East Asia Foundation: FDI Outflow Surge From South Korea

Foreign direct investment outflows from South Korea are surging, increasing by more than 30 percent annually since 2010. Such levels can signal economic growth, but can also warn about rising wages, tax rates and regulations that erode a country’s manufacturing base and eliminate jobs, explains Namsuk Choi for East Asia Foundation. “The Moon Jae-in administration’s economic policies have had unintended consequences,” he writes. “The corporations and laborers that it targets to help are those who are getting hurt…. The business environment worsened as minimum wages increased and working hours shortened.” Large companies can respond quickly while small ones struggle. Protectionism and reshoring policies in the United States and Japan could encourage companies to return to South Korea, but the South Korean market is small. The writer urges South Korea to define targets and prepare policies to encourage cooperation among companies and protect jobs. Nations should diversify export markets, recruit talent and remain flexible on global demand. – YaleGlobal