Determinants of Korean Outward Foreign Direct Investment: How Do Korean Firms Respond to the Labor Costs of Host Countries?

Hanbyul Ryu, Young SIk Jeong
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Abstract

Low cost of labor has been one of the major incentives that foreign firms invest in many developing countries. Yet, many developing countries including China and ASEAN have recently experienced a rapid increase in labor costs. Using the wage information provided by JETRO, this study examines how Korean FDI outflow is affected by the increase in labor costs of the manufacturing industry in host countries. The results indicate that the worker’s and engineer’s wages in Asian developing countries, who accumulated at least 3 and 5 years of work experience, have generally a negative impact on Korean FDI outflow. However, there exist positive relationships between the wages and FDI when the wages stay at very low levels. We do not find evidence that labor costs make a significant impact on Korean FDI outflow to European or Developed countries.
韩国对外直接投资的决定因素:韩国企业如何应对东道国的劳动力成本?
低廉的劳动力成本一直是外国公司在许多发展中国家投资的主要动机之一。然而,包括中国和东盟在内的许多发展中国家最近都经历了劳动力成本的快速增长。利用JETRO提供的工资信息,本研究考察了韩国FDI流出如何受到东道国制造业劳动力成本上升的影响。结果表明,在亚洲发展中国家,积累至少3年和5年工作经验的工人和工程师的工资对韩国的FDI流出总体上有负面影响。然而,当工资水平保持在很低的水平时,工资与FDI之间存在正相关关系。我们没有发现证据表明劳动力成本对韩国向欧洲或发达国家的FDI流出有显著影响。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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