Factors Influencing ASEAN FDI and the Policy Implications

4 Pages Posted: 14 Dec 2018

See all articles by Hyung-Gon Jeong

Hyung-Gon Jeong

Korea Institute for International Economic Policy

Boram Lee

Korea Institute for International Economic Policy

Jonghun Pek

Korea Institute for International Economic Policy

Date Written: August 17, 2018

Abstract

This study examines the characteristics of ASEAN FDI and doing business conditions by income level, and conducts an empirical analysis of the determinants of ASEAN FDI to draw policy implications for further eco-nomic cooperation between Korea and ASEAN. Based on the analysis of the characteristics of ASEAN FDI, most ASEAN FDI in all income groups is of the vertical type. Only FDI in Singapore showed a market-seeking, horizontal FDI pattern among the ASEAN high-income group. Based on the primary component analysis to determine factors influencing the FDI inflow of 10 ASEAN countries between 2003 and 2014, Factor 1 includes four variables of "starting a business: time," "time to import," "time to export," and "resolving insolvency: recovery rate" and Factor 2 includes four variables of "enforcing contract: time," "starting a business: procedures," "trade openness," and "exports of goods and services."

Finally the paper suggests the following three policy recommendations. Firstly, the Korean government should make efforts for standardization of Rules of Origin thorugh RCEP negotiations. Secondly, the Korean government could provide institutional support via FTA and BITs to strengthen Korea-ASEAN economic cooperation. Thirdly, the Korean government should pursue a strategy of focus to enhance the ASEAN business environment.

Keywords: ASEAN, FDI

Suggested Citation

Jeong, Hyung-Gon and Lee, Boram and Pek, Jonghun, Factors Influencing ASEAN FDI and the Policy Implications (August 17, 2018). KIEP Research Paper, World Economy Brief 18-21. Available at SSRN: https://ssrn.com/abstract=3299385 or http://dx.doi.org/10.2139/ssrn.3299385

Hyung-Gon Jeong (Contact Author)

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Boram Lee

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Jonghun Pek

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

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