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

Author

Listed:
  • Suk-Jun Lim
  • Jeong-Yeol Park
  • Hyun-Jung Nam
  • Sun-Hwa Park

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.

Suggested Citation

  • Suk-Jun Lim & Jeong-Yeol Park & Hyun-Jung Nam & Sun-Hwa Park, 2020. "The moderating role of ASEAN-Korea FTA on the relationship between trade and South Korean outward FDI," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 13(3), pages 348-365.
    • Handle: RePEc:ids:ijtrgm:v:13:y:2020:i:3:p:348-365
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