World Economy Brief
Koreaʹs Investment in ASEAN: An Analysis Linking Foreign Subsidiary Activities and Parent Data
- Author Jinyoung Moon, Hyoungmin HAN, Hanbyul RYU, Nayoun PARK, Chihyun YUN, Mi Lim KIM and Yoon Ah OH
We analyzed the current status and characteristics of Korean investment in the Southeast Asian manufacturing sector, based on the combined data of the KOTRA Overseas Enterprise Data and Korea Enterprise Data (KED). According to our analysis, expansion by Korean companies into Southeast Asia is steadily increasing within labor-intensive industries. This result can lead to a conclusion that easing trade and investment-related barriers would lower production costs and further increase investment in Southeast Asia. In addition, parent enterprises entering the Southeast Asian countries have shown a low average sales or profit ratio, suggesting that many small and medium-sized companies are expanding into these markets. Therefore, there appears to be a need for government support for small and medium-sized enterprises in ASEAN. At the government level, support for law and accounting service, and market research, which can be classified as fixed costs in the early stages of investment, or support for information sharing with large companies can be effective policy tools.
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