Three essays on South Korean multinational corporations
In the era of globalization, multinational corporations are the center in international economics. Most studies are based on investment flows between developed countries, however. With a firm-level dataset on South Korean multinational corporations, this dissertation adds new insights to the research of multinational corporations from the perspective of an emerging country. The first essay investigates the impact of the level of development of the destination country on employment growth of the multinational corporations in the home country. Using a difference-in-difference approach, we assess the impact of starting to invest in less-advanced countries compared with investing in more-advanced countries. To obtain suitable control groups in each case, we use the propensity score method. The method selects national firms that ex post did not take the investment decisions even though ex ante they would have been equally likely to. We find that moving to less-advanced countries decreases a company's employment growth rate especially in the short run. On the other hand, moving to more-advanced countries does not consistently affect employment growth in any significant way. Including investment decisions of established multinationals in the estimation somewhat weakens but does not overturn this conclusion. The second essay studies the location decision of South Korean multinationals across China's regions with a firm-level dataset. Our conditional logit estimates confirm previous studies that found agglomeration effects along industry and along national lines. In particular, South Korean investors target the region where there are more firms in an industry irrespective of their nationality. At the same time, more affliates from South Korean multinationals also attract new entrants. More importantly, however, we add an upstream and downstream (backward and forward) linkage effect. We find that the presence of upstream and downstream South Korean affiliates significantly increases the likelihood that a South Korean multinational invests in a particular region. At the same time, however, backward and forward linkages at the industry level that do not differentiate by nationality do not seem to matter much. As such, our analysis of investors' location choice brings together two perspectives: (backward and forward) linkages and agglomeration along national lines. The third essay explores regional production networks and off-shoring of material and service inputs in East Asia using the Asian International Input-Output Table (1990, 1995, and 2000). In process of doing so, off-shoring is directly measured from the Table which is not used in the previous literature on this issue. It turns out that East Asian countries source the significant share of inputs within East Asia. Besides material off-shoring, services off-shoring becomes more and more common in the era of globalization. In particular, countries in this region have used goods and services inputs mainly from Japan and the United States. However, in recent years, China and Korea started to supply greater amounts of goods and services inputs.