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Productivity Spillover Effect of Foreign Direct Investment into Korea

Author

Listed:
  • Kim, Hyuk Hwang

    (Dept. of Trade and Investment Policy in KIEP)

  • Kim, June Dong

    (Dept. of Trade and Investment Policy in KIEP)

Abstract

This paper aims at analyzing the FDI spillover effect in accordance to the industrial forward and backward linkages effect during the entire (1990~2008) and recent (2001~2008) periods. The System Generalized Method of Moment has been utilized in order to solve the endogeneity issue. As a result, spillover effect within the industry has been diminishing recently consequently leading to the presence of backward linkage effect but no forward linkage effect. According to the system GMM result, the backward linkage effect in the manufacturing and services sector has increased more recently. Also, the backward linkage effect in the service sector is increasing further than that of the manufacturing sector. The analysis concludes that it is meaningful to note the importance of attracting FDI to the service sector as it results in greater spillover effect than in other sectors.

Suggested Citation

  • Kim, Hyuk Hwang & Kim, June Dong, 2010. "Productivity Spillover Effect of Foreign Direct Investment into Korea," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 14(2), pages 21-46, December.
    • Handle: RePEc:ris:eaerev:0099
    DOI: 10.11644/KIEP.JEAI.2010.14.2.217
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    Cited by:

    1. Shimaa Elkomy & Hilary Clistina Ingham & Robert Allan Read, 2018. "Heterogeneous Sectoral Growth Effects of FDI in Egypt," Working Papers 238221684, Lancaster University Management School, Economics Department.
    2. Hilary Ingham & Robert Read & Shimaa Elkomy, 2020. "Aggregate and heterogeneous sectoral growth effects of foreign direct investment in Egypt," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1511-1528, November.

    More about this item

    Keywords

    Foreign Direct Investment (FDI); Forward And Backward Linkages Effect; System Generalized Method of Moment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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