Research On Developing Tracks & Results Of Out-ward FDI In South Korea

The main research purpose of this dissertation is to analyze with practical proof the domestic economic effect on South Korea by its direct investment in foreign countries(outward FDI). The dissertation also summarizes the experience and lessons learned from outward FDI of South Korea and provides the relevant policies and suggestions for the development of China's FDI in order to promote the domestic economic development.This dissertation adopts the method of combining practical and normal analysis. In the part of practical analysis, the dissertation presents the assumption based on the theoretic premise and then constructs on appropriate model, and then selects the proper samples to test the assumption, according to the reqiurements of research and with reference to relevant study results and conclusion in foreign countries. In the part of normal analysis, the dissertation makes a given analysis of the process and policies of South Korea's FDI. Based on the practical and normal analysis mentioned above, generalizing the experience and lessons learned from South Korea's FDI and combined with the present status of China's FDI, the dissertation proposes the relevant policies which help to promote and perfect China's FDI.Through the process of South Korea's FDI and the given analysis of policy, the main conclusion gained is : first, we can divide the overseas investment of South Korea into three phases according to its features: the first phase is the preliminary one of overseas direct investment dating from 1968～1980;the second phase is the rapidly developing one dating from 1981～1997;the third phase, with recession at beginning and then booming, is the extremely fast developing one dating from 1998 to now. It makes a close-up analysis of each phase and then raise the existing problems of South Korea's FDI. Secondly, this dissertation sorts out the supporting system and summarizes the transformation of policies of South Korea's FDI. First of all, the supporting system is described from five points of view: finance, insurance, revenue, information and safe investment environment. It divides the South Korea's FDI into five stages regarding the policies transformation, and then offers the given analysis, they are the introduction stage (1968-1974), the adjustment stage (1975-1979), the incentive stage (1980-1985), fast-developing stage (1986-1993) and liberalization stage (1994 up to now). And this dissertation has generalized these five stages'developing features from six aspects of the investment emphasis, the investment examination system, the investment conditions, the investment restriction system, the proportion of collecting self capital and the financial supporting system.The emphasis of this research is the practical analysis of the effect South Korea's FDI has on the domestic trade balance, and the structural adjustment of employment and industry,and the normal analysis of domestic technical innovation and deindustrialization.To analyze the influence by the South Korea's FDI through practical examples, it selects the period from 1991 to 2004 as the sample and uses the statistics summed up by the banks of South Korea. Because the manufacture industry of South Korea holds a crucial position in overseas investment and domestic economy, the research carries out a circular analysis from the perspectives of the inspiring effect overseas investment has on the export of domestic manufacturing industry, export substitute effect and counter-import effect. The result of practical analysis is that the FDI of South Korea has not generated the decrease of domestic trade balance until now. However, with further development of the FDI, export substitute effect and counter-import effect will definitly occur as predicated and lead to the deterioration of trade balance.The statistics from South Korean Ministry of Statistics and Ministry of Labor are used to analyze the effects of FDI on domestic employment, with the samples from 1995 to 2004. A number of hypotheses are made due to the endogenous of the statistics. On the basis of these hypotheses, the model of research is designed to make the Regression Analysis.The practical analysis is conducted from three perspectives: the direct effect, the indirect effect and the effects on different industries on employment. It comes to the conclusion that till now the direct and indirect effect of FDI has no negative influences. However, in some light industries such as textile industry the domestic employment is reduced by the foreign investment, and in some heavy industries in such as appliances and steel areas, the domestic employment is increasing.The statistics by the export and import banks of South Korea and statistical yearbooks from different countries are used to analyze the effect of South Korea's outward FDI on industrial structure adjustment, with the samples from 1985 to 2006. The Granger Causality Test and Regression Analysis are adopted to show the influencial degree of South Korea's outward FDI on the domestic industrial structure adjustment of South Korea. The conclusion is that South Korea's outward FDI promotes the domestic industrial structure adjustment with the results for influencial degrees of the most in primary industry, the least in secondary industry due to a no obvious fitting and positive in tertiary industry, which indicates South Korea's outward FDI promotes the development of the tertiary industry.The Normal Analysis is used to analyze the effects of South Korea's outward FDI on domestic technological innovation. It also studies the effects of South Korea's outward FDI on the influencial mechanism of domestic technological innovation, which includes transnational annexation and international purchase, establishing international joint venture and proprietorship with focus on technological innovation, and international strategic alliance and establishment of overseas institution of technological development.It is also used the normal analysis to analyze the effect of South Korea's outward FDI to domestic deindustrialization. Firstly, it describes the reasons and the characteristics of South Korean deindustrialization. Secondly, it analyzes the influence of outward FDI on South Korean deindustrialization from the perspective of the national economy. The analysis shows that outward FDI has some influence on the domestic deindustrialization, however, the emphasis should be how to reduce the negative effect by promoting the optimization of industrial structure through FDI. Finally, it analyzes from different perspectives of manufacturing industry, and the results indicate that the FDI in South Korean speeds up the domestic deindustrialization in shoe and fabric industry, and causes an obvious tendency of deindustrialization in the mechanical equipment industry, and the appliance industry has avoided deindustrialization by the efficient technology transfer.Based on the quantitative and qualitative analysis above, this study further summarizes the experiences and lessons of South Korea's outward FDI, proposes the corresponding strategies for China to promote the domestic economic development through developing outward FDI. They are the policies of FDI should adapt to the process of economic development; the location and industry choice of FDI should be beneficial for the export promotion; FDI should be favorable to the technological innovation of enterprises; FDI should be beneficial to optimize industrial structure and FDI should be benefit the domestic employment.