The linkage of OFDI between exports and employments: evidence from the manufacturing sectors in South Korea

To verify the direct employment impact of outward foreign direct investment (OFDI) and the indirect effects between OFDI and exports, we use Korean manufacturing sector data from 2001 to 2019. The results reflect the opposite indirect effects of OFDI to the Asia region or OECD countries and exports on domestic employment. Meanwhile, the direct impact illustrates that OFDI reduces, but exports increase manufacturing employment. Moreover, for a different indirect effect, we argue that the increase in foreign demand from OECD countries leads to increased exporting domestically produced goods, thus enhancing employment. In turn, the Asia region is favourable to act as a production base or export platform by transferring the Korean productive activities overseas, thus replacing direct exports.