chapter  2
The Theory of Korean Foreign Direct Investment
WithYoung-Chan Kim, Yongrok Choi
Pages 22

In this chapter, the authors address the motivation and objectives of Korean Foreign Direct Investment (FDI). They also address the following interrelated questions: why have some Korean firms invested overseas while others have not? To what extent has Korean FDI grown? It includes how important are the variables which motivate foreign investment in both developed and developing countries, and what is specific to the case of Korean FDI? In order to answer these questions, the authors synthesize existing theories concerning FDI in developed and developing countries, and test the international behaviour of Korean FDI against this synthesized theory. They show how the principles of the FDI theories applied to developing countries differ from those applied to developed countries. The basic theme of the FDI theories applied to developed countries lies in the proposition that there exist two substitutes as perfect alternatives to each other: export of goods or export of capital.