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Productivity and the Timing of Foreign Direct Investment (in Korean)

Author

Listed:
  • Sangho Kim

    (Honam University)

Abstract

This study investigates the value of waiting that exists in the firm's decision-making on foreign direct investment (FDI) in the context of firm's productivity by applying a Cox(1972) proportional hazards model to Korean manufacturing firms' FDI data in China. The paper hypothesizes that firms with intermediate productivity level tend to realize their first investments earlier than the manufacturing firms with relatively high and low productivity levels. Empirical results show that the timing of FDI is a positive quadratic function of firm's productivity, suggesting that average productive firms lead FDI, followed by both more productive firms that delay their FDI to lower the probability of FDI failure and by less productive firms that don't have enough resources required to implement the investment. These results hold in two industries out of four industries in industry-wise regression.

Suggested Citation

  • Sangho Kim, 2010. "Productivity and the Timing of Foreign Direct Investment (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 16(1), pages 106-126, March.
    • Handle: RePEc:bok:journl:v:16:y:2010:i:1:p:106-126
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    Cited by:

    1. Shimaa Elkomy & Hilary Clistina Ingham & Robert Allan Read, 2018. "Heterogeneous Sectoral Growth Effects of FDI in Egypt," Working Papers 238221684, Lancaster University Management School, Economics Department.

    More about this item

    Keywords

    FDI; Value of waiting; Cox hazards model;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • F10 - International Economics - - Trade - - - General

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