This report clarifies how developing nations try to induce foreign direct investment (FDI). First, FDI can promote technology by becoming a channel for technology transfer. Second, FDI efficiently allocates capital resources for economic development. Third, as developing nations have abundant labor, influx of capital can create employment through on-the-spot employment.

This report emphasizes that FDI would have not an effect on the creation of employment micro-economically as much as raise technology in the domestic industry by transferring ultimately indispensable technology for industrial development.
This report says that Korea's FDI has been inactive compared to other developing nations, but since the 1980s, Korea's FDI has changed from direct investment in producing centers to market investment due to the growth and opening of Korea's economy.

Accordingly, this report notes that market-oriented or advanced direct investment will contribute to improving the constitution of Korea's economy, industrializing the economic structure and strengthening its international competitiveness. Together, Korea's companies should promote their advanced knowledge and systems in accordance with global and international trends.

Contents

I. Introduction

II. Federal Legal and Regulatory Framework
A. Exon-Florio
B. Hart-Scott-Rodino
C. Industry Specific Restrictions
D. Disclosure Requirements

III. State Legal and Regulatory Framework
A. Investment Incentives
B. State Tax Policy
C. Banking Regulations
D. Insurance Regulations

IV. FDI Tax Considerations
A. Legal and Regulatory Framework
B. Jurisdiction
C. Tax Treaties
D. Tax Rates

V. Recent Proposals and Policy Alternatives
A. Increased Disclosure
B. Increased Screening
C. Reciprocity
D. Performance Requirements
E. Multilateral Policy Actions

VI. Conclusion

〈References〉

Foreign direct investment("FDI") in the United States typically takes the form of real estate investments, greenfield operations, or mergers and acquisitions. Despite recent moves towards increased regulatory supervision of FDI, the U.S continues to permit foreign concerns and individuals to freely acquire U.S. real estate or U.S. concerns without the joint-involvement of a U.S. counterpart and without government approvals for money remittances or repatriation.
While broad access remains the Gerneral rule, recent legislation confining FDI features rather broad language which could potentially cover a wide range of high -technology investments. As FDI in the U.S. surged throughout the 1980s, the share of foreign-owned high -technology establishments increased(see Table 1). While the U.S. had traditionally been a major investor abroad, in the 1980s high-profile acquisitions by Japanese and German firms (see Table 2) as well as high rates of FDI growth (see Table 3) raised Public fears that U.S industrial competitiveness was at stake. In response to these concerns, the U.S. Congress enacted several statutes that either directly or indirectly have a bearing on investment decisions on the part of foreign investors in high-

High-Technology Establishments of Foreign-owned Affiliates as a Share of All U.S. Businesses

Number of High-Technology Firm Acquisitions and Establishments by Major Investing Country, 1987-1990

technology areas.
Consequently, a great deal of uncertainty exists in the current regulatory environment as to how such legislation may be interpreted or applied in specific cases. For example, such legislation has targeted Investments in industries that may threaten U.S. " national security " interests, which could be defined broadly to include investment in any high-technology industry. Moreover, recent legislation has not clarified what types of investments would be barred; in other words, what types of investments or

FDI in the United States during the 1980s

degree of investment would constitute effective "control" of a specific company. Also, foreign investors have found that U.S. tax laws also act as a barrier to FDI in that reporting requirements and complex regulations backed by extensive penalty payments are particuarly burdensome.
Beyond the formal restrictions embodied by statutory provisions that will be reviewed below, it is important to note that informal governmental powers are often an even greater constraint on FDI in the U.S. Although challenges to investment are the exception, they have occurred on occasion and are often driven by political trends. While formal restrictions are narrow in the U.S., the informal efforts of public officials have in the past blocked acquisitions in the absence of formal legislation.1)
Finally, U.S. policymakers have been considering alternative methods of regulating FDI amied at protecting U.S. industrial competitivenss. Such policy alternatives will have a bearing on future legislation defining FDI policy in the U.S as well as the future of Korea-U.S. economic relations. In late 1994, Hyundai Electronics America announced the largest Korean FDI into the United States on record, a U.S. $300 million acquisition of AT& T Corp.'s NCR Microelectronics Product Division.2) The center-piece of the deal is the highly prized petents and trademarks that will allow Hyundai Electronics America to leap ahead in terms of technological know-how. As Y.H. Kim, Chief Executive of Hyundai Electronics America in San Jose, California pointed out, "There are certain technologies which NCR Microelectronics has which are very valuable to us. It takes years to build up this kind of infrastructure." Also, recently Samsung Electronics Co. announced plans to invest U.S. 1 billion for the production of memory chips in the U.S. at greenfiled sites starting in 1998.3)
As such, Korea concerns continue to rely on U.S. FDI to upgrade critical technological capabilities and have benefited from a FDI Policy which has generally permitted free access to acquire or invest in U.S. concerns. Korean concerns also rely on U.S.-based R&D facilities to acess U.S. technological advancements (see Table 4) that may be subject to increased regulatory supervision.

U.S. R&D facilities of Foreign Companies, Selected Industries and Companies, 1992


Given recent legislation such as the Exon-Florio amendment could signal a shift towards a more restrictive FDI approach in the U.S., it is important to broadly review the entire legal and regulatory framework as well as consider potential changes which may impact Korean concerns' ability to continue to freely access U.S. technological know-how in the future.

These proceedings are the outcome of the Korea-U. S. Science and Technology Cooperation Forum2, which was held in Washington D. C. on May 26, 1994. The forum hosted more than 50 speakers and 300 participants from the administrations, legislative bodies, science and technology communities, and business sectors of both countries. Forum2 reconfirmed the spirit of Forum1 and made significant progress in enhancing science and technology cooperation between the two countries by making a resolution to recommend the establishment of a foundation for Korea-U. S. science and technology cooperation.

Contents

I. Introduction

II. Historical Overview of Technology Transfer

III. Main Features and Characteristics

IV. The Case of the Korean Electronics Industry

V. Implications and Challenges

VI. Concluding Remarks

References

It is often said that many Asian countries have followed the Japanese model of industrial and technology policy. Among these Asian countries, Korea has been regarded as the most faithful follower of the Japanese model. This paper reviews the Korean technology transfer of the past and compares it with the Japanese experience, and points out the similarities and differences between them. It also draws some implications and lessons that may be considered by other Asian countries for developing their own technology transfer strategies.
Technology is transferred through various channels and by many different agents. The paper first reviews these channels and agents, and then a brief comparison between Korea and Japan in technology trade and R&D is introduced. Although various forms of technology transfer are considered, licensing is discussed more often than others in this paper. Since Korea's outward technology transfer is negligible, only inward technology transfer is discussed here. Having reviewed the historical evolution of technology development and transfer, the main features and characteristics of the process are pointed out. In order to gain some insights, technology transfer in the Korean electronics industry is examined in more detail. Finally, the paper discusses the challenges ahead for korea and makes some suggestions for Korea and other Asian developing countries.

Ⅰ. TitleA Study of Measures for Strengthening Science and Technology Cooperation between Korean and the U.S.

Ⅱ. Purpose and Importance of the Study

This study was designed to research various measures and future tasks to strengthen science and technology cooperation between Korea and the U.S. More specifically, the study focused on the establishment of cooperation systems in the areas of mutual interests for R&D cooperation such as semiconductor equipments and devices and HDTV; and collaborative R&D in large R&D sectors in which the U.S. has strengths such as aerospace, environment, biotechnology, and atomic power. Also, encouragement of collaborative basic research based on mutual understanding and major tasks such as commercialization of R&D results were studied.

As economic and technological competition increases, each country strives to enhance its technological capability in order to strengthen its international competitiveness. Thus, it has become Korea's urgent task to strengthen its own competitiveness through active technology transfer and the development of indigenous technological capability.

In this context, the result of this study is expected to contribute to the advancement of R&D and technological innovation in Korea through the exchange of research manpower and industrial technology cooperation with the U.S., which has first-rate technological capability and research manpower.

Ⅲ. Contents and Scope of the Study

In addition to the traditional research methods utilizing literature, field survey, interviews, etc., this study utilized the result of the Korea-U.S.

Science and Technology Cooperation Forum 2, which was held in Washington D.C. in May 1994. The forum was organized by KIEP and J.W.K. International and sponsored by KOSEF. Furthermore, four expert meetings were organized to discuss cooperation strategy and policies.

This study discusses the basic direction of science and technology cooperation between the two countries, with emphasis on the contribution of this kind of cooperation to the development of the Asia-Pacific region. Then, it reviews the history of science and technology cooperation between the two countries, policies for internationalization of national R&D, and measures for industrial technology cooperation in the private sector.

The main body of the study consists of discussions on science and technology cooperation in the areas of basic research in universities, atomic power, biotechnology, aerospace, telecommunications, semiconductors, IPR protection, etc.
The last part covers strategic alliances and the results of the round-up discussion.The scope of the study covers science and technology cooperation between the two countries since the 1960s, as well as medium-and long-term prospects.

Ⅳ. The Results of the Study and RecommendationsIn the process of the study implementation, a proposal to materialize the idea of establishing a foundation for Korea-U.S. science and technology cooperation was made during the Korea-U.S. Science and Technology Cooperation Forum 2. The study also includes various suggestions for Forum 3 and the proposed foundation, which can be considered by the organizers of these institutions.It is strongly recommended that both the Korean government and the private sector seriously take the above suggestions into consideration for the direction of cooperation in general and for exchanges of manpower, technology, and strategic alliances in particular.