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Impact of FDI on Competition in Korean Manufacturing Industries: 1991-97

Author

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  • Yun, Mikyung

    (Korea Institute for International Economic Policy)

Abstract

Since the outburst of the financial crisis, FDI flows into Korea have dramatically increased, causing great concern regarding the rapid penetration of FDI and its concentrating effects on the economy. The study explores the issue of how FDI impacts on market structure and competition in Korea. The preliminary conclusions are that FDI seems to have an upward influence on concentration while at the same time, concentration leads to higher price cost margin, and through this channel, FDI would indirectly contribute to increasing price cost margin. The direct impact of FDI on price cost margin is not conclusive, but seems to suggest that multinationals are attracted to markets where profits are stable (and probably high), but compete profit away as they enter these markets.

Suggested Citation

  • Yun, Mikyung, 2001. "Impact of FDI on Competition in Korean Manufacturing Industries: 1991-97," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 5(2), pages 111-140, December.
    • Handle: RePEc:ris:eaerev:0237
    DOI: 10.11644/KIEP.JEAI.2001.5.2.84
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    Cited by:

    1. Jatinder Singh, 2011. "Inward Investment and Market Structure in an Open Developing Economy: A Case of India’s Manufacturing Sector," Journal of Economics and Behavioral Studies, AMH International, vol. 2(6), pages 286-297.

    More about this item

    Keywords

    Foreign Direct Investment; Competition; Market Structure; Korea;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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