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Current state of global business management by Korean enterprises and the ripple effects on the domestic economy in Korea

Author Ha Byeonggi, Seo Byeongseon Date 2014.12.29 Page 114
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The outward foreign direct investment (FDI) has increased substantially in Korea since the mid-2000s. The overseas activities of domestic firms are necessarily associated with firms’ strategies on the global competition and international operation.

In this study, we investigate the relationship between the domestic and foreign activities of Korean manufacturing firms. Specifically, we evaluate the extent to which increased foreign activity influenced domestic activities by using the firm-level panel data composed of Korean manufacturing firms for the period 2008~2012. The propensity score matching method and difference-in-difference estimation method are used to assess the causal effects of the outward FDI on the domestic economic activities. In addition, the dynamic panel analysis provides an empirical assessment of the dynamic association between the outward FDI and the domestic economic activities such as employment, capital investment, sales, exports, imports, R&D, and labor productivity.