Canadian Investment in Korea before and after the Asian Financial Crisis

초록

Investment decision-making to foreign countries depends on many factors: political stability, currency and asset value fluctuations, government's regulations in hosting countries, labor relations, and country locations, to name a few. This paper investigates the trend of foreign direct investment in Korea during the last 10 years, emphasizing a big change after the Korean foreign exchange crisis in 1997. A sharp increase in FDI inflows into Korea since the crisis was due to the depreciation in the Korean currency and asset values, Korean government's promotion of FDI through deregulation, increased acquisition by foreigners of Korean companies released from corporate restructuring and privatization of government owned companies, and favorable business environment after the crisis. This paper investigates whether Canada has been active in making use of this opportunity in Korea. Canada's FDI behavior in Korea is compared with that in other Asian countries who had experienced similar cases of financial crisis. This study may also give some insight on future prospects of FDI in the Asian region in line with China's accession to the WTO. China, recently considered as a black hole sucking up most of the FDI in Asia, could be the best place where foreigners could invest to gain access to its market and resources. However, regarding that China is new to the WTO, a more indepth look should be given.