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1 Service firm performance and foreign ownership  / 2020 /  Industrial and Corporate Change

10.1093/icc/dtz055

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East Asian Economic Review Vol. 5, No. 2, 2001. pp. 111-140.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2001.5.2.84

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Impact of FDI on Competition in Korean Manufacturing Industries: 1991-97

Author

Mikyung Yun

Korea Institute for International Economic Policy (KIEP)

mikyung@kiep@go.kr
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

Since the outburst of the financial crisis, FDI flows into Korea have dramatically increased, causing great concern regarding the rapid penetration of FDI and its concentrating effects on the economy. The study explores the issue of how FDI impacts on market structure and competition in Korea. The preliminary conclusions are that FDI seems to have an upward influence on concentration while at the same time, concentration leads to higher price cost margin, and through this channel, FDI would indirectly contribute to increasing price cost margin. The direct impact of FDI on price cost margin is not conclusive, but seems to suggest that multinationals are attracted to markets where profits are stable (and probably high), but compete profit away as they enter these markets.

JEL classification: F21, L1, L6

Keywords

Foreign Direct Investment, Competition, Market Structure, Korea

Language

English

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