The effects of foreign direct investment on regional growth and productivity

Jaegon Park

No 2018-11, AGI Working Paper Series from Asian Growth Research Institute

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.

Keywords: GLOBAL PRODUCTION NETWORK; FOREIGN DIRECT INVESTMENT; GROWTH AND PRODUCTIVITY; REGIONAL POLICY (search for similar items in EconPapers)
JEL-codes: C33 D24 R11 R58 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-cse, nep-eff, nep-fdg and nep-int
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