earticle

영어

Given the rapid growth of foreign direct investment in Mongolia, this subject is a central concern of Mongolian government policymakers and foreign invested companies. This study explores the determinants of foreign direct investment inflows into Mongolia by country using data of 35 countries from 1990 to 2009 by pooled OLS and random effects estimations. Evidence from the past twenty years shows that main significantly positive influences are the market size of host & source country, exchange rate and “mining” dummy. “Border” dummy has significantly positive by OLS but insignificantly by random effects regression. Additionally the wage rate ratio of Mongolia to source country has estimated positively related to FDI inflows against the expected hypothesis. It has deciphered by two reasons. At first, the higher wages paid by the foreign firms may also results in the higher wages in the domestic firms. Second, the economic growth provides both FDI improvement and higher wage level. Significantly negative influences include distance from Mongolia to source country and lending rate of source country. But the Mongolian corporate tax rate has resulted insignificantly negative. It has deduced by two basic arguments. First, the Mongolian corporate tax rate was less than that of top investor countries from 1990 to 2010. And secondly, industries and companies, which active in territory of Mongolia, could enjoy some tax discounts and exemptions according to the Mongolian laws. Since The Foreign Investment Law of Mongolia was adopted in 1993, Korea started to invest in Mongolia, and from 2007 its FDI inflows increased suddenly. Korea's influence has been increasing dramatically, with the expansion of small- and medium-sized investments (restaurants, esthetic clinics, service industry businesses such as in fashion) and increases in the number of Mongolian workers accepted (approx. 30,000 people). Korea ranked at the third place among the list of major investors and second place in the list of number of invested companies. Wholesale business, retail trade, restaurants and cafes have included in the trade and catering services. Korean FDI in this sector is 45.17% of all Korean FDI. In the recent years Korean FDI in trade and catering service and mining oil geological service is increasing but Korean FDI in other sectors are decreasing.