Foreign Direct Investment in Korea's Globalization Experience

Abstract

Korea was in 1994 one of the first countries to introduce a government-led globalization (segyehwa) policy. The inducement of foreign direct investment (FDI) was a major component of the economic dimension of this policy. This was a radical shift in government policy as Korea during its economic take-off saw FDI more as a threat to the ability of the state to direct economic development, than as potentially benefiting the country. However, since 1994, and in particular since the crisis in the late 1990s, Korean governments have increasingly acknowledged the potential benefits of FDI. Still, while reforms and policies have been introduced with the purpose of increasing incoming FDI, foreign investments in Korea remain relatively small taking into consideration the size of the Korean economy. However, while the Korean public still on occasion express negative sentiments towards FDI, there exists a general consensus among the major political actors on the need to attract more FDI, and since the introduction of the globalization policy in 1994 Korean governments have sought to implement policies that will enhance the FDI locational attractiveness of the country.