MOTIVATIONS AND LOCATIONAL FACTORS OF FDI IN CIS COUNTRIES: EMPIRICAL EVIDENCE FROM SOUTH KOREAN FDI IN KAZAKHSTAN, RUSSIA, AND UZBEKISTAN

Regional Statistics. 2021. Vol. 11. No. 4. P. 79–100.

Chernikov S., Lee H., Nagy S.

Considering growing significance of Eurasian economic ties- derived from South Korea’s New Northern Policy and Russia’s New Eastern Policy, this paper investigates motivations and locational factors of South Korean foreign direct investment (FDI) in Commonwealth Independent States (CIS) countries (namely Kazakhstan, Russia, and Uzbekistan) by employing panel analysis (pooled OLS, fixed effects, random effects) on datasets from 1993-2017. The results show positive and significant coefficients of GDP, resource endowments, and inflation. Unlike conventional South Korean outward FDI, labor-seeking is not defined as a primary purpose. Exchange rates, political rights and civil liberties are identified as insignificant. We conclude that South Korean FDI in Kazakhstan, Russia, and Uzbekistan is associated with market-seeking (particularly, in Kazakhstan and Russia) and natural resource-seeking, but market-seeking outweighs natural resource-seeking. From a policy perspective, our empirical evidences suggest that the CIS countries’ host governments should implement mechanisms to facilitate movements of goods across regions and countries to increase market attractiveness to overcome a small local market size. The South Korean government should develop various financial supports and risk sharing programs to enhance natural-resource seeking investments and mutual exchange programs to overcome an existing red complex in the South Korean societies

Keywords: мировая экономика, global economy