Department Ritsumeikan Asia Pacific University College of Asia Pacific Studies Position Professor
|Research paper (Academic/Professional Journal)
|Productivity and Timing of Foreign Direct Investment:
Evidence Based on Korean Direct Investment in China
|Journal of Market Economy
|Volume, Issue, Page
|This study investigated the value of waiting with regard to firms’ decision-making about foreign direct investment (FDI) in the context of productivity. To this end, a Cox (1972) proportional hazards model was applied to FDI data gathered from Korean manufacturing firms in China. Empirical results reveal that firms with average production led FDI, followed by more productive firms (which delayed their FDI to lower the probability of FDI failure) and by less productive firms (which had insufficient resources to implement such investment). The findings suggest that FDI delay time is a non-linear function of a firm’s productivity. Industry-wide regression analysis of two industries showed that the results held for the chemical industry.