Korean outward FDI, theory of FDI, location decisions, MNE firm strategy
Abstract
This paper examines the trends and determinants of Korean outward foreign direct investment and the extent to which location decision explanation needs to be nested within the general theory of the multinational firm. In the context of investment development path developed by Dunning and Narula, we examine the important factors for the location decisions of Korean outward foreign direct investment, considering host countries at very different stages of economic development. In line with this objective, we test empirically the determinants of Korean outward investment using macro economic factors of host countries. Thus, we identify several factors that impact on such trends and develop hypotheses that could explain the phenomenon generically. We test our hypotheses using official Korean outward FDI data collected from 1994 to 2005. The behavior of Korean multinational firms shows several distinctive features. As a result, we find that the dynamic effects of economic development have influenced on the changes of outward FDI characteristics.
