This study offers the first large scale finn-Ievel study of the factors which influence Korean firms to manufacture abroad. By and large, my results support the predictions of the modem theory of FDI, which combines location and transaction costs variables. Size of target market and labor costs have the expected impact, though trade barriers do not. Technological intensity is a strong determinant of Korean FDI, as in the case of American, Swedish and ]apanese firms. One remaining difference, though, is in the impact of adveπising expenditures. Previous experience gained by Korean firms as well as group-affiliated firms showed strong impacts on Korean firms propensity of overseas manufacturing investment. Political stability of target market incites Korean investors to undertake FDI there, however, culturaI difference does not.

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