Is There a Two-Way Linkage Between Trade and FDI? : Evidence from Korea’s Major Trading Partners

Abstract

This investigation explored a linkage between trade and FDI based on the Granger-causality test and Geweke's decomposition method performed using a bilateral data set between Korea and its major trading partners: U.S.A, Japan and China. The investigation’s findings indicated a two-way linkage between Korea's export and FDI outflow to Japan. More than half of the linear feedback between export and FDI outflow could be accounted for by a simultaneous two-way linkage between the two series.