The moderating role of ASEAN-Korea FTA on the relationship between trade and South Korean outward FDI

Suk-Jun Lim, Jeong-Yeol Park, Hyun-Jung Nam and Sun-Hwa Park

International Journal of Trade and Global Markets, 2020, vol. 13, issue 3, 348-365

Abstract: This study examines the determinants of outward Korean foreign direct investment (FDI) in ASEAN countries and the moderating role of the ASEAN-Korea FTA. We utilised the generalised least squares (GLS) with 170 country-year panel data obtained from 10 ASEAN countries and South Korea from 2000 to 2016. The trade volume between ASEAN countries and South Korea had a positive impact on outward FDI of South Korea, supporting the complementary relationship between trade volume and FDI. Also, the moderating effect of ASEAN-Korea FTA on the relationship between trade and FDI was found. It implies that the implementation of ASEAN-Korea FTA stimulates not only outward FDI of South Korea but also the effective economic integration among countries. Thus, we suggest that ASEAN-Korea FTA would be a good way to establish a cooperative framework among countries and improve these countries' economic welfare.

Keywords: FDI; foreign direct investment; ASEAN-Korea free trade agreement; GLS; generalised least squares. (search for similar items in EconPapers)
Date: 2020
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