Three essays on inward foreign direct investment and region

Abstract

The dissertation consists of three essays on FDI and regional economy. Although there are differences in structure and methodology for each essay, each essay is closely related to each other in the following two major directions. First, the essays, focusing on FDI inflow, observe the unbalanced development between the capital area and non-capital area in Korea. Second, the essays in this dissertation are closely linked together as each essay is focusing on each element of the production function below. Y=A*(L, K), where Y refers to the final policy goals pursued by regional economic policies, such as the development of the local economy and the increase of the regional population; and A, L and K represent innovation capacity, human capital and capital investment respectively. More specifically, Chapter 1 is a study on element K. This essay reviews Korea''s balanced regional development policy to narrow the gap between the metropolitan and non-metropolitan areas, and reviews the Korean government''s policy to revitalize FDI, and describes the current status of FDI attraction in nonmetropolitan areas. Chapter 2 is a study on element L. This essay observes how the proportion of highly educated workforces affects the inflow of FDI. In addition, this essay observes how the proportion of highly educated workforces (1) between the manufacturing and service industries, and (2) between the capital area and non-capital area affects differently on the inward FDI attraction performances. Finally, Chapter 3 is a study on element A. This essay observes how the inflow of FDI affects the strengthening of regional innovation capabilities. In particular, this chapter analyzes the difference in the effect of FDI inflow on regional innovation capabilities using an interaction term between non-capital area dummy variables and regional FDI inflow performance. Through series of essays on strengthening regional innovation capabilities through FDI inflow, the importance of human capital to increase FDI inflow and FDI-regional economy related-policies’ improvement, this dissertation hopes to contribute to the balanced development among Korean regions.