The Korean experience in FDI and Sino-Korean relations |
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Authors: | Sung Wong Hong Chang Ho Yim Young Chul Park |
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Institution: | 1. the Korea Research Institute for Human Settlements, Korea 2. Department of Urban Planning of Hongik University, Korea
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Abstract: | The possibility of regional cooperation in the Yellow Sea Rim (YSR) area has been discussed since the early 1980s. In recent
years, Korean outbound foreign direct investment (FDI) has increased rapidly and it will be growing much further. In the new
phase of the global economy and the post-cold war political environment, Korean firms consider the socialist countries, especially
China, to be attractive new partners for trade and investment projects. Foreign investment contributed to economic growth
in developing countries. In the early stage of industrialization in the 1970s, the share of foreign firms amounted to about
one-tenth of the total manufacturing employment in Korea. Similarly, outbound Korean FDI could also play an important role
in the industrialization of the LDCs in Southeast Asia and China. A case study of a Korean multinational corporation reveals
that the direct employment effect of Korea’s FDI is extensive in terms of money invested. In spite of the complementarity
in economic structure and the phase of development between Korea and China, the prospect of Korea’s outbound FDI is not all
clear. However, one can safely assume that the unit scale of FDI projects will increase. Unlike in the past, the large Korean
corporations are now preparing more than a few fair-sized projects in China. The positive impact of those FDI will be significant.
The YSR cooperation, if successful, could create efficient economic cooperation based on complementarity between Korea and
China. The Korean outbound FDI would pave a road to such regional cooperation.
This article is the revised version of a paper prepared for the International Conference on Regional Development in the Yellow
Sea Rimlands, held February 18–21, 1991. The conference was cosponsored by the Korea Research Institute for Human Settlements,
the State Science and Technology Commission of China, and the East-West Center of Honolulu, Hawaii. |
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