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Foreign direct investment exceeds 8% of GDP

Posted February. 07, 2001 21:11,   


Foreign direct investment (FDI) in Korea has grown at such a rapid clip since the 1997 financial crisis that foreign-invested firms play an increasingly important role in the domestic economy, government officials said Wednesday.

Officials said that foreign companies are already deeply involved in Korean life, as FDI accounts for more than 8 percent of gross domestic product (GDP) and its contribution to the nation¡¯s trade surplus reaches 40 percent.

According to the Ministry of Commerce, Industry and Energy, the number of companies in which foreign ownership exceeds 10 percent and foreign-invested enterprises according to the definition of the Organization for Economic Cooperation and Development (OECD) came to just 3,877 in 1996 but had risen to 9,423 as of the end of last year. Moreover, combined FDI for 1998 and 1999 was $24.4 billion, almost equivalent to the $24.6 billion worth of foreign investment in the 35 years from 1962 until 1997.

Just last year, FDI was reported to have hit an all-time high of $15.7 billion. The figure marks the 12th highest level in the world and the second highest in Asia after China, a substantial change from its previous position outside the top 40 countries.

A total of $4.3 billion in foreign funds was invested in the domestic stock market in 1999.

The Korea Institute of Industrial Economics and Trade (KIET) recently conducted a survey on FDI`s influence on the domestic economy. The results showed that FDI made up just 1.0 percent of the value of the overall economy in 1995 and 1.7 percent in 1997 but that the figure rose to 5.7 percent in 1998 and 8.2 percent in 1999. However, these numbers still fell far short of the world average of 11.1 percent as well as the 25.7 percent figure in Britain, 12.8 percent in the United States and 11.0 percent in France. But it was much higher than 5.1 percent in Germany and 0.3 percent in Japan.