According to second-quarter FDI data released by the Organisation for Economic Co-operation and Development (OECD) on Wednesday, the country’s outbound investment totaled $23.4 billion in the first half of 2024 while inbound investment reached only $3.9 billion- a six-to-one ratio of outflows to inflows.
The gap was narrower in 2019, with outgoing investments exceeding incoming investments by 3.6 times. Even during peak overseas investment periods in 2021 to 2022, the disparity never exceeded threefold. Outbound investments stood at $34.5 billion in 2023 compared to $15.1 billion in inflows, with the ratio shrinking to 2.2 times.
Korea ranked 21st among 46 countries, including 38 OECD member nations, in attracting FDI during the first half of 2024. The United States led the rankings with its $153 billion figure, followed by Brazil and Mexico, which benefitted from their proximity to the United States and competitive labor costs.
Industry insiders attribute Korea’s lagging FDI inflows to a deteriorating domestic investment environment. “Foreign investors see little appeal in Korea, citing a lack of exceptional talent and limited incentives for establishing advanced factories,” a senior executive in the investment sector said. “Domestic firms are likewise hesitant to invest due to numerous labor and environmental regulations.”
The 52-hour workweek cap is often singled out as a major regulatory barrier. Critics argue that relaxing this restriction, particularly for high-salary professionals and advanced industries, could spur domestic investment.
“While reduced outbound investments have contributed to a larger current account surplus, they’ve also slowed domestic growth and cut job opportunities,” Yonsei University Professor Emeritus of Economics Kim Jung-sik said. “Labor market flexibility is a pressing issue.”
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