Foreign Direct Investment and De-Industrialisation

17 Pages Posted: 1 Mar 2011

See all articles by Sung Jin Kang

Sung Jin Kang


Hongshik Lee

Korea Institute for International Economic Policy (KIEP)


The purpose of this study is to discuss the various issues regarding de-industrialisation and to systematically analyse the causes of this phenomenon. In addition, the effect of the recent increase in foreign direct investment on de-industrialisation will be analysed. Unlike extant studies, this study employs a more reliable method of estimation, known as the generalised method of moments system, for establishing the importance of foreign direct investment (FDI) with regard to de-industrialisation. For a general assessment of the different factors of de-industrialisation, including FDI, this study classifies the causes of de-industrialisation in OECD countries into external and internal factors. As a result, the analysis has proved that not only internal and external factors are major factors of de-industrialisation, FDI inflow and outflow are also major factors.

Suggested Citation

Kang, Sung Jin and Lee, Hongshik, Foreign Direct Investment and De-Industrialisation. The World Economy, Vol. 34, No. 2, pp. 313-329, 2011, Available at SSRN: or

Sung Jin Kang


Hongshik Lee (Contact Author)

Korea Institute for International Economic Policy (KIEP) ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

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