IDEAS home Printed from https://ideas.repec.org/p/oec/dafaaa/2013-2-en.html
   My bibliography  Save this paper

Lessons from Investment Policy Reform in Korea

Author

Listed:
  • Françoise Nicolas

    (Institut Français des relations internationales)

  • Stephen Thomsen

    (OECD)

  • Mi-Hyun Bang

    (OECD)

Abstract

As more and more countries seek to liberalise their foreign investment regimes to attract global flows of foreign direct investment (FDI), an essential question for policy-makers is no longer just what to reform but also how to reform. How is a reformist government to sell the idea of reform to the general public and to counter any opposition to reform? How are those who lose from reform in the short term to be compensated? Does sequencing of reforms matter? Korea offers a particularly interesting case study because its reforms beginning in the 1990s were both rapid and far-reaching. Based on the OECD FDI Regulatory Restrictiveness Index, Korea was the biggest reformer of its policies towards FDI between 1997 and 2010 among a sample of 40 developed and emerging countries. The objective of this study is to document the liberalisation of the FDI regime in Korea and to examine how and why it came about. What were the main obstacles and what were the main drivers? How did FDI liberalisation relate to other reforms (trade policy and regulatory reform, policies towards outward investment)? The paper does not ask what more Korea needs to do but rather what lessons can we draw from the Korean experience about how to achieve rapid and sustainable reforms? The insights from Korean liberalisation are useful for other countries, particularly non-OECD members in Asia and elsewhere, which still have high levels of statutory restrictions as measured by the FDI Index. Many of these countries are eager to attract more investment and recognise that they will need to reform their investment regime but are unsure how best to proceed. Each country?s reform path is unique, and this study will not provide a roadmap for other countries to follow, but it will nevertheless serve as a useful model for reformers in other countries and provide evidence that successful reform is accompanied by rising inflows of direct investment.

Suggested Citation

  • Françoise Nicolas & Stephen Thomsen & Mi-Hyun Bang, 2013. "Lessons from Investment Policy Reform in Korea," OECD Working Papers on International Investment 2013/2, OECD Publishing.
  • Handle: RePEc:oec:dafaaa:2013/2-en
    DOI: 10.1787/5k4376zqcpf1-en
    as

    Download full text from publisher

    File URL: https://doi.org/10.1787/5k4376zqcpf1-en
    Download Restriction: no

    File URL: https://libkey.io/10.1787/5k4376zqcpf1-en?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sánchez-Masi, Luis, 2022. "La política económica neoclásica en América Latina: génesis y consecuencias de cuatro décadas perdidas en el desarrollo latinoamericano, 1980-2020 [Neoclassical Economic Policy in Latin America: Or," MPRA Paper 114296, University Library of Munich, Germany, revised 01 Jul 2022.
    2. Chune Young Chung & Sang Jun Cho & Doojin Ryu & Doowon Ryu, 2019. "Institutional blockholders and corporate social responsibility," Asian Business & Management, Palgrave Macmillan, vol. 18(3), pages 143-186, July.
    3. Hille, Erik & Shahbaz, Muhammad & Moosa, Imad, 2019. "The impact of FDI on regional air pollution in the Republic of Korea: A way ahead to achieve the green growth strategy?," Energy Economics, Elsevier, vol. 81(C), pages 308-326.
    4. Ka-Hyun Lee & Jai S. Mah, 2017. "Foreign Direct Investment Flows from China to Korea in the Automobile Industry," China Report, , vol. 53(1), pages 26-45, February.
    5. Hille, Erik, 2016. "The impact of foreign direct investments on regional air pollution in the Republic of Korea: A way ahead to achieve the green growth strategy?," VfS Annual Conference 2016 (Augsburg): Demographic Change 145517, Verein für Socialpolitik / German Economic Association.
    6. Sta. Romana, Leonardo L., 2014. "Some Lessons from Korea's Industrialization Strategy and Experience," EconStor Preprints 102088, ZBW - Leibniz Information Centre for Economics.
    7. CHUN, Hyunbae & HUR, Jung & SON, Nyeong Seon, 2018. "Hollowing Out or Filling In? Impacts of Multinational Enterprises on Domestic Plant Turnover and Job Growth in Factory Asia," Discussion paper series HIAS-E-71, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    8. Mr. Diego A. Cerdeiro & Rachel J. Nam, 2018. "A Multidimensional Approach to Trade Policy Indicators," IMF Working Papers 2018/032, International Monetary Fund.
    9. Hyunbae Chun & Jung Hur & Nyeong Seon Son, 2020. "Hollowing Out or Filling In? The Effects of Multinational Enterprises on Domestic Plant Turnover and Job Growth in Factory Asia," Korean Economic Review, Korean Economic Association, vol. 36, pages 285-317.

    More about this item

    Keywords

    FDI Regulatory Restrictiveness Index; foreign direct investment; investment policy reform; segyehwa; South Korea;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:dafaaa:2013/2-en. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/caoecfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.