ODI Strategies of Korea: In Comparison with Emerging and Advanced Markets

Abstract

Global economic integration through trade, factor movements, and communication of economically useful knowledge and technology has been a generally rising trend worldwide. The establishment of the World Trade Organization further enriched the quality of life of global citizens. The aim of this thesis is to investigate the effect of Korea Outward Direct Investment in China, India, Japan and the US in light industry and heavy-chemical industry. This paper seeks to analyze the Republic of Koreas trade pattern and outward direct investment (ODI) patterns from 2001 to 2010 in emerging and advanced economy which are the outputs of our longtime desire. Outward Direct Investment is considered to be an alternative means available to the firms to give them particular opportunities to acquire international resources and capitals. As a result of these economic integrations, many countries have started to invest in foreign nations in order to look out for their own interest and benefits. Korea is one example of that looks out for its own interest and benefits in international markets where natural resources, human capitals, dynamic market benefits are abundant. I researched the relationship between Koreas foreign investment and labor costs, and tried to find how Koreas foreign investment affected Korean industries market shares. Generally, it showed that Koreas light industry investment in emerging economies was affected by emerging economies labor prices while Koreas heavychemical industry investment in emerging economies was not affected by emerging economies labor prices. Interestingly, investments in Japan for both light and heavy-chemical industries from Korea were not affected by the Japanese high labor costs while Korean light and heavy-chemical industries investments in the US were both affected by the US high labor costs. In addition, Korean firms market shares in both emerging and advanced economies showed similar patterns. It was shown that in all four countries any of Korean firms foreign investment has insignificant effect on foreign market shares. ODI is one marketing tool sued by firms in global business strategy. Trade policy, economic policy, public policy, exchange rate, interest rate, consumption pattern, consumer taste, and economic growth rate are the important factors with significant influence on the increase in Korean firms global market shares. In four economies, their GDP growth rate is a positive contributor in the increase of foreign market share. In order to survive in world markets, Korean manufacturers must produce good-quality products with low prices, and develop competitive marketing strategies. Moreover, strategic currency strategies must be used to reduce risks from currency wars among nations.