Korea’s Direct Investment in China and Its Implications for Economic Integration in Northeast Asia

Abstract

This paper investigates Korea’s direct investment in China and its implications for economic integration in Northeast Asia by examining its effect on bilateral trade between the two countries. The empirical part of the research is based on two recent surveys on Korea’s overseas direct investment (ODI), one carried out by the Korea Institute for Industrial Economics and Trade and the other by the Korean Export-Import Bank. The paper concludes that although the motives for investing in China are diverse Korea’s ODI in China as a whole has had a positive effect on bilateral trade and thus on the economic integration of the two economies.