When Does Foreign Direct Investment Lead to Inclusive Growth? (with Jorge Martinez-Vazquez), The World Economy (2022)

In this paper we examine the conditions under which FDI can lead to inclusive growth. While FDI is widely considered among the most effective instruments for the promotion of economic development, there has yet been a study that examines it’s effect on inclusive economic growth; growth that benefits the poorest income groups. By using a three-way interaction and marginal effect analysis in a two-way fixed effects regression with cross-country panel data, I find that FDI has the most positive effect on inclusive growth when there is a sufficiently large manufacturing sector and infrastructure base in the host country. The results emphasize the critical importance of the host country’s absorptive capacity in order for FDI to lead to inclusive growth. A smaller technological or knowledge gap between the host country and the foreign firms will lead to more linkages and spillovers, and ultimately lift the welfare of the poorest groups and create jobs. This emphasizes the importance of host countries’ capability and policy orientation to build a certain level of economic structure and base in order to economically benefit from FDI, rather than relying on FDI as a sufficient policy for inclusive growth. 

The Effects of Korean Firm-specific Advantages on Foreign Subsidiary Performance: Moderating Effects of Host-location and Korean Chaebols (with Young-Ryeol Park and Yu-na Song), International Business Journal (2011) 

In this paper we study Korean multinational corporations' (MNCs) firm specific advantages' effect on foreign subsidiary performance. Korean MNCs overcame the 1997 Asian financial crisis through restructuring, and have continuously improved with an increase in Korea’s outward FDI scale, which has persisted even after the 2008 sub-prime mortgage crisis. Past studies have been mostly based on periods before the 1997 Asian financial crisis, and research lack in studying Korean MNCs’ firm-specific advantages (FSA) when operating overseas. This paper studies Korean MNCs’ firm specific advantages’ effect ―technological knowledge, marketing knowledge, international experience―on foreign subsidiary performance and the moderating effects of host location(DC/LDC) and Chaebol affiliation, by using firm-level panel data from 2000 to 2006, which is the period that Korean FDI started to increase. The results show that technological knowledge has a positive effect on subsidiary performance, while marketing knowledge has a negative effect. Host country location and Chaebol affiliation both exhibits moderating effects. On the other hand, international experience does not have a significant effect on subsidiary performance, but additional research shows that it has a U-shaped relationship with foreign subsidiary performance. 

Working Papers

 The Effect of Foreign Direct Investment on Employment in Manufacturing Industry Sectors in Sub-Saharan African Countries (2021)

In this paper I study the effect of manufacturing FDI on manufacturing employment in Sub-Saharan African (SSA) countries. In the first analysis, I use a three-way fixed effects regression with interactive fixed effects of country and year and look at several models with different types of industry level sub-group fixed effects to observe the effect of manufacturing FDI on manufacturing employment. I find that there is a significantly positive effect, and find implications for indirect employment effects through spillover effects among similar industry sectors. In the second analysis, I look at how the effect of manufacturing FDI on manufacturing employment differs by groups of industry sectors, by interacting manufacturing FDI with subgroups of industry sectors. The results show varying effects by industry sector subgroups. The results reflect employment creation both through direct and indirect employment effects. The evidence of indirect employment effects in this paper is a distinguishable finding that highlights the dynamic economic effects of manufacturing FDI. While the struggles of SSA’s labor market have shown to be difficult to tackle, more than ever, their economies are currently at a critical juncture, as the patterns that have led to large proportions of working poverty, informal and vulnerable employment are expected to persist. The results of my study indicate that attracting manufacturing FDI through various economic policies can be a key component of overcoming the difficulties. Increased flows of manufacturing FDI would also benefit SSA countries by contributing to industrial diversification/structural transformation that is currently needed. 

Replication and Extension: Utilization and Quality: How the Quality of Care Influences Demand for Obstetric Care in Nigeria (Peet and Okeke, 2019) (2020)

In this paper I replicate and extend Peet and Okeke’s 2019 paper that looks at the effect of obstetric care quality on the utilization of obstetric care—both antenatal and delivery care—in Nigeria. The data was drawn from the Better Obstetrics in Rural Nigeria (BORN) study, which measured the availability and quality of obstetric care and birth outcomes in rural communities of 12 states that cover all six geopolitical regions in Nigeria. The extension results provide important implications in terms of explaining women’s decisions in which facilities to utilize based on the different domains of quality in care, different perception of cost, and perceived vs. actual quality. For antenatal care, structural and process related qualities are important in choosing the facility, while for delivery care, qualities related to process and outcome are important. The results also show that there are considerable substituting effects of women from other public facilities or private facilities who switch to primary health facilities when the quality of care is enhanced in primary health facilities. The magnitude of the coefficients show that there are more substituting from public facilities than private facilities, which may be due to the fact that public facilities are similar in cost with primary health facilities. Lastly, a large percentage of women who would previously deliver at home choose to deliver at the primary health facility when the perceived quality of care increases. This implies that there are a large number of women who will potentially become new users of the primary health facility as long as there is enhancement in quality of care. In addition, the more significant and prominent effect of perceived quality as opposed to actual quality implies the importance of word of mouth or advertisement in affecting women’s decision making process for obstetric care. 

The Impact of Subsidiary Networks on Korean MNC's Foreign Expansion under Uncertainty (2010)

In this paper I study the effect of economic uncertainty on the expansion of Korean MNC's foreign subsidiaries. Globalization of Korean MNCs is now reaching its’ fifth decade, and academic research and theoretical development on the subject have also flourished. Past research on Korean MNC’s globalization and foreign investment have mainly remained in studying entry mode choices, motivations for overseas operation, ownership advantages etc., which are topics related to the beginning stage of firms’ globalization. However, Korea has now entered a new phase of globalization. This is recognized through Korean firms’ quick recovery after the sub-prime mortgage crisis. Thus, relevant research topics also need to follow up to understand the trend and to support further development of Korean MNC’s globalization. Relying on the real options perspective in international strategy, this study examines the effect of economic uncertainty – exchange rate uncertainty - on the expansion of Korean MNC’s foreign subsidiaries, based on a sample of 150 listed Korean firms and its’ 346 foreign subsidiaries from 2000 to 2006. The subsidiary multinational network size and subsidiary’s ownership type were included as moderating effects. The results show that subsidiaries expanded in periods of economic uncertainty, with the multinational network size negatively moderating the effect. This implies that Korean MNCs were able to make a quick recovery after the sub-prime mortgage crisis because they accumulated option value of operational flexibility prior to the crisis, through expanding operations in periods of uncertainty. The negative moderating effect of multinational network size is due to Korea’s specific context – the presence of Chaebols. The study contributes to the development of the real options perspective in international strategy, and provides important implications for Korean MNC’s foreign investment and operations in the future. 

Work in Progress

When Does Fiscal Decentralization Lead to Inclusive Growth? (with Jorge Martinez-Vazquez and Kshitiz Shrestha)

Policy Reports

 Economic Development Models for the City of Newburgh (with José Ramón Martí, Libby Lok, Ariel Sankar-Bergmann, and Kate Hamaji) (2013)

Impact Evaluation Proposal for a Micro Finance Company's Financial Education Program (with Jeff Meyer and Laine Rolong) (2012)