This study discusses North Korea’s foreign investment policy and tasks ahead of its government to revitalize the economy, based on the premise that nuclear negotiations between North Korea and the US proceed smoothly. First of all, in order to derive policy tasks, we compared and analyzed the achievements and policies of transition countries in Asia and Eastern Europe to attract FDI, also analyzing the determinants of FDI inflows, after which we present policy tasks for North Korean authorities. As South Korea may very well become the largest investor in North Korea, our study also discusses tasks for the Korean government to pursue in order for Korean companies to successfully invest in North Korea.
   Based on data provided by the Doing Business project at the World Bank, this study investigates changes in the investment environment of each transition economy and compares their investment environment, institutions, and correlations with FDI inflows. During our quantitative analysis of determinants of FDI inflows in transition economies, we came upon many cases where statistics were unstable or difficult to secure, so this study limits target group to 24 countries. For FDI inflow data, we used OECD statistics and conducted our analysis through system GMM estimation, a method in wide use recently. In addition to the determinants of FDI inflows for all transition economies, we also performed a separate analysis of the Visegrad Group (the “V4”) and the Baltic states, which are considered to be successful in attracting FDI, classified into one group.
   In addition, we analyzed the income categories by classifying them as transition economies with per capita GDP less than US$ 2,000 and those above. In the case of transition economies, we postulated that accession to the WTO or EU would have a great effect on FDI inflows for these nations. Based on this premise, we measured FDI inflows by using dummy variables based on when the nation joined the WTO or EU. In the case of the V4 and the Baltic states, the initial conditions were the externally determined independent variables. The most important success factors for investment in the early stages of the transition were the pace of reform and level of openness. This is because the performance of investment inducement policy depends on how wide open the economy has been rendered and reformed rapidly to be incorporated into the world economy.
   In the case of China and Vietnam, the improvement of the business environment was also an important factor for the inflow of FDI. The Baltic states, Macedonia and Georgia all have limited domestic markets, which has led to these countries attracting investment by carrying out drastic improvements in their business environments, thus positioning themselves as a base for advancing into adjacent and larger markets. Among the evaluation factors, efforts to improve the environment in the trade sector were prioritized. In other words, efforts were made to attract investment in sales bases in neighboring large markets to the country by radically improving procedures and reducing the time and costs required in the import and export process. In the regional characteristics of the transition country’s business conditions, the EU member states as well as the transition countries adjacent to the EU generally receive better evaluations in the trade sector than any other assessment factor.
   There are many instances of transition economies not included among the top 20 nations on the “Ease of Doing Business” ranking announced by the World Bank benefiting from a larger market or abundant resources in adjacent regions. This includes Poland in the Middle East and Europe, Russia and Ukraine in the CIS adjacent to the EU, Kazakhstan in Central Asia, and China in East Asia. Of course, reform and opening and improvements in the business environment were made, but the size of the market and the abundance of abundant resources played a significant role in FDI inflow compared to neighboring competitors. Kazakhstan has actively attracted FDI through improving its business environment, developing its own resources and utilizing this as the foundation for economic development. Even in Russia, which is not a rapidly transitioning nation, the rich potential for development of abundant resources attracted large amounts of FDI. China, now a “G2” economy, also attracted a huge amount of FDI despite carrying out reform in a gradual manner and opening its market only partially.
   In addition, improving relations with the Western world, such as the US and the EU, is one of the major success factors for transition countries to attract investment. There are many cases in the leading group of transition economies where joining the EU served as a decisive factor to increase FDI inflow, while efforts to strengthen their relationships with the EU added a similar impetus for the late stage group. Serbia, once a leading figure in the former Yugoslavia federation, continued to clash with the UN due to the Baltic Wars and its own civil wars, but is recently seeing a dramatic improvement in its FDI inflow following efforts to join the EU and improve relations with the West. Vietnam’s approval of Permanent Normal Trade Relations (PNTR) with the US in December 2006 served as a new opportunity to increase its inflow of FDI.
   Based on the quantitative analysis on the determinants of FDI inflows by transition countries, and an analysis of the results of investment and reform in the transition countries, 11 policy implications were drawn for North Korea, as follows: ① efforts to secure support in advance from international financial institutions ② efforts to normalize trade relations with the US ③ efforts to expand market size and location ④ maximum leveraging of geographical proximity with other countries ⑤ attraction of foreign capital through competition-promoting policies ⑥ expansion of trade openness ⑦ expansion of the private sector ⑧ efforts to foster the manufacturing industry ⑨ stable provision of public services and macroeconomic stability ⑩ incorporation into the international trade order through regional trade agreements and membership in the WTO, and ⑪ efforts to improve elements evaluated on the Doing Business index will be necessary.
   Finally, we suggest for the South Korean government to consider the following policy tasks: ① ease US export control regulations (EAR) for Korean companies to enter North Korea ② resolve rules of origin issues to secure export markets for Korean companies, and ③ transfer experiences of SEZs to attract FDI into North Korea.
 

국문요약 

제1장 서론
1. 연구의 필요성 및 목적
2. 선행연구
3. 연구의 구성과 차별성

제2장 체제전환국의 FDI 유입 현황 및 투자 환경 분석
1. 체제전환국의 FDI 유입 현황 분석
2. 체제전환국의 투자 환경 분석(Doing Business Index)
3. 소결

제3장 체제전환국에 대한 FDI 유입 결정요인
1. 분석자료 및 실증분석 모형
2. 체제전환국의 FDI 유입 결정요인
3. 결론 및 북한에 대한 함의

제4장 북한의 FDI 유치를 위한 정책적 시사점과 우리 정부의 과제
1. 체제전환국 FDI 유치 성공요인으로 본 북한 당국의 과제
2. 우리 정부의 정책 방향과 과제

참고문헌

부록

Executive Summary