Three essays on outward multinational activity in South Korea

Multinational enterprises play a key role in the current process of globalization. In particular, both the inward and outward FDI of East Asian countries (such as South Korea, Hong Kong, Singapore, Taiwan, and China) have grown by magnitudes, especially since the mid-1980s. This dissertation examines the outward multinational activity of South Korea. With a unique firm-level dataset that includes all South Korean multinationals, Chapter 1 studies the link between the firm performances of multinationals and the decision to invest abroad. In doing so, this chapter explicitly differentiates between exports and FDI decisions. This chapter asserts that the premium for FDI is huge compared to exports. I find that firms that engage in FDI outperform other firms in the future in all possible dimensions: they are larger in size, pay higher wages and are also more productive. These results correspond to the hypothesis that “good firms self-select to engage in FDI.” In addition, this chapter also finds clear evidence that past FDI experience has a strong positive effect on the probability of future investment abroad. This implies that some learning-by-doing effects may exist.