Regulation and Liberalization of Imports and Foreign Investment and the Role of Trade Actions in the Republic of Korea

The Republic of Korea is well-known for its exceptionally successful export-driven economy and for the role of the Korean government in actively pursuing policies which have fostered the growth of Korean industry and the penetration of Korean products in the international marketplace. This rapid penetration of Korean products has been a source of tension among Korea’s trading partners as they have sought to respond to calls from their domestic-industry constituencies for protection from the increased importation of Korean products. However, less well-known and of increasing significance to Korea itself and to the international community is not the outflow of Korean products but the dramatic shift in the flow of goods into Korea. This increase in imports into Korea is the result of major structural shifts in the Korean economy and a greatly strengthened domestic appetite for foreign raw materials, capital goods, and consumer goods. Coupled with this increase in import activity have been broad changes in the level and nature of direct foreign investment activity in Korea, in part suggesting an increase in activity in service sectors such as insurance and advertising.