A Study on the Foreign Direct Investment Behavior of Foreign Firms in Korea

2002 ◽  
Vol 6 (2) ◽  
pp. 75
Author(s):  
Taeyoung Chung ◽  
Du-Sop Cho
2017 ◽  
Vol 24 (7) ◽  
pp. 1937-1955 ◽  
Author(s):  
Nitin Arora ◽  
Preeti Lohani

Purpose Foreign firms have certain advantages which may spillover to domestic firms in the form of improvements in total factor productivity (TFP) growth. The purpose of this paper is to empirically observe the presence of TFP spillovers of foreign direct investment (FDI) to domestic firms through analyzing source of TFP growth in Indian drugs and pharmaceutical industry. Design/methodology/approach This paper examines the sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry over the period 1999 to 2014. The data of 304 firms has been used for estimation of the growth rates of TFP and its sources under stochastic frontier analyses based Malmquist productivity index framework. For frontier estimation, the Wang and Ho (2010) model has been executed using translog form of production function. Findings The results show that there exists significant TFP spillover effect from the presence of foreign equity in drugs and pharmaceutical industry of India. The results also show that the major source of TFP fluctuations in the said industry is managerial efficiency that has been significantly affected by FDI spillover variables. In sum, the phenomenon of significant Intra-industry (horizontal) efficiency led productivity spillovers of FDI found valid in case of Indian drugs and pharmaceutical industry. Research limitations/implications The number of foreign firms is very less to imitate the significant impact of foreign investment on TFP growth of Indian pharmaceutical industry at aggregated level; and the Wang and Ho (2010) model is failing to capture direct impact of FDI on technological change under Malmquist framework. Practical implications Since, there exists dominance of domestic firms in Indian drugs and pharmaceutical industry, the planners should follow the policy which not only attract FDI but also benefit domestic firms; for example, developing modern infrastructure and institution which will further help domestic firms to absorb spillovers provided by the Multinational Corporations and also accelerate the growth and development of the economy. Social implications In no case, the foreign firms should dominate the market share otherwise the efficiency spillover effect will be negative and the domestic firms will be destroyed under the self-centric approach of foreign firms protected by the recent patent laws. Originality/value The study is a unique attempt to discuss the production structure and sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry with such a wide coverage of 304 firms over a period of 16 years under Wang and Ho (2010) model’s framework. The existing studies on TFP spillovers are using either a small sample size of firms or based upon traditional techniques of measuring spillover effects.


2019 ◽  
Vol 36 (1) ◽  
pp. 54-79 ◽  
Author(s):  
Rodolphe Desbordes ◽  
Loe Franssen

This paper adopts a cross-country, multisector approach to investigate the intra- and inter-industry effects of foreign direct investment (FDI) on the productivity of 15 emerging market economies in 2000 and 2008. Our main finding is that intra-industry FDI has a large positive effect on total and “exported” labor productivity. The effects of FDI on total factor productivity are much more elusive, both in statistical and economic terms. This result suggests that foreign firms raise the performance of their host economies through a direct compositional effect. Foreign firms tend to be larger and more input intensive and have greater access to foreign markets than domestic firms. Their greater prevalence mechanically increases average labor productivity and export performance.


2017 ◽  
Vol 10 (1) ◽  
pp. 19-34
Author(s):  
Laura Diaconu Maxim ◽  
Daniel Sterbuleac

Abstract The present paper presents a series of results concerning the labour market impact of the foreign direct investment (FDI) inflows in Romania, during the period 2005-2014. In order to reach this objective, we have conducted both an investigation of the specialized literature and an econometric analysis, based on a pooled OLS regression. The added value of this study results from the novelty aspects brought by the results, which indicate two new roles of FDI on the Romanian labour market: a potential “gap-widening” effect between the civil employment and number of employees and a “crawling” effect on the net income. Since the results showed a positive correlation between FDI and civil employment and also between FDI and the average number of employees, the first effect suggests that most of employees of the foreign firms work there less than one year. This may explain why foreign companies are not motivated to offer their employees much higher wages than the local firms and thus that the effect of FDI on nominal net income is very small (“crawling” effect).


China Report ◽  
2018 ◽  
Vol 54 (2) ◽  
pp. 175-193 ◽  
Author(s):  
Jungmin Lee ◽  
Jai S. Mah

This article examines the impact of foreign-invested enterprises in the development of China’s automotive industry. It particularly focuses on the case of foreign direct investment (FDI) by a Korean firm, namely, the Hyundai Motor Company, in China. The Chinese government’s policy regarding the automotive industry allowed China’s domestic manufacturers to benefit from technology transfer, as foreign firms were not allowed to invest exclusively in China without a partnership. The contribution of Korea’s investment in China’s automotive industry would comprise the creation of job opportunities, technology transfer and the development of the automobile parts industry. Korea’s investment in the automotive industry of China has policy implications for China and other developing countries trying to expand their technology-intensive industries.


1997 ◽  
Vol 160 ◽  
pp. 76-86 ◽  
Author(s):  
Frances Ruane ◽  
Holger Görg

Foreign direct investment (FDI) has played a crucial role in the overall development of the Irish economy over the past three decades, as the Republic of Ireland, hereafter referred to as Ireland, has pursued an industrial strategy characterised by (i) promoting export-led-growth in Irish manufacturing through various financial supports and fiscal incentives, and (ii) encouraging foreign companies to establish manufacturing plants in Ireland, producing specifically for export markets. The significance of FDI for the Irish economy is now reflected in, inter alia, the significant gap between GNP and GDP; in 1994, GNP was roughly 88 per cent of GDP in Ireland. As regards the manufacturing sector, the high shares of output and employment in foreign-owned companies in Ireland also indicate the importance of foreign firms. As we discuss in some detail in Section 3, foreign companies produced roughly 69 per cent of total net output and accounted for 45 per cent of employment in Irish manufacturing industries in 1993.


2020 ◽  
Vol 5 (1) ◽  
pp. 6
Author(s):  
Ahmad Oktabri Widyananda ◽  
Dyah Wulan Sari

Foreign Direct Investment (FDI) takes an important role in the development process, especially in developing countries. The purpose of this study is to examine and analyze FDI spillover on the level of technical efficiency in the large and medium manufacturing industry in East Java. This study uses a time-varying stochastic frontier approach for firm-level panel data of the East Java manufacturing industry. The results show that all factors in this study affect the level of technical efficiency of large and medium industries in East Java. Variable foreign share, FDI horizontal spillover, and firm size have a positive influence on the technical efficiency of the industry. Whereas the variable FDI backward spillover, FDI forward spillover and the level of market concentration negatively affect the level of technical efficiency of the industry. Finally, it’s needed to build synergies and sustainable relationships between products produced by domestic and foreign firms. Thus, the presence of foreign firms in East Java could have a positive impact on improving the technical efficiency of the domestic industry both at the upstream and downstream levels. Keywords: Foreign Direct Investment Spillover, Technical Efficiency, East Java IndustryJEL Classification: F21, L60, D24


Author(s):  
Michael Verner Menyah ◽  
Jincai Zhuang ◽  
Evelyn Sappor ◽  
Rejoice Akrashei

Foreign Direct Investment (FDI) has served as a huge promoter of growth for many economies over the years, playing the role of supplementary income source for economies. The trend being identified now, however is that FDIs do come with adverse effect for host economies with one of the sector feeling the impact of the adverse impact being the local entrepreneurship. This study therefore measured the severity of the adverse effect of FDIs on the economy of China whiles also evaluating the contribution of FDIs to the overall economy using Sequential Explanatory Design (SED). Using Statistical Package for Social Scientist (SPSS), the researchers conducted statistical analysis like t-test, Correlation, Multiple Regression Analysis, R-Square, F-statistics and Variance Inflator Factors (VIF). The findings of the study revealed that FDIs indeed have both positive and negative implications for the Chinese economy. The positive effects come in the form of inspiring innovation and infrastructural development, influx of investment capital and the liberalization of the economy form monopolies and unfair trading The negative effect came in the form of stifling domestic entrepreneurship development as the foreign firms compete with local entrepreneurs for market, expertise, labor, capital and space for operation


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