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Foreign direct investment, competitiveness and industrial upgrading : The case of the Republic of Korea

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Frame of Image nt factors, including domestic wage hikes, increasing amount of labor union activities, search for new markets, trade jumping, and technology acquisition (Kim, 1998). Asia, in particular, has received Korean FDI characterized by low-technology and labor-intensive manufacturing activities. Consequently, the movement of production activities overseas has prompted many concerns about a possible Korean “industrial hollowing,” which posed as a threat to the country’s competitiveness in the global economy. This research will investigate the issues related to Korea’s FDI and its impacts on industrial structure, including industrial hollowing. Does the outflow of FDI necessary lead to industrial hollowing? Or is it simply a form of industrial restructuring, where FDI is a necessary step towards upgrading the competitiveness of Korean manufacturing firms? In order to answer these questions, I will start with certain definitions of key terms. The development trend of mature economies, particularly those of the G7 countries, reveal that the weight of service industry in GNP tends to increase in the later stages of development. When coupled by a decreasing importance of the manufacturing sector in GNP, this process is known as deindustrialization. Deindustrialization, however, is not necessarily equivalent to industrial hollowing. Chen and Yang (1997) define industrial hollowing as “a phenomenon where industries in the manufacturing sector fail to upgrade while the economy is moving into


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Title Foreign direct investment, competitiveness and industrial upgrading
Similar Titles
Sub Title

The case of the Republic of Korea
Material Type Articles
Author(English)

Advincula, Rossel V.

Publisher

[Seoul] : KDI School of International Policy and Management
Date 2000
Pages 49
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Direct Investment
Holding KDI School of Public Policy and Management
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Thesis(Master)