Causes for Sluggish Foreign Direct Investment in Korea: A Foreign Perspective

In spite of the liberalisation of the FDI regime since the 1997 financial crisis, the magnitude of FDI in Korea is smaller than a level comparable internationally, and has declined significantly in the recent past. To address the issue of flagging FDI in Korea, a comprehensive survey was undertaken of foreign companies in Korea. The survey results show that foreign firms undertake investment in Korea mainly to capitalise on the emerging business opportunities and that there is substantial room for improvement in the areas of government regulations and the business environment. To further attract FDI, therefore, not only should Korea undertake an across-the-board liberalization of the FDI regime, but it should also make concerted efforts to improve the operational environment for foreign businesses. JEL classification: F2