This paper focuses on the effect of the Korea-EU FTA on foreign direct investment to and from Korea. Using cross-country time series for the period covering 1999-2014, we analyze the effect of FTA on FDI. The main empirical findings are as follows: First, Korea-EU FTA had a positive effect on FDI outflows from Korea, while it did not have a statistically significant effect on FDI inflows in Korea. This finding indicates that the FTA may help promote Korea’s outward FDI, but may not help increase inward FDI into Korea. Second, estimating the influence of GDP on FDI, the positive relationship between the GDP and FDI is found, implying that GDP has a positive impact on inward and outward FDI. The current findings suggest that FTA plays a particularly important role in FDI outflows. It appears that GDP was more important as a stimulus to inward FDI than FTA
(0)
(0)