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The effects of foreign direct investment on regional growth and productivity

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  • Park, Jaegon

Abstract

To promote regional economic growth in the current global environment, nations have begun methodically combining internal assets with external capabilities. Against this backdrop, this paper demonstrates how foreign direct investment (FDI) — a major channel for participating in the global production network — influences regional economic development. Its key findings are as follows: 1) Korea has reached the stage where outbound overseas investments outpace inbound FDI, 2) FDI in Korea is heavily concentrated in a handful of regions and in particular the Seoul capital region, 3) inbound FDI has a statistically significant positive impact on regional growth and productivity and 4) outbound foreign investment weighs negatively on regional growth and productivity. The paper concludes by arguing the necessity of utilizing a global perspective in regional policymaking.

Suggested Citation

  • Park, Jaegon, 2018. "The effects of foreign direct investment on regional growth and productivity," AGI Working Paper Series 2018-11, Asian Growth Research Institute.
    • Handle: RePEc:agi:wpaper:00000149
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    References listed on IDEAS

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    More about this item

    Keywords

    GLOBAL PRODUCTION NETWORK; FOREIGN DIRECT INVESTMENT; GROWTH AND PRODUCTIVITY; REGIONAL POLICY; C33; D24; R11; R58;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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