Foreign Direct Investment in Korea

1. Change from "Control and Regulation" to "Promotion and Support"
Promotional efforts by the Korean government obtained the first inflows of foreign capital in 1962. Following its initial success, the government was somewhat passive about inducing further inflows for quite a while, being afraid that multinational enterprises would dominate most lucrative sectors of the domestic economy. At the same time, foreign capital gained by loan inducement seemed much easier to control than direct foreign investment. This growth policy of preferring foreign debts to investment continued until the early '80s.
After Korea joined the OECD in December 1996, the government exerted itself to continue liberalization up to the level of advanced countries. The Foreign Capital Inducement Act was amended to become the Foreign Direct Investment and Foreign Capital Inducement Act in February 1997, which spelled out policies on FDI, M&A, and long-term loans.
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