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FDI Policy in Korea

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Frame of Image reign investment amount: 100 million won Foreign investment ratio: 10% or more of the voting stocks or total invested capital Long-term loans by the foreign parent company with a maturity of 5 years or more is recognized as FDI
Types of FDI
Direction of Flows
• Inward FDI • • •
Mode of Entry
Greenfield investment Mergers & acquisitions Joint ventures
• Outward FDI
FDI
Motivation
• Market-seeking • Efficiency-seeking • Strategic asset-seeking
Forms of Investment
• Equity capital • Reinvestment of earnings • Intra-company loans
Potential Benefits of FDI
1. Investment capital 2. Employment and job creation 3. Access to advanced technology and technology transfer 4. Improved management and labor skills 5. Increased export and foreign exchange earnings 6. Tax revenue 7. Increased competition – forcing local competitors to perform at higher levels of competitiveness 8. Spillover effect through backward and forward linkages 9. Additional investments attracted by the success of the first wave of investment 10. Trained workers leaving a foreign subsidiary and starting their own business or transferring their expertise to a local company
Potential Harm of FDI
1. Crowding-out of domestic producers in the product, labor and capital market. 2. Low-quality FDI may result in low-paid, unskilled jobs 3. Manipulation of transfer prices to minimize taxes or tariff duties 4. High profit repatriation over time resulting in adverse balance of payment position 5. MNCs’ profit maximization goal may


Full Text
Title FDI Policy in Korea
Similar Titles
Material Type Proceeding
Author(English)

Seungjoo, Lee

Author(Korean)

이승주

Publisher

Korea :

Date 2011
Event

Benchmarking of Trade and Investment Promotion Pol

Event [Workshop] China NDRC Training Program 2 (Jilin Province)
[Workshop] Capacity Building Program for Innovation Driven Development
Pages 98 (pdf)
Language English
File Type Documents
Original Format pdf
Subject Economy < Direct Investment
Holding KDI국제정책대학원
Organizer 한국개발연구원 국제정책대학원, 한국국제협력단
Venue 대한민국
Project Term 2011-06-16 ~ 2011-07-02
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