Factors Influencing ASEAN FDI and the Policy Implications
4 Pages Posted: 14 Dec 2018
Date Written: August 17, 2018
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
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