The policy of Foreign Direct Investment (FDI) of Korea has been run by the central government since 1960's. In those days, however, the negative cognition to FDI make public loan have the major part of all Foreign Capital Investment (FCI).
Not until ...
The policy of Foreign Direct Investment (FDI) of Korea has been run by the central government since 1960's. In those days, however, the negative cognition to FDI make public loan have the major part of all Foreign Capital Investment (FCI).
Not until the first Oil-Shock came to us did we need FDI which had no charge for redemption to the amount with interest added. In 1996, moreover, entering the group of advanced nations with joining OECD, Korea had become impossible to borrow public loan while we had become to want FDI seriously due to economic crisis occurred at the end of 1997.
People expected that FDI would be a effective means to get over the foreign exchange crisis, by carrying through stable introduction of foreign capital and reinforcement of economic constitution without additional charge for foreign debt.
The local governments who are seeking way out of the economic FDI in order to elevate their rates of financial self-reliance. Presidents of the local governments, especially, have done their best to attract FDI to make it a means of activation of local economy. With Foreign Investment Promotion Act in 1998, local authorities' effort to induce FDI has been accelerated.
Nevertheless, their achievement in attracting FDI is not good. The goal of this study, therefore, is to analyze Why the localities could not succeed in inducement of FDI and What alternatives are needed to solve problems in attracting FDI. In particular, this study is focused on the public officials who are taking charge for inducing FDI With analyzing their ability in policy execution, their consciousness to FDI problems, and their obstacles in inducement; we can find the alternatives contributing to the improvement of whole inducing - FDI - system.
The results of a survey of officials in charge for FDI is following.
The first, they are realizing that the inducement of FDI is a criteria for localities, ability and essential in regional development.
The second, they think the localities' policies are not consistent.
The third, the problems pointed by them in attracting FDI are lack of Know-How, information, and strategies, limit of supplying incentives and one-stop-services, insufficience of discretion and support from central government, and poor investment environment.
According to the results of above survey, alternatives to solve problems in inducing FDI are following.
The first, reasonal authority-allocation between central and local governments is needed to overcome limit of supplying incentives and one-stop-services, and in sufficiency of discretion.
The second, local governments must prepare appropriate strategies to help themselves and induce some industry in which they have comparative advantages.
The third, they must supply to foreign firms various administrative services ; including consulting service, establishing joint-committee composed of citizens and public officials for inducement, using managers in charge for each project, and supplying post-investment services for investors.
The forth, establishing world-line infrastructure is urgently needed. Because Insufficience of infrastructure decrease desire for investment in inducing FDI. Therefore, it is needed in constructing infrastructure to form foreign investment zones and facilities for settling foreigners difficulties in daily life. That amenities must include founding foreigner schools, providing health insurance benefits, and providing housing for expatriates.