Thursday marked the ninth annual Foreign Company Day in Korea, and the government signed a memorandum of understanding with U.S. firm Cell Guard over a US$100 million investment to expand its plant in North Chungcheong Province. Cell Guard controls 29 percent of the global market for lithium ion batteries. The government also unveiled the official catchphrase for foreign investment: "Korea is where your future lies." 

Korea began aggressively seeking foreign direct investment after the 1997 Asian financial crisis and attracted $112.6 billion over the last 10 years. That is 4.6 times more than the total amount of foreign investment in Korea from 1962 to 1997. But it plummeted to around $10 billion a year since 2004.

As of the end of 2008, foreign investment into Korea totaled $90.6 billion, accounting for 9.8 percent of the country's GDP. That is less than half the global average of 24.5 percent and lower than in China ($378 billion), Brazil ($294.6 billion), India ($123.2 billion) and Thailand ($104.8 billion).

The poor performance is mostly due to the successes of China, India and other emerging markets in attracting 60 percent of foreign investment around the world. Investors simply find them more appealing. In Korea, attractive investment targets have decreased since the Asian financial crisis, while the global economic slump also plays a role. Given this, Korea needs to revise foreign investment policies that have so far focused on securing foreign currency.

Advanced countries have already gone beyond attracting foreign investment as a source of foreign currency and are focusing on job growth and industrial and rural development. Ireland is focusing on information and communication, pharmaceuticals, finance and the service industry. The U.K. is trying to boost its film, energy, finance and biotech industries, while Taiwan puts the priority on attracting knowledge-based research and development centers.

China is also being selective in luring foreign investment, opting for FDI sources that would contribute to industrial restructuring, technological development, environmental protection and balanced regional development. Korea, too, needs to shift its strategy so that it can target businesses with the potential to become essential part of the country's economy.