Korea’s FDI hits all-time high in 2023 on improved environment

[Graphics by Song Ji-yoon]

Foreign direct investment (FDI) in South Korea reached a record high last year amid a decline in the number of workdays due to fewer strikes in recent years.

According to the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy, FDI in the country reached an all-time high of $19.1 billion in 2023, up 4.9 percent from the previous year.

The amount of capital outflow, represented by the difference between overseas direct investment (ODI) by domestic companies and FDI, stood at $44.2 billion in 2023, down from $63.2 billion in 2022.

The upturn in FDI comes amid a more stable business environment in Korea, particularly fewer strikes.

According to the Ministry of Employment and Labor on Monday, the number of workdays lost during the first two years of the Yoon Suk Yeol administration was 616,622 days, which is 37 percent of the average 1,665,798 days under the previous four administrations.

This figure was based on the number of workdays lost from May 10 of the first year of each administration to April 30, two years later.

The average duration of labor disputes also dropped under the Yoon administration to 15 days in 2022 and 9 days in 2023, compared to over 20 days each year during the previous Moon Jae-in administration.

“Labor disputes in Korea are a factor that makes foreign investors hesitant,” said Cho Kyung-yup, a research fellow at the Federation of Korean Industries (FKI). “The current Korean government‘s emphasis on the rule of law in labor relations is likely to have had a significant impact on the increase in foreign investment.”