Title: The linkage of OFDI between exports and employments: evidence from the manufacturing sectors in South Korea

Authors: Mengzhen Wang; Baek-ryul Choi

Addresses: Department of Economics and International Trade, Hubei University of Automotive Technology, No. 167, Checheng West Road, Shiyan City, Hubei Province, 442002, China ' Department of International Trade, Jeonbuk National University, Jeonju-si, Jeollabuk-do, 54896, South Korea

Abstract: To verify the direct employment impact of outward foreign direct investment (OFDI) and the indirect effects between OFDI and exports, we use Korean manufacturing sector data from 2001 to 2019. The results reflect the opposite indirect effects of OFDI to the Asia region or OECD countries and exports on domestic employment. Meanwhile, the direct impact illustrates that OFDI reduces, but exports increase manufacturing employment. Moreover, for a different indirect effect, we argue that the increase in foreign demand from OECD countries leads to increased exporting domestically produced goods, thus enhancing employment. In turn, the Asia region is favourable to act as a production base or export platform by transferring the Korean productive activities overseas, thus replacing direct exports.

Keywords: FDI; foreign direct investment; employment; exports; system GMM.

DOI: 10.1504/IJTGM.2023.136124

International Journal of Trade and Global Markets, 2023 Vol.18 No.4, pp.368 - 384

Received: 04 Oct 2021
Accepted: 22 Mar 2022

Published online: 17 Jan 2024 *

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