In the paper, we analyze the effects and determinants of foreign direct investment as an important aspect of firms` globalization. We find that Korean firms` foreign direct investments have a postive effect on exports, and that the effect does not show any significant differences by investment peroids and target countries` incomes. Considering three main determinants of foreign direct investment-firm-specific assets, size, and funding mechanism, we find that the size and funding variables are significant. We cannot confirm that Korean firms invested abroad in order to exploit their firm-specific assets redundant in domestic markets. Despite the mixed results, we cannot observe any evidence that indicate negative effects of foreign direct investments on the Korean economy. Hence we are led to conclude that individual profit motives rather than government policy initiatives should guide Korean firms` decisions on foreign direct investments.