Integration and Growth in East Asia
This paper empirically analyzes the experience of East Asia f s economic growth with data both at aggregate-economy and micro-firm levels, focusing on the role of international integration through trade and direct investment. The analysis within a framework of cross-country panel regression shows that trade openness and foreign direct investment (FDI) inflows have a positive effect on GDP growth -particularly in the 1970s and 1980s- while FDI outflows appear to have a negative effect on GDP growth. Micro-level evidence based on manufacturing data in the Republic of Korea (Korea) confirms the positive effect of trade and investment integration on plant-level productivity growth. It also suggests that the relationship between FDI outflows and productivity growth depends on the characteristics of a recipient economy. We find that FDI to the People fs Republic of China tends to reduce productivity growth of firms in Korea, while FDI to the United States or Japan works in favor of productivity growth.
Volume (Year): 25 (2007)
Issue (Month): S1 (December)
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- David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, 02.
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- Sanghoon Ahn & Kyoji Fukao & Keiko Ito, 2008. "Outsourcing in East Asia and its impact on the Japanese and Korean Labour Markets," OECD Trade Policy Papers 65, OECD Publishing. Full references (including those not matched with items on IDEAS)
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