The Determinants of Korean Direct Investment Abroad: Evidence from Country-Industry Panel Data
The Determinants of Korean Direct Investment Abroad: Evidence from Country-Industry Panel Data
Joosung Jun, Hyemi Kim
Journal of International Trade and Industry Studies, 2018
Abstract
Using a country-industry unit panel data set covering 27 host countries and 19 Korean manufacturing sectors for the period 2012-2015, this paper investigates the country and industry determinants of Korea’s outward direct investment. The estimation results across various specifications show that ‘proximity-concentration trade-off’ factors have statistically significant effects on affiliate sales: economies of scale at the corporate level relative to those at the plant level, port inefficiency and lower local corporate tax rate all would increase foreign production. The gravity variables such as distance and GDP also show an expected estimated result. This finding is in line with the theoretical predictions and the empirical results of the past studies using U.S. data sources.
Key Words : Affiliate sales, Direct investment abroad, Horizontal direct investment, Proximity-concentration trade-off, Industry characteristics
The Determinants of Korean Direct Investment Abroad: Evidence from Country-Industry Panel Data
Joosung Jun, Hyemi Kim
Journal of International Trade and Industry Studies, 2018
Abstract
Using a country-industry unit panel data set covering 27 host countries and 19 Korean manufacturing sectors for the period 2012-2015, this paper investigates the country and industry determinants of Korea’s outward direct investment. The estimation results across various specifications show that ‘proximity-concentration trade-off’ factors have statistically significant effects on affiliate sales: economies of scale at the corporate level relative to those at the plant level, port inefficiency and lower local corporate tax rate all would increase foreign production. The gravity variables such as distance and GDP also show an expected estimated result. This finding is in line with the theoretical predictions and the empirical results of the past studies using U.S. data sources.
Key Words : Affiliate sales, Direct investment abroad, Horizontal direct investment, Proximity-concentration trade-off, Industry characteristics