Abstract
Overseas direct investment is constantly on the rise, while domestic investment has been slowing and has led to concerns that the expansion of overseas investment may be weakening domestic investment. Considering the change of environment as economic growth, this paper analyzes the relationship between domestic and overseas investment using a regression tree. The result shows that overseas investment substituted domestic investment in the past (before 1985); however, they compensated for each other during the rapid growth period based on exports (1986-1997). The relationship turns out to be insignificant after the Asian currency crisis(after 1998). In addition, this paper also examines the factors determining domestic facilities investment and overseas direct investment at each stage of the changes in their influence due to globalization. Taking into account the results, we need to re-evaluate the current pattern of corporate investment apart from the past restricted point of view to help domestic enterprises efficiently utilize the international production network and resources.
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