March 05, 2014 12:22
Korean companies have invested more than 2.3 times more money overseas than the amount of foreign direct investment here over the last decade. This has resulted in a net outflow of W174 trillion (US$1=W1,072).
Since robust domestic investment leads to more jobs and boosts private consumption, this divergent trend is being cited as one of the causes for the slowdown in domestic spending over the last 10 years.
The Chosun Ilbo analyzed investment figures tallied by the Ministry of Trade, Industry and Energy and found that Korean companies invested US$290.5 billion in other parts of the world from 2004 to 2013, while foreign direct investment amounted to just $126.8 billion.
Kim Dong-yeol at the Hyundai Research Institute said, "If outbound investments had been directed at domestic facilities, we would have seen the creation of 650,000 manufacturing jobs."
The trend seems to be getting entrenched, with Korean businesses investing more than $30 billion overseas every year since 2007 compared to just about $10 billion in annual foreign direct investment here.
Experts warned the trend would exacerbate slowing domestic consumption. Lee Chang-sun at the LG Economic Research Institute said, "We need to find ways to attract foreign businesses and investment to create more jobs and boost private spending."
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