Foreign Direct Investment in Korea

Foreign Direct Investment in Korea

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Institution

Overview of the Country

Korea is amongst the developed countries in the world amid technological innovations that have revolutionized the business sector. Following the 1997 financial crisis that occurred in Korea, the country has undergone a successful recovery. The government has developed and implemented various trade policies and laws to ensure that the country’s Foreign Direct Investment on E-entertainment improves to boost the economy (Bishop, 2018). Korea is strategically situated in the Asian continent, and the government has supported Foreign Direct Investments by creating a market for various products and services. The economy of the E-entertainment sector has improved over the past decades, considering that the government has attracted more foreign investors to generate more income and increase growth and development. In the current generation, Korea has a powerful and stable economy, and many investors prefer to conduct E-entertainment business in environments that do not exploit them in one way or another (McCormick & Unger, 2017). Foreign Direct Investments has boosted Korea’s economy, and the country has increased its level of competitive advantage.

Korea has been in the front line on the reformation of FDI restrictions in all business sectors including the E-entertainment docket since they suffered the financial crisis. The fusion of microeconomic considerations and the macroeconomic ones facilitated the sustainability or sufficiency of the country’s status quo. The government of Korea has managed to acquire foreign technologies in an effort to enhance competitiveness in E-entertainment. Skilled labor is essential for E-entertainment companies, considering that experienced personnel assists businesses to accomplish various objectives and create expansion. Korea develops to be a strategic country for Foreign Direct Investment in the E-entertainment sector as the business regulations and restrictions are not too harsh compared with those in other Asian states. This is an open opportunity for investors to conduct business in areas that have identified the significance and contribution of Foreign Direct Investment to the economy (Emery, 2017). Despite the fluctuations that emerged after the economic crisis, Korea has managed to recover and build a strong and competitive entertainment economy by promoting Foreign Direct Investment.  

Political Environment

The political environment in Korea is supports E-entertainment businesses because legislators have managed to abolish Foreign Direct Investment restrictions and oppressing regulations that limit the growth of the sector. This strategy has assisted Korea to be suitable for investment, and more investors have flocked the country amid positive political influences that promote Foreign Direct Investment (Cohn, 2016). The entertainment sector and the political segment have worked together to ensure that foreign investors operate in a favorable environment that facilitates business growth and development. Investors provide knowledge, skill, and experience, and this can be used for economic growth, considering that Foreign Direct Investment facilitates the exchange of ideas and increases innovation. Politicians in the country are aware of the significance of foreign investors, and they have created an environment that supports FDI (Chung & Kirkby, 2005). Korea has used this strategy to promote the e-entertainment sector, and this has assisted the state in growing and developing economically.

Financial Analysis

Korea’s currency has proven to be very much more stable in the past years as it has managed to undergo fluctuations fewer than 10% (Bishop, 2018). As a result, the foreign exchange rate has stabilized, and this is crucial for investors to know. The foreign exchange rate is not too high and too low for investment. This means that Foreign Direct Investment in the E-entertainment field will increase even in the future, considering that the country’s currency is competitive in the global market. Furthermore, Korea’s foreign debts have decreased, and this has improved their financial status. Taxation has been moderate, and this has increased Foreign Direct Investment, considering that the country has improved its ability to raise international finances. Consumer price inflation has stabilized in Korea over the past years, and this means that prices for goods and services are steady (Harvie & Van Hoa, 2016). This opportunity prevails itself for foreign investors who desire to conduct business in favorable environments. The diagram below represents Korea’s financial competence and level of global competitive advantage retrieved from study notes in tutor2u: Economic Growth and Development.

[pic 1]

Efficiency

Korea has recorded a fantastic increase in research and development in E-entertainment as a result of developing domestic technology and greater economic growth. This has allowed the country to increase its level of global competitiveness giving them a higher bargaining power in the market. Most Korean E-entertainment companies are ranked highly in the global market in terms of research and development investment in Asia. This means that they have managed to identify the significance of technology to economic growth. The use of sophisticated technologies in E-entertainment business has given Korea a competitive advantage, which has attracted more investors (Chan, 2016). Investors are encouraged to conduct business in regions that enjoy high speeds of technology. The current generation has adapted to technological innovations, and it is the mandate of business to embroil technologies to improve goods and services. Korea has a robust technological base that surpasses those used in other developed countries around like China and Japan. Competitiveness can be accomplished when E-entertainment FDIs incorporate technology in all processes of production and service delivery.

Korea has various natural resources that assist the E-entertainment industry in thriving and being competitive in the global market. Korea is one of the leading countries that export more manufactured products. The availability of resources has ensured that entertainment companies have increased in Korea, and infrastructural developments have supported these businesses. Foreign investors in the entertainment sector have an added advantage due to the availability of a ready market. Entertainment products and services are amongst the top exports in Korea, illustrating the opportunity for investors from different backgrounds. This makes the country suitable for Foreign Direct Investment, considering that resources are available in the Korean Republic (Bishop, 2018). Resources have been significant to Korea’s entertainment industries, considering that they are developed domestically; hence, this reduces the production costs and allows companies or organizations to earn more incomes. Most companies in Korea are foreign-based, and this has been promoted by the availability of raw materials that are necessary for production.

Worker Payout and Policy

The Korean labor force is one of a kind. Korea has backed the importance of education to economic development and technological skills. This has allowed the country to emphasize on quality education, producing a highly skilled and educated labor force (Jessop, 2016). Skill and diligence are essential in production processes and accomplishing organizational goals and objectives. Foreign Direct Investment in Korea has been encouraging by the highly trained and skilled workforce present in the country. The presence of layoffs for management restructuring determinations has allowed the government to create a flexible labor market that supports Foreign Direct Investments. A labor force that can enlarge the market base can assist FDI companies to accomplish many goals and objectives, making the market of Korea rigid and flexible. Countries that have a skilled labor force manage to address their economic situations at ease, considering that the workforce can take effective decisions that enhance development and growth. The Table below shows Korea’s minimum wages over the past years and country’s target in the next few years.

[pic 2]Foreign Currency and Exchange Advantages

Exchange rates in Korea are predictable, considering the continuous improvements taking place in the country. The price trends indicate that Korea is a suitable region for investors to grow and develop their companies and organizations. In Korea, investors are advised to purchase assets when prices grow at an increasing rate. The foreign exchange and monetary policies in Korea favor foreign investors, and the country’s currency is potent in the global market. The Foreign Direct Investment companies enjoy market liberalization when operating in Korea, considering that the Korean Yen does well in comparison to the US Dollar (Yeung, 2016). These market characteristics make Foreign Direct Investment increase and the economy has improved; thus, increasing the country’s global competitive advantage. Korea has grown its market share in the global economy, and this has allowed them to have a stable currency that has value worldwide.

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