The moderating role of ASEAN-Korea FTA on the relationship between trade and South Korean outward FDI Online publication date: Mon, 03-Aug-2020
by Suk-Jun Lim; Jeong-Yeol Park; Hyun-Jung Nam; Sun-Hwa Park
International Journal of Trade and Global Markets (IJTGM), Vol. 13, No. 3, 2020
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.
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