Perspectives from Spatial and Neoclassical Economics
Edited by Masahisa Fujita, Satoru Kumagai and Koji Nishikimi
Chapter 8: Location Choices of Korean MNEs in East Asia: Escaping the Nutcracker
Ho Yeon Kim INTRODUCTION 8.1 The increasing role of FDI in global economic development is now widely recognized. FDI emanates from location decisions of MNEs that roam across national borders to maximize their proﬁts. Multinational production, investment and trade are becoming ever more important. As Markusen and Venables (1999) point out, the general view in the 1970s was that multinational investment was detrimental to the welfare of host economies, creating monopoly situations. In the 1990s, however, views became much more optimistic, suggesting that multinationals may stimulate development in host economies. Indeed, FDI represents the cutting edge of globalization; it is a unique bundle of capital and managerial/ technological knowledge. Multinational ﬁrms are constantly in action reshaping production and trade patterns around the globe. East Asia is no exception. Following the collapse of the Bretton Woods regime in the 1970s, as Mason (1999) notes, the value of the yen appreciated sharply and escalated production costs in Japan. A coincident increase in real wage rates encouraged the migration of labor-intensive manufacturing industries to Korea, Taiwan, Hong Kong, and later to China and the countries of the ASEAN. In the late 1990s, the consultant ﬁrm of Booz, Allen and Hamilton (1997) warned that Korea was now caught in a nutcracker, being crushed by China’s low costs and Japan’s technical excellence. It is thus interesting to examine how Korean ﬁrms responded to the daunting challenge. Against the above backdrop, this chapter opens with a brief survey of the related literature. The development of...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.