South Korea's early development strategy favored foreign loans over direct investment, as the government sought to maintain tight state control over capital inflows while shielding domestic industries from foreign ownership. Debt was seen as more manageable — it could be directed, repaid, and kept at arm's length from the levers of industrial policy. The global debt crisis of the early 1980s, however, exposed the structural risks of this approach, prompting a fundamental re-evaluation. By 1984, Seoul began actively courting FDI, transitioning from a positive to a negative list system and removing the 50 percent ceiling on foreign equity — signaling a clear departure from decades of protectionist instinct.These incremental reforms gathered momentum through the 1990s, accelerated by Korea's OECD accession in 1996 and its attendant obligations to international standards of economic openness. Yet it was the 1997 Asian Financial Crisis that triggered a wholesale reconstruction of the investment framework. Faced with a collapsing currency and urgent need for foreign capital, the government dismantled barriers to mergers and acquisitions, opened the banking and securities sectors to full foreign ownership, and moved within months to integrate Korea into global capital markets in ways that decades of gradualist reform had failed to achieve.