direct investment on the amount of trade and exports considering FTAs and use methods to consider the endogeneity of variables and panel data characteristics. According the results of the analysis, foreign direct investment has an effect of increasing the amount of trade and exports. As a results, it is found out that the increase of the trade value and the export amount of Korea is caused by foreign direct investment.

Citation status

* References for papers published after 2023 are currently being built.

This paper was written with support from the National Research Foundation of Korea.