Development of Outward FDI from South Korea

Abstract

The Investment Development Cycle (Dunning, 1981) assigns investment positions to countries based on their inward and outward investment portfolios, and their stages of economic development. This paper uses Dunning's cycle to conceptualises the model of South Korean outward foreign direct investment (FDI). In our South Korean outward FDI model, we differentiate between two paths of Korean outward FDI. The two paths are to developed and developing countries, with then the change from technology seeking FDI to market seeking FDI in one case, and efficiency seeking FDI to market seeking FDI in the other, while taking into account South Korea's own investment position according to the investment cycle (Dunning, 1981). We have collected South Korean FDI data from 1980 to 2014. The data includes the total FDI amount and number of new overseas firms by country. industrial area and motivation. Our analysis of the feature of economic development correspond to Korean firms' FDI location choices in terms of motivations. The findings suggest that the economic development affect the motives for undertaking FDI by industries from South Korea.