earticle

영어

This paper examines determinants of foreign direct investment (FDI) by scrutinizing various empirical studies for developing countries to find significant factors and draw some implications.Conclusive evidence supporting the newly held view that foreign direct investment(FDI) has been started to be significantly influenced by the so called non traditional factors such as cost, trade barriers, and incentives is not surprisingly hard to come by. However it is also notable to look at the increasing role of non traditional factors. The less regulations imposed on the administrative bottlenecks and trade activities is more helpful and valid to make decision on FDI, coupled with less entry restrictions.The determinants of incremental FDI will be influenced largely by the information searching cost and switching cost. The empirical results shows that the additional measures such as affiliate profitability, affiliate operation size and majority ownership to affiliate, are significant to incremental FDI. Host market profitability, social-political stability and incentive, have less influence on incremental FDI than initial FDI.These results imply especially the importance of FDI policy aiming at the facilitating various administrative restrictions generally triggered by the hard regulations and induce the FDI based on the high value added industry for Korea.