Korean FDI in Russia - Closer View of Korean FDI in Primorsky Krai－

초록

Russia is one of the eight largest economies in the world and has many attractive factors for foreign investors. Inward FDI flows into Russia have grown because of rising fuel prices since 2003, reaching 4.5 percent of the GDP in 2008. However, an unfavorable investment climate due to such as bad public governance and natural resources dependence remain as problems for foreign investors, as well as the Russian economy. Korean FDI outflows in Russia have increased rapidly from 2006, reaching 428 million US dollars in 2008 even though the share is only 1.4 percent of the total Korean FDI outflow. Manufacturing is the most attractive industry for Korean investors in Russia accounting for 62 percent of FDI stock as of March 2011. Beginning in 1990s, Primorsky Krai was the first region of Russia to develop economic relations with Korean enterprises. Korea has been one of the largest investors and foreign trade partners in Primorsky Krai. The total accumulated Korean FDI in the region was US$126.95 million as of September 2009. There were 76 Korean FDI enterprises in 2007. But Korean investors’ short-term view of investment without considering the spillover effects on domestic industries and the Primorsky government’s inefficient FDI policies caused unfavorable results for both Korean investors and the Primorsky region. Therefore, Korean FDI has decreased in the region. However, WTO accession of Russia in 2012 and Russian government’s development strategy considering the FDI as an important factor of economic advancement will give new opportunity for the Korean FDI in Russia. Federal government has outlined its objectives for FDI in the “3+5” formula, which builds on three national strengths and addresses five challenges. A ten-step plan to improve the investment climate was initiated as well. The Primorsky Krai government also adopted a program to improve the investment climate, and initiated ambitious projects for attracting foreign investment Korea also is increasing its investment concern including energy, ICT, and service sector in Russia. To maximize the mutual benefits of Korean FDI in Russia including Primorsky region, both Korea and Russia should implement effective policies. At regional level, it would be beneficial to set up a consortium of the Primorsky government (IPAs), the Korean authorities in Vladivostok, and universities and research institutes in both countries.

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