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Investment Down, but More Free Trade in Korea’s Future
Region: Asia
Theme: Economics
Location: Korea, South
Published May 25, 2011
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After a record year in 2004 that saw foreign direct investment (FDI) inflows to Korea increase by 97.7 percent, 2005 saw a step back with a drop of nearly 10 percent, from $12.8 billion to $11.6 billion. According to the Ministry of Commerce, Industry, and Energy (MOCIE), a combination of high oil prices and a strong won discouraged foreign companies from investing in the Korean economy. However, a reduction in FDI was not unexpected, as the government had cut a tax reduction period for foreign investors from ten years to seven beginning in 2005. Other experts have noted that it is also a reflection of the magnet China has become for FDI in the region.

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