FDI THEORIES AND PRACTICE: THE CASE OF KOREA

• Main Authors: Trevor Crick, Suk Kim, Jane Oh
• Format: Article
• Language: English
• Published: People & Global Business Association (P&GBA) 1998-03-01
• Series: Global Business and Finance Review
• Subjects: fdi theories for developing country; motives for korean fdi; motives for u.s fdi; fdi theory and practice
• Online Access: http://www.gbfrjournal.org/pds/journal/thesis/20150625123426-TMLZF.pdf

Prior to the Asianfinancial crisis ofJuly, 1997, the Republic ofKorea was the second industrialized country in Asia and joined the OECD in 1996, at that time its latest policy was to encourage Korean firms to invest abroad, recognizingareducedroleofitspastsuccessfulexport-orientedstrategy. Thispaperattemptstofindempiricallythe underlying motivesfor Korean FD! in the United States as well asfor U.S. FD! in Korea. Data were gatheredfrom a questionnaire survey of63 Koreans (firm-owners, business professors, and Consuls) and 192 international busi- ness executives of U.S. companies that have invested in Korea. The results ofthe study show that: a) Korea seems to be in the final stage o f the investment development cycle, b) Korean firms possess ownership-specific advantages in technology with respect to a number of key industries, c) they were motivated to exploit some location-specific advantages, and d) the pattern ofKorean outward investment may suggest the value ofDunnings eclectic approach. For U.S. FD! in Korea, the two top motivations were "penetration in a growing market" and "anticipation ofrela- tively higher profits." Lastly, to what extent the impact o f Korean FD! as well as foreign investment in Korea in the past is linked to the recent Korean financial crisis is a very interesting area for future research.