Does FDI Mode of Entry Matter for Economic Developments of a Host Country? The Case of Korea

There is an ongoing debate on whether benefits of foreign direct investment (FDI) differ depending on the modes of FDI entry. This paper examines this debate using firm-level data on FDI in Korea. The paper adopts a new, more accurate classification scheme than the current official classification system and finds that there is little difference in firm-level performance according to FDI mode of entry. The paper thus argues against any provision of preferential incentives based on modes of entry. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.