Foreign direct investments by Korean firms: An analysis with FDI theories

Abstract

This paper analyzes data on foreign direct investment (FDI) by Korean firms in the light of eight propositions drawn from the literature on FDI which includes both the theoretical and empirical findings of studies on FDI by Third World Multinational Corporations (MNCs). The data concern FDI in manufacturing, natural resources, construction, banking and other industries. The propositions examined include the nature of ownership advantages, the trade-orientation of FDI, and motivations behind the overseas expansion of Korean banks. In addition, the geographical distribution and ownership patterns which arise as a result of these variables are also examined. The findings are generally consistent with many of those in previous theoretical and empirical studies and suggest that an eclectic approach, incorporating many explanatory variables, could adequately explain the patterns in Korean outward FDI.