Productivity Spillover Effect of Foreign Direct Investment into Korea

Hyuk Hwang Kim () and June Dong Kim ()
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Hyuk Hwang Kim: Dept. of Trade and Investment Policy in KIEP
June Dong Kim: Dept. of Trade and Investment Policy in KIEP

East Asian Economic Review, 2010, vol. 14, issue 2, 21-46

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.

Keywords: Foreign Direct Investment (FDI); Forward And Backward Linkages Effect; System Generalized Method of Moment (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:0099

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