IDEAS home Printed from https://ideas.repec.org/p/hai/wpaper/199610.html
   My bibliography  Save this paper

Toward Korean Unification: A Policy Proposal for Investment in North Korea

Author

Listed:
  • Kwang Soo Cheong
  • Chung H. Lee

    (Department of Economics, University of Hawaii at Manoa)

Abstract

South Korea became a net-provider of foreign direct investment in the late 1980s, and is now emerging as a major source of foreign direct investment in ASEAN and China. In general, the economic gains that the host country realizes from foreign direct investment are not a factor that the home country should take into account in deciding its policy on outward investment. The case of South Korea is, however, an exception to this general principle because of the possibility of the eventual unification of two Koreas. Given that the unification cost borne by South Korea will decrease as the North Korean economy improves, the South Korean government should actively encourage South Korean investment in North Korea by offering appropriate incentives. The rational for this policy is that the beneficial effect of investment on the North Korean economy is not a factor taken into account by private investors. Policy measures in this direction include the provision of a corrective subsidy for North Korea bound investment.

Suggested Citation

  • Kwang Soo Cheong & Chung H. Lee, 1996. "Toward Korean Unification: A Policy Proposal for Investment in North Korea," Working Papers 199610, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:199610
    as

    Download full text from publisher

    File URL: http://www.economics.hawaii.edu/research/workingpapers/88-98/WP_96-10.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. G. D. A. MacDougall, 1960. "THE BENEFITS and COSTS OF PRIVATE INVESTMENT FROM ABROAD: A THEORETICAL APPROACH," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 13-35, March.
    3. Louis T. Wells, Jr., 1993. "Mobile Exporters: New Foreign Investors in East Asia," NBER Chapters, in: Foreign Direct Investment, pages 173-196, National Bureau of Economic Research, Inc.
    4. Kang, Myoung-Kyu & Lee, Keun, 1992. "Industrial systems and reform in North Korea: A comparison with China," World Development, Elsevier, vol. 20(7), pages 947-958, July.
    5. Murray C. Kemp, 1962. "Foreign Investment And The National Advantage," The Economic Record, The Economic Society of Australia, vol. 38(81), pages 56-62, March.
    6. Kenneth A. Froot, 1993. "Foreign Direct Investment," NBER Books, National Bureau of Economic Research, Inc, number froo93-1.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Feiqiong & Zhong, Fangfang & Chen, Yao, 2014. "Outward foreign direct investment and sovereign risks in developing host country," Economic Modelling, Elsevier, vol. 41(C), pages 166-172.
    2. Martin Feldstein, 1994. "Taxes, Leverage and the National Return on Outbound Foreign Direct Investment," NBER Working Papers 4689, National Bureau of Economic Research, Inc.
    3. Andrzej Cieślik, 2020. "What attracts multinational enterprises from the new EU member states to Poland?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 253-269, June.
    4. Hill, Hal, 2000. "Export Success Against the Odds: A Vietnamese Case Study," World Development, Elsevier, vol. 28(2), pages 283-300, February.
    5. Hassan Sallahuddin, 2018. "Fdi Oriented Exports And Role Of Free Industrial Zones In Malaysia," Post-Print hal-03455842, HAL.
    6. Bijun Wang & Rui Mao & Qin Gou, 2014. "Overseas Impacts of China's Outward Direct Investment," Asian Economic Policy Review, Japan Center for Economic Research, vol. 9(2), pages 227-249, July.
    7. Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-797, August.
    8. Sakli Hniya & Ahlem Boubker & Fatma Mrad & Sawssen Nafti, 2021. "The Impact of Real Exchange Rate Volatility on Foreign Direct Investment Inflows in Tunisia," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 52-67.
    9. Paitoon Wiboonchutikula & Chayanon Phucharoen & Nuchit Pruektanakul, 2016. "Spillover Effects Of Foreign Direct Investment On Domestic Manufacturing Firms In Thailand," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(02), pages 1-32, June.
    10. Honglin Zhang, Kevin, 2005. "Why does so much FDI from Hong Kong and Taiwan go to Mainland China?," China Economic Review, Elsevier, vol. 16(3), pages 293-307.
    11. Andrzej Cieślik, 2017. "Determinanty bezpośrednich inwestycji zagranicznych w Polsce: Czy integracja europejska ma znaczenie?," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 47, pages 65-82.
    12. Md. Shakib Hossain & Md. Shahin Kamal & Md. Rubaeth Halim & Nurul Mohammad Zayed, 2019. "Inward Foreign Direct Investment and Welfare Nexus: The Impact of Foreign Direct Investment on Welfare in Developing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 228-240.
    13. Humaira Raffat & Danish Ahmed Siddiqui, 2020. "Does Openness, and Productivity Matters for FDI: A Global Interactive Analysis Based on the Complementary Role of Institutions," Issues in Economics and Business, Macrothink Institute, vol. 6(2), pages 1-21, December.
    14. Jiming Ha & Anne Sibert, 1997. "Strategic Capital Taxation in Large Open Economies with Mobile Capital," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 243-262, July.
    15. Slemrod, Joel & Hansen, Carl & Procter, Roger, 1997. "The seesaw principle in international tax policy," Journal of Public Economics, Elsevier, vol. 65(2), pages 163-176, August.
    16. Zac Rafidi & George Verikios, 2022. "The Determinants of Foreign Direct Investment: A Review and Re‐Analysis of Evidence from Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 71-90, March.
    17. Martin Feldstein & David Hartman, 1979. "The Optimal Taxation of Foreign Source Investment Income," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 613-629.
    18. Roy, Santanu & Viaene, Jean-Marie, 1998. "On strategic vertical foreign investment," Journal of International Economics, Elsevier, vol. 46(2), pages 253-279, December.
    19. Aurangzeb Zeb & Thanasis Stengos, 2013. "The Role of Foreign Direct Investment (FDI) in a Dualistic Growth Framework: An Application of Smooth Coefficient Semi-parametric Approach," Working Paper series 55_13, Rimini Centre for Economic Analysis.
    20. Chupryhin, Radzivon, 2021. "Determinants of Foreign Direct Investment in Europe: Bayesian Model Averaging in the Presence of Weak Exogeneity," MPRA Paper 107197, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:199610. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Web Technician (email available below). General contact details of provider: https://edirc.repec.org/data/deuhius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.