Financial Motives of U.S. Corporate Investment in Korea

by Seung Kim



This article combines a questionnaire survey with analytical work on U.S. multinational firms that have invested in Korea. As of December 1973, ninety-seven U.S. corporations had invested in Korea. The survey, containing ten principal questions, each with subquestions, was sent to eighty-eight companies; forty-one companies, or 46.6 percent, replied. The questionnaire respondents represent diverse industries. The main source of foreign capital in Korea before 1962 was foreign aid, in the form of U.S. government grants and P.L. 480 agricultural commodity surpluses. Since 1962 the major types of foreign capital have been foreign loans and direct investment from the United States and Japan. The search for low labor cost also motivates U.S. companies whose private market is the: U.S. but who have labor-intensive products. Fifteen companies (36.6 percent) listed "re-export to the U.S." as one of the motives for investment in Korea. Partly to meet Japanese competition, many U.S. companies ship components of electronics and textile products to Korea for assembling and subsequent re-export to the U.S.

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