Routledge Studies on Think Asia. Abingdon; New York: Routledge, 2024. US$170.00, cloth; US$43.00, ebook. ISBN 9781032140957.
The book opens with a fascinating question: Why does inbound foreign direct investment (FDI) in South Korea fail to match its outbound FDI? The author Choong Yong Ahn addresses this question by drawing on eight years of experience as a foreign investment ombudsman (FIO) and a deep expertise in South Korea’s economic development, shaped by an extensive academic career. This wealth of experience, including participation in various government committees and organizations, allows the author to provide an analysis of South Korea’s FDI that extends beyond a narrow perspective. It offers valuable insights and lessons on FDI policy not only for South Korea but also for the global community.
Following the Asian financial crisis, South Korea implemented comprehensive reforms, including the introduction of a proactive FDI inducement system. A key component of this system was the establishment of an aftercare service through FIO, which was founded in October 1999. To create a more welcoming environment for FDI, the FIO was designed to provide full support to foreign-invested companies facing challenges while doing business in South Korea.
Chapter 1 introduces the Office of the Foreign Investment Ombudsman (OFIO) and its role in aftercare services for foreign investors in South Korea. It highlights the global trends in FDI and international investment agreements (IIAs), emphasizing the growing importance of aftercare services, even more in the post-COVID 19 era. The discussion sets the stage for understanding the broader context in which the OFIO operates and the critical role of sustained investor support.
Chapter 2 includes a concise overview of South Korea’s development strategies, including key policies that shape the country’s foreign direct investment (FDI) environment and characteristics. The author organizes data across different periods in a clear and accessible manner, empirically demonstrating the growth of the Korean economy, its evolving economic structure, and the changes in FDI trends over time. This analysis shows the historical context that has shaped South Korea’s investment environment and underscores the key factors contributing to economic success.
Chapter 3 stands out as the highlight of the book. After explaining the structure and roles of the FIO, the author presents around 40 grievance cases, each illustrating real-world challenges faced by foreign investors and their corresponding resolutions. These cases shed light on the complexities of Korea’s investment environment, while also offering the author’s perspective on the problem-solving process and the strategies used to address these challenges. The author’s interview with the Invest Korea Journal before the case presentations is helpful to understand the author’s experiences in different positions of government and the overall direction of the Korean government’s foreign economic policy to be an economic hub of Northeast Asia. The chapter then presents seven types of grievance cases in six sub-chapters explained with specific examples: (1) business permits and renewals, (2) regulatory barriers, (3) taxation and customs, (4) non-working provisions of incentives as promised in investor-relations tours abroad, (5) labour relations, (6) social network services, and (7) preemptive outreaches with foreign business communities. The author vividly delivers each story, sharing his reflections on the incidents, actions, and decisions involved. Readers will find it intriguing to observe the dynamics between different government offices, local governments, and international organizations throughout the cases. The key takeaways from these examples lie in the implications of the grievance resolutions. As the author emphasizes repeatedly throughout the cases and in the chapter’s summary, collaboration between the FIO and central and local government agencies is essential for resolving grievances, alongside ongoing institutional development. Additionally, a trusted ombudsman, recognized by both the host government and the business community, plays a crucial role in the resolution process.
Chapter 4 presents the implications of South Korea’s OFIO system for the global community. The author provides specific lessons for FDI-seeking economies and the post-pandemic world. The lessons emphasize the need for flexibility and institutional reforms in domestic economic policies as well as in international institutions such as FTAs or IIAs. The chapter also highlights the importance of considering digital transformation in the evolving economic landscape. In conclusion, the author stresses the critical role of aftercare ombudsman services in supporting these efforts.
The book’s outstanding contribution lies in the author’s rich real-world experience combined with a deep understanding of South Korea’s economic development path. This combination allows the author to provide insights that are both practical and theoretically informed. Given the relative scarcity of literature on South Korea’s FDI, this book fills a gap by offering a comprehensive examination of the country’s FDI policies, empirical trends, and historical context. The descriptions of grievance cases offer invaluable reading experiences, as they are both highly informative and engaging. However, a limitation is that the discussion of these cases relies solely on the author’s perspective as the ombudsman, rather than drawing on his broader scholarly expertise, leaving some aspects unexplored. The analysis would have been further enriched by, for example, incorporating the socio-political aspects that influenced the resolution of each case, providing a more holistic understanding of the outcomes and future recommendations. This limitation narrows the author’s answer to the question in the beginning, focusing primarily on institutional shortcomings.
For foreign entrepreneurs and investors considering opportunities in South Korea, this book serves as a practical guide to showing the business environment, potential challenges, and effective solutions. Meanwhile, policymakers and academics will find the author’s insights thought-provoking. While the author’s arguments may not be easily disputed, they invite deeper reflection and analysis and pose important questions for future policy development.
Ji Hye Lim
George Mason University Korea, Incheon