The figure above shows that the motives underlying Korea's outward foreign direct investment (FDI) have changed substantially over time. The most striking trend is the persistent decline in resource-seeking investment. During the 1980s and the early 1990s, resource-seeking investment was the single most important motive for outward FDI, accounting for more than half of the cumulative stock of overseas investment. Since the mid-1990s, however, its share has fallen rapidly and now stands at around 10 percent of total outward FDI.
A second notable trend is the shift from export-promoting investment toward market-seeking investment. From the mid-1990s to the early 2000s, export-promoting investment increased rapidly and became the dominant motive for outward FDI. This reflects the widespread use of overseas production bases to reduce production costs and strengthen export competitiveness. Since the 2010s, however, the share of export-promoting investment has steadily declined, while market-seeking investment has continued to expand and now accounts for roughly half of Korea's outward FDI. This suggests that Korean firms have increasingly shifted their focus from establishing production and export bases abroad to directly targeting overseas consumer markets.
The third notable trend is the rise of third-country-oriented investment. Such investment was virtually nonexistent until the mid-2000s, but its share has increased rapidly since then and now accounts for nearly 20 percent of total outward FDI. This indicates that Korean firms have increasingly adopted strategies that use a particular country as a production or logistics hub from which to serve neighboring countries and global markets. The growing importance of this type of investment also reflects the expansion of regional production networks and the deepening of the international division of labor, particularly in Asia.
Finally, although technology-sourcing investment still represents a relatively small share of total outward FDI, it has increased steadily since the 1990s and now accounts for approximately 5–6 percent of the cumulative stock of overseas investment. This trend suggests that Korean firms are increasingly engaging in strategic investments aimed not only at reducing production costs or expanding into foreign markets, but also at acquiring advanced technologies, research and development capabilities, and intangible assets possessed by firms in advanced economies.
The figure above shows that the motives underlying Korea's outward foreign direct investment (FDI) have changed substantially over time. The most striking trend is the persistent decline in resource-seeking investment. During the 1980s and the early 1990s, resource-seeking investment was the single most important motive for outward FDI, accounting for more than half of the cumulative stock of overseas investment. Since the mid-1990s, however, its share has fallen rapidly and now stands at around 10 percent of total outward FDI.
A second notable trend is the shift from export-promoting investment toward market-seeking investment. From the mid-1990s to the early 2000s, export-promoting investment increased rapidly and became the dominant motive for outward FDI. This reflects the widespread use of overseas production bases to reduce production costs and strengthen export competitiveness. Since the 2010s, however, the share of export-promoting investment has steadily declined, while market-seeking investment has continued to expand and now accounts for roughly half of Korea's outward FDI. This suggests that Korean firms have increasingly shifted their focus from establishing production and export bases abroad to directly targeting overseas consumer markets.
The third notable trend is the rise of third-country-oriented investment. Such investment was virtually nonexistent until the mid-2000s, but its share has increased rapidly since then and now accounts for nearly 20 percent of total outward FDI. This indicates that Korean firms have increasingly adopted strategies that use a particular country as a production or logistics hub from which to serve neighboring countries and global markets. The growing importance of this type of investment also reflects the expansion of regional production networks and the deepening of the international division of labor, particularly in Asia.
Finally, although technology-sourcing investment still represents a relatively small share of total outward FDI, it has increased steadily since the 1990s and now accounts for approximately 5–6 percent of the cumulative stock of overseas investment. This trend suggests that Korean firms are increasingly engaging in strategic investments aimed not only at reducing production costs or expanding into foreign markets, but also at acquiring advanced technologies, research and development capabilities, and intangible assets possessed by firms in advanced economies.