Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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A Study on Characteristic Changes in Korea's Inward FDI in Connection with Global Outward FDI

국제투자동향과 한국내 외국인직접투자의 특징적 변화

  • 이영선 (서울과학종합대학원, KOTRA) ;
  • 신호상 (서울과학종합대학원)
  • Received : 2022.11.26
  • Accepted : 2022.12.30
  • Published : 2022.12.30
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Abstract

A new protectionism caused by the US-China competition and a following new Cold War would have a negative impact on global FDI. In this time, this study researched the effects of the long lasting global openness and liberalization on Korea's Inward FDI. 1,387 foreign invested companies in Korea were analyzed. The results are summarized as follows. First, Korea's FDI has been expanded under the environment of globalization. The IFDI amount and share in GDP increased. Seven countries out of the world top 10 were listed in Korea' the top 10. However, the share of the US and Japan's FDI in Korea's IFDI decreased. Second, non-manufacturing industry became prevalent in Korea's IFDI. Considering it's local market-oriented characteristics, the biggest investment motivation by global companies was Korean market pursuit. The US was more local market-oriented than Japan. Third, cross-border M&A, which became active in developed countries since 1980s, also kicked off in Korea from late 1990s. Global companies managed foreign-invested companies in Korea with shares close to wholly owned. The US had higher share ratios than Japan. The implications by this research are as follows. First, looming protectionism by a New Cold War would negatively affect Korea's IFDI through the adverse function of globalization. Second, Korea's IFDI has been converted to a market pursuit type being mainly leaded by non-manufacturing industry. Since GDP is the largest FDI motive in this type of FDI, the key policy for IFDI promotion is lying in the expansion of domestic market rather than deregulation.

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