Foreign direct investment (FDI) in South Korea soared to a record $19.1 billion in 2023, reflecting a 4.9% increase from the previous year. This milestone was achieved amid a notably more stable business environment, characterised by a significant reduction in labour strikes.
The Ministry of Economy and Finance, along with the Ministry of Trade, Industry and Energy, reported the FDI surge, highlighting the correlation between the improved investment climate and fewer workdays lost to strikes. In contrast, the capital outflow, which is the difference between overseas direct investment (ODI) by domestic companies and incoming FDI, declined to $44.2 billion in 2023 from $63.2 billion in 2022.
The reduction in labour disputes played a critical role in fostering this favourable environment. According to the Ministry of Employment and Labour, the number of workdays lost during the first two years of President Yoon Suk Yeol’s administration dropped to 616,622 days, which is just 37% of the average 1,665,798 days recorded under the previous four administrations.
The duration of labour disputes has also significantly decreased. Under the Yoon administration, the average duration fell to 15 days in 2022 and 9 days in 2023, compared to over 20 days annually during the Moon Jae-in administration.
“Labour disputes in Korea have historically been a deterrent for foreign investors,” noted Cho Kyung-yup, a research fellow at the Federation of Korean Industries (FKI). “The current government’s emphasis on the rule of law in labour relations has likely contributed significantly to the increase in foreign investment.”
This record FDI marks a positive trend for South Korea, reinforcing the importance of a stable and predictable business environment in attracting foreign capital.
