Developmental Nationalism and Public Support for Foreign Direct Investment Inflow: Evidence from South Korea *

This paper investigates the impact of real effective exchange rates (REER), both in terms of levels and volatility, on foreign direct investment (FDI) inflows for a panel of 35 Indian sub-national economies over the period 2000-2013. In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between FDI inflows at the sub-national level and India’s competitiveness captured by REER. Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market oriented in nature. Purpose: In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between foreign direct investment (FDI) inflows at the sub-national level and India’s competitiveness captured by real effective exchange rates (REER). This paper investigates the impact of REER, both in terms of levels and volatility, on FDI inflows to 35 Indian sub-national economies over the period 2000-2013. Research Methodology: To examine the impact of REER on FDI inflows, we compile a panel dataset for 35 sub-national economies covering the time period 2000 to 2013. We employ panel fixed effects models to explore our relationship of interest between REER and FDI, controlling for other characteristics specific to a sub-national economy.Findings: Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market-oriented in nature. Originality/Value: Considering that India’s FDI inflows exhibit significant concentration patterns among selected regions, we exploit this heterogeneity at the sub-national level to empirically understand the determinants of FDI, with a particular focus on cost competitiveness as captured by REER. The extant literature has not explicitly focused on testing the impact of REER both in terms of its levels and volatility on FDI inflows to India at the sub-national level, especially not at the sub-national level. While admittedly the exchange rate varies only at the national level, the value-addition comes from understanding its interaction with state-varying macroeconomic indicators.

This study investigates the relationship between foreign direct investment (FDI) inflows and CO2 emissions in Korea, applying the autoregressive distributed lag model. Specifically, we test the impact of FDI on CO2 emissions based on Korea’s level of economic growth, using yearly data from 1971 to 2015. Our results show that, in the long run, FDI inflows positively affect CO2 emissions. However, the absolute size of the positive effect decreases with an increase in income. Eventually, the effect of FDI inflows changes from positive to negative, increasing the GDP per capita, in the long run. Thus, while the pollution haven hypothesis is satisfied at a lower income level, the pollution halo hypothesis becomes applicable at a higher income level. For Korea, the optimal policy strategy at the current income level, is to maximize FDI inflows. Our results also imply that a policy promoting FDI inflows to developed countries, is beneficial both economically and environmentally. Meanwhile, policymakers in developing countries should adopt a balanced policy for FDI inflows, considering their negative effects on the environment and positive effects on economic growth.

Foreign direct investment outflow from Asian countries to EU member states

In this article we explore whether South Korea's long-standing tradition of economic nationalism remains an appropriate development strategy, or whether this approach has been rendered irrelevant by the current wave of neoliberal globalization led by multinational corporations. We examine the changed economic agendas of each Korean regime, with a particular focus on national identity and economic nationalism, mobilized and implemented by the state. We argue that, despite the rapid development of globalization and cosmopolitanism in South Korea, economic nationalism is still prevalent. Korea's adoption of neoliberal economic activities, such as lifting trade barriers to encourage the inflow of foreign direct investment, was necessary to assist certain areas of the economy. Furthermore, changing the direction of the growth trajectory remains subordinate to the goal of state building. Empirical analysis of results collected from survey data and one-on-one interviews conducted in 2010 help to validate our hypothesis. KEYWORDS: economic nationalism, economic globalization, Korean state, multinational corporations.Following KOREA'S independence from Japan in 1945, it was inconceivable that the Republic of Korea (South Korea) would become one of the world's most dynamic economies. However, the nation has recorded an annual average economic growth of 9 percent over the past four decades and, despite suffering heavily during the 1997 financial crisis, was the fifteenth-largest economy in the world in 2011 based on gross domestic product (GDP).One notable characteristic of the country's rapid economic growth was strong economic nationalism, stimulated initially by a negative response to earlier interactions with foreign regimes and then by the desperate need for economic survival. Economic nationalism has been a binding force that has given direction to Korea's modernization policies over the past half-century (Cho 2008; Lopez-Aymes 2010). Its growth mantra of development, productivity, and competitiveness constitutes the foremost and single-minded priority of state action (Onis 1991, 111), directing the state's management and protection of the domestic economy, labor, and even capital flows. Promoting domestic capitalists has been at the center of the national interest in economic development (Jones and Sakong 1980; Amsden 1989; Wade 1990; Onis 1991; Woo 1991; Dent 2000). The state's authoritarian and corporatist structures that underpin the processes of capital accumulation, the allocation of monopolies, and a reliance on foreign capital (e.g., in aid and loans) have long been identified as the key forces that pushed Korea's growth trajectory in a highly nationalistic direction (Jones and Sakong 1980; Amsden 1989; Chu 1989; Wade 1990; Woo 1991).1Ironically, successful economic growth and accumulated economic wealth have led to escalating wealth accumulation and increased consumption of foreign material goods, particularly Western products (Schutte and Ciarlante 1998). In comparison with the 1980s, when Korea first began to import a small number of products such as cigarettes and cars, an ever increasing level of buying power has given present-day Koreans access to a wider range of foreign products. Many of these products were not available in the Korean market a decade ago (Jeong Duk Yi 2002). If a nation's level of globalization is measured by its openness to the global economy-its consumption level of international media and foreign products, for instance-as well as by the movement of its capital, trade, investments, and people across borders and the degree of extension into the global markets,2 then Korea's economy certainly demonstrates substantial globalization.In the four-year period following the 1997 Asian financial crisis (1997 to 2001), Korea attracted approximately $52 billion in inward foreign direct investment (FDI), almost double the entire amount of inward FDI in the previous four decades. …

factors such as level of output, rate of saving and investment, standard of living of people, per capita income as well as national income and finally on industrial development. Pakistan is the second largest economy in the south Asia in terms of market size and availability of cheap labor force, however, failed to attract the surge of FDI inflow in the economy during last two decades. More specifically, the foreign investment comes in Pakistan generally on the basis of relation i.e. Pak -US relationship whose effect can be observed clearly during interval 2000 to 2007. Later, the financial crisis dumped the world economy resultant the developed countries channelize their investment within country to cope up with the worsening effect of financial crisis rather than concentrating on foreign investment. The prime motto behind this study is to observe the challenging effect of FDI inflow on the economy of Pakistan during most impressive period in Pakistan history in terms of foreign investment. In this study the economic growth of Pakistan is being measured by developing the econometric model over various indicators such as GDP, GDPPC, GNI, TOP during clustering period 2000 to 2012.Empirical results shows that the entrance of FDI, however, uplifted the status of GDP whereas another variables are negatively influenced during first interval i,e.2000 to 2006. On the other hand, during second interval of study i.e. 2007 to 2012 the entrance of FDI inflow strongly affected the status of GDP Per Capita, whereas other variables are negatively influenced. At last, despite of favorable investment environment and key macroeconomic fundamentals, the Pakistan is still legging continuously in attacking the large FDI inflow caused to poor infrastructure, terrorist activities, energy issues, distortion in law and orders and large security issues.

Since Trump initiated the trade war against China, the impact of politics on the economy has significantly increased. In recent years, as China's economic power has grown, diplomatic conflicts between China and Japan, as well as China and South Korea, have become more frequent and intense. From the diplomatic level, to expand the interests of countries, foreign trade is an indispensable part of every country's diplomacy. A very important index of foreign trade is foreign direct investment. Foreign direct investment (FDI) has been crucial to China’s rapid economic growth since the 1980s. As China’s key trade partners in East Asia, Japan and South Korea have invested over $1.5 trillion in FDI in China. National sentiment reflects people's views on politics from the perspective of the people and can also reflect political changes to a certain extent. Therefore, this study reflects the change of political change to economic development to a certain extent through the impact of national sentiment on economy. This article uses the gravity model to estimate how national sentiment affects the inward FDI flows from Japan and South Korea. This study highlights the national sentiment in both Japan and South Korea. While research shows a positive correlation between public sentiment towards China in these two countries, the coefficient results indicate that the overall impact of national sentiment on FDI is limited. This article mainly analyzes the relationship between national sentiment and FDI in South Korea and Japan and subdivides the different foreign policies of these two countries. Additionally, countries demonstrate different levels of sensitivity to sentiment, suggesting further-segmented policies should be taken into consideration. Investigating these different sensitivities is useful for China's different national policies towards its own country.

The inflow of foreign direct investment shows the economic and political strength of a country (Bevan & Estrin, 2004). Resources agglomeration and foreign direct investment have a theoretical and empirical relationship (Carlton, 1983; Hansen, 1987; Krugman, 1991; Wheeler and Mody, 1992; Friedman et al., 1992; Head et al., 1995; Henderson and Kuncoro, 1996; Head and Ries, 1996; Devereux and Griffith, 1998; Head et al., 1999; Guimaraes et al., 2000). This paper has examined the impact of aggregate and disaggregates natural resources agglomeration on foreign direct investment in the case of France from 1989 to 2012. Seven different model specifications are used for empirical analysis. The inflow of foreign direct investment from Greece, Australia, Austria, Germany, Canada, Finland, Ireland, Hungary, Israel, Japan, Italy, Republic of South Korea, Switzerland, Norway, Netherlands, Poland, Spain, Portugal, Sweden, Turkey, United States, Mexico, Korea and United Kingdom in France is taken as the dependent variable. Total natural resources agglomeration, population density, trade openness, secondary education, taxes, inflation rate, primary education, agriculture land agglomeration, forest agglomeration, oil production agglomeration, mineral production agglomeration and natural gas production agglomeration are selected as explanatory variables. The results show that aggregate and disaggregate natural resources agglomeration are important indicators of foreign direct investment. The results show that the population density is a key indicator of foreign direct investment, the current population growth of France and many developed countries is below the replacement rate. Agriculture land agglomeration, oil production agglomeration and mineral production agglomeration are the inputs of many economic activities. This shows that for higher amount of foreign direct investment, natural resources agglomeration must be encouraged. Keywords: natural resources agglomeration, foreign direct investmentJEL Classifications: N5, F21DOI: https://doi.org/10.32479/ijefi.10869

Foreign direct investment (FDI) has increased globally since the late 1980s. It increased rapidly in Cambodia in the past two decades. This paper aims to examine the determinants of inward FDI from China, South Korea and Japan and its contribution to economic growth in Cambodia during 1994-2014, using both time series analysis by country and the panel data analysis. The results on the determinants of FDI show that real GDP, bilateral trade between the countries, exchange rate, inflation rate, and relative labor productivity are statistically significant and have positive impact on inward FDI flows into Cambodia, and inward FDI from those three investing countries contribute to Cambodia?s economic growth respectively. The findings from the study on the impact of FDI indicate that there are positive relationships between inward FDI from China, South Korea and Japan and Cambodia?s economic growth. Labor force, domestic investment, human capital, infrastructure and trade openness are the important factors leading to economic growth in Cambodia when receiving inward FDI from those three investing countries. However, the positive effect on the Cambodia?s economic growth could have been greater if the country had greater capability to absorb advanced technology from the FDI. Besides, Cambodian policy makers should focus more on the policies that are friendly and attractive to inward FDI. Moreover, to attract more inward FDI, the government should promote encouraging environment for trade and investment for both local and foreign investors, remove restrictions against FDI and develop physical infrastructure. Finally, policy makers should not forget the development of human capital because the variable represents the absorption capacity from which the Cambodian economy could benefit from the FDI.

Most developing countries rely heavily on foreign direct investment (FDI) inflows for economic growth and stability. However, political risk and the foreign exchange rate could direly affect FDI inflows as investors seek stable markets. The most recent example of political risk interactions, the exchange rate and FDI has been the trade war between the United States (US) and China, where the US increased tariffs on Chinese goods worth over $16 billion. A crucial debate is needed regarding the importance of FDI inflows in developing countries, such as South Africa. FDI is observed as a crucial component in providing resources, and it is critical in facilitating globalisation and providing financial assistance to countries in need, especially developing countries such as South Africa. This study aimed to examine the long- and short-run effects of political risk ratings and foreign exchange rate fluctuations on FDI inflows in South Africa. The literature review provided evidence of long- and short-term relationships between political risk ratings, the real effective exchange rate, and the GDP's balancing variable on the dependent FDI inflows. The study utilised both the autoregressive distributed lag (ARDL) and non-linear autoregressive distributed lag (NARDL) models to analyse quarterly data from 1995 to 2020. The Variables included in the study were political risk, the real effective exchange rate, FDI inflows and GDP. The study revealed that political risk ratings and the real effective exchange rate have long-run effects on FDI inflows. The real effective exchange rate has an asymmetric long-run effect. It was also found that FDI inflows respond more to real effective exchange depreciations than real effective exchange rate appreciations, implying that the exchange rate is an important economic factor in explaining the investment inflows. Consequently, the study recommends that policymakers deploy responsive policy measures to deal with currency fluctuations and political instability. In South Africa, the negative effect of political risk affects FDI and impacts the overall country risk ratings and the country's ability to borrow. The study also recommends that further research be employed to understand other impacts on FDI inflows and the interaction of political risk and the real effective exchange rate on other critical economic factors.

While scholars extensively study the middle-income trap, gaps persist, particularly regarding foreign direct investment and its role in transitioning from middle- to high-income status. This mixed-methods research examines the relationship between foreign direct investment inflows and escaping the middle-income trap. Utilizing a comparative case study of the automotive industries in Mexico and South Korea during the 1960s to 2000s, alongside logistic regressions, we consistently observe a negative correlation; higher foreign direct investment inflows are associated with a decreased likelihood of escaping the middle-income trap. This confirms the World-Systems Theory’s view of the relationship between foreign direct investment inflows and the middle-income trap. The implications of this study should induce caution on the part of middle-income countries when accepting foreign direct investment in strategic, high-value-adding industries. This study recommends opting for purchasing foreign technology or for joint ventures that ensure technology transfers. This research addresses a critical gap, offering insights into the nuanced dynamics of foreign direct investment’s effects on the transition from middle to high-income status.

Tiesioginių užsienio investicijų Lietuvoje regioninė

This research extends Dunning’s investment development path theory to assess the long-run relationship among foreign direct investment (FDI) inflow, outflow and domestic investment (DI) for 32 emerging market economies (EMEs) based on 17 years data from 1996 to 2012. Breitung Panel unit root test has been used to identify the presence of unit root in the panel data. Since the FDI flows and domestic investments were found to be non-stationary at they were first differenced for converting to stationary variables. Based on Pedroni’s panel cointegration test a long-run relationship among DI, FDI inflow, and FDI outflow was observed indicating that the variables were integrated of order one. Further panel VECM was carried out to assess the causality and it was observed that a joint long-run causality was present both from FDI inflow and outflow towards DI. This essentially indicates that the FDI flows to EMEs will augment domestic capital formation. Therefore policy makers from the EMEs instead of focusing on standalone increase in FDI inflow should focus on both FDI inflow and outflow. However, in the short-run, DI was caused only by FDI inflow, and FDI outflow did not have any causal impact on DI. Further applying fully modified OLS (FMOLS) and dynamic OLS (DOLS) it was observed that FDI inflow and FDI outflow have crowding-in effects on DI. Hence, it can be concluded that for EMEs FDI outflow is also equally important in addition to FDI inflow to augment DI. The impact of 2008 crisis was also examined in the light of FDI outflows and inflows from EMEs. Results based on FMOLS and DOLS indicate that 2008 crisis negatively affected the FDI inflow but the effect on outflows was not statistically significant. These results advocate for a protection mechanism from the financial crises for the EMEs as the FDI inflow declined during the period. Further incentivizing the domestic firms investing abroad for technologies and synergies as FDI outflow also enhances growth.

This research investigates the effect of Financial Sector Development on the Foreign Direct Investment (FDI) inflows in Zambia. This study adopts a quantitative approach utilizing econometric modelling to analyze the relationship between financial development indicators and FDI inflows over a 32-year period from 1990 to 2022. Financial Sector development in this study refers to four key indicators and these are Credit to the private sector, Broad Money Supply, Stock Market Capitalization, and Gross Domestic Savings. The research employs various statistical techniques to ensure the reliability and validity of the results. Using the Vector Autoregression (VAR) model, the study evaluates the long-term and short-term effects of financial sector development indicators on FDI inflows. The results suggest that while domestic credit to the private sector is positively correlated with FDI inflows, the effect is statistically insignificant, indicating that credit accessibility alone does not substantially drive FDI in Zambia. In contrast, the broad money supply exhibits a significant negative correlation with FDI inflows, likely due to its association with inflationary pressures and volatile interest rates, which deter foreign investors. Such instability creates an unfavorable investment climate, causing potential investors to reconsider their commitment to entering or expanding in the Zambian market. Furthermore, stock market capitalization, which reflects the overall performance and robustness of the capital markets, demonstrates negligible influence on FDI inflows. The limited impact of stock market capitalization suggests that Zambia’s capital markets remain underdeveloped, characterized by low liquidity and limited investor participation. Similarly, the negative relationship between gross domestic savings and FDI may reflect a crowding-out effect, where local investors prioritize domestic investment opportunities over attracting foreign capital. This research underscores the necessity for targeted policy reforms aimed at enhancing financial development in Zambia. To enhance financial development and attract FDI, policymakers should focus on strengthening financial regulations to improve credit access, implementing monetary policies that ensure price stability, and fostering capital market growth through investment incentives and enhanced market transparency.

In this study, the long termed effects of foreign direct (capital) investments inflows and outflows on the economic growth of the economies of developed G-7 countries where the capital mobility is intense and selected emerging market economies (Brazil, China, India, Mexico, Russia, South Africa and Turkey (EME-7)) are empirically analyzed for the period of 1994-2015 within the scope of the new generation panel data methodology. From this aspect, it is also aimed to economically analyze whether the foreign direct investments inflows and outflows in countries of G-7 and EME-7 have an effect on the economic growth as is seen in the theoretical framework by being considered the capital exporter/importer positions of these countries. Determined in consequence of the study that foreign direct investments inflows/outflows in the countries of G-7 have a positive and statistically significant effect on economic growth in the long term. Also determined that the foreign direct investments inflows have a positive and statistically significant effect on economic growth in countries of EME-7; while the foreign direct investments outflows have not the same effect on the economic growth. These results which are consonant with the theoretical and empirical literature show that just both foreign direct investments inflows and outflows have a significant role in economic growth on G-7 countries; just foreign direct investments inflows have an important role in economic growth on EME-7 countries at the same time.

The majority of developing countries have heavily relied on foreign direct investment (FDI) inflows over the past years due to the gap between domestic savings and investment. Studies on the interactive effect of monetary policy and institutional quality (IQ) on FDI inflows are still scanty in East African countries. This study examined the effect of monetary policy (monetary policy rate (MPR), exchange rate (ER), reserve requirements (RR)) on FDI inflows in East African Countries with a special focus on the moderating impact of institutional quality. A fixed effect model was applied to analyse panel data spanning from 2003 to 2022. The results showed that incorporating institutional quality into the relationship between monetary policy and FDI inflows marginally improves the model's explanatory power from 56 percent to 57 percent with the interaction of IQ and monetary policy variables suggesting that institutional factors contribute to understanding FDI dynamics. The findings revealed a positive relationship between, IQ and MPR-IQ interaction and FDI inflows, though it was not strong. The results further showed a negative but weak relationship between ER-IQ interaction and FDI inflows. Thus, it is concluded that IQ slightly mitigates the negative impact of MPR on FDI, suggesting that strong institutions create a stable environment that offsets the deterrent effect of higher interest rates. Additionally, though IQ enhances stability, exchange rate fluctuations continue to undermine investor confidence. It is therefore recommended that Policymakers consider a holistic approach, focusing on structural reforms and stable macroeconomic policies to boost investor confidence and attract FDI.