Essays in Honour of J. George Waardenburg
Edited by Servaas Storm and C. W.M. Naastepad
Chapter 11: Firm-level determinants of outward FDI from the Korean and Taiwanese electronics industry: An econometric analysis
Roger van Hoesel 1. INTRODUCTION For a long time the promotion of manufactured exports has been regarded as the most important source of economic growth of South Korea and Taiwan. At present, however, their cross-border business activities are no longer conﬁned to exports. Since the end of the 1970s, Korean and Taiwanese companies have also started to invest abroad. Although this relatively new phenomenon has already been analysed to some extent at the more aggregate level (compare van Hoesel, 1996; Lee, 1994), much less is known about the ﬁrm-level determinants of outward investment. The primary goal of this chapter is therefore to investigate which ﬁrm-level factors determine whether a Korean or Taiwanese ﬁrm would rather invest abroad than export. But, as Chen (1992) noted, most of the indicators that are commonly tested in studies on the ﬁrm-level determinants of outward investment are typically ascribed to Multinational Enterprises (MNEs) from Early Industrialized Economies (EIEs). It therefore follows that a second question (almost automatically) has to be raised, namely whether the determinants that are derived from conventional MNE theory also apply in the case of MNEs from Late Industrialized Economies (LIEs). In other words, are the characteristics of Korean and Taiwanese MNEs similar to those of MNEs from EIEs?1 The numerous empirical studies carried out to test ﬁrm-level determinants of outward investment are in most cases based on samples of American, European or, especially in more recent years, Japanese companies.2 In view of the fact that most Foreign Direct Investment...
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