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Comments on Korea's Outward FDI in Asia: Characteristics and Prospects

Comments on Korea's Outward FDI in Asia: Characteristics and Prospects. Rabin Hattari. General Trend. Asia (in particular, Southeast Asia) received more Korea’s FDI compared to other region. Most of the investment has been on manufacturing.

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Comments on Korea's Outward FDI in Asia: Characteristics and Prospects

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  1. Comments onKorea's Outward FDI in Asia: Characteristics and Prospects Rabin Hattari

  2. General Trend • Asia (in particular, Southeast Asia) received more Korea’s FDI compared to other region. • Most of the investment has been on manufacturing. • Large enterprises led continuously Korea’s FDI outflow in most of the industries. SMEs and individuals come second and third, respectively.

  3. General comments • Paper explains the push and pull factors of Korea’s outward FDI to world and to other Asian countries. This is the same with push and pull factors with other Asian countries. • Findings are aligned with empirical studies: • Korea’s direct investment motives in Asia are different between countries. • Appreciation of Korean won led to more outward FDI. • Low cost have been the dominant factors, although increasing purchasing power of Asian economies are beginning to take front stage.

  4. General comments (cont’d.) • Authors provided good introduction on Korea pull and push factors.

  5. Comments (cont’d.) • However, the authors can strengthen the paper by: • Simple analytical work to support the empirical observation (gravity model) – an empirical study was conducted by Lee (2005), where market size of the destination country and real GDP per capita of the destination country are determinants. • Elaborate more on labor issues in Korea. It would be useful for readers to cite how often do labor disputes or labor strikes happen in Korea compared to their destination countries; and, how is Korea’s ULC compared to their destination countries (in particular to China and Southeast Asia).

  6. Comments (cont’d.) • What are their entry modes? Greenfield or M&As? • Case study between SMEs and large Korean MNCs motives to invest in Asia will provide a better insight. • Firm level data analysis will be a good next step in analysing SMEs and large Korean MNCs motives.

  7. Destination (cont’d.)

  8. However, on per project basis, Singapore leads Korea’s outward FDI.

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