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

Authors: Suk-Jun Lim; Jeong-Yeol Park; Hyun-Jung Nam; Sun-Hwa Park

Addresses: Department of International Studies, Graduate School of International Studies, Dong-A University, 225 Gudeok-ro Seo-gu, Busan, 49327, South Korea ' Department of Hospitality Services, Rosen College of Hospitality Management, University of Central Florida, 9907 Universal Blvd, Orlando, FL 32819, USA ' Department of International Studies, Graduate School of International Studies, Dong-A University, 225 Gudeok-ro Seo-gu, Busan, 49327, South Korea ' Department of International Studies, Graduate School of International Studies, Dong-A University, 225 Gudeok-ro Seo-gu, Busan, 49327, South Korea

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.

DOI: 10.1504/IJTGM.2020.108781

International Journal of Trade and Global Markets, 2020 Vol.13 No.3, pp.348 - 365

Received: 04 Oct 2018
Accepted: 21 May 2019

Published online: 28 Jul 2020 *

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