Analysis of Japan's Investment Strategy for Korea and Some Policy Issues: Focusing on an Empirical Study and Questionnaire Survey of Japanese-Affiliated Companies in Korea

Diminishing Japanese foreign direct investment in Korea has showed no signs of abatement, continuing a precipitous decline from 2.69 billion USD in 2013, 2.49 billion in 2014, and 1.67 billion in 2015 to 1.25 billion in 2016 after peaking at 4.54 billion in 2012. Persistent issues with Abenomics have played a role in the slowing of Japanese investment toward Korea, including the weakening of the yen. Meanwhile, Korea’s increasingly prohibitive cost structure, the slowing growth of Korean multinationals (particularly assembly plants) and historical and territorial issues that continue to plague political discourse between the two neighbors have all served as a drag on Japanese direct investment toward Korea. In these circumstances, Japanese corporate investment strategies toward Korea are attracting much attention from the Korean government. The purpose of this article is to propose national and provincial (municipal) policy initiatives aimed at attracting Japanese FDI through an analysis of Japanese investment strategies. This analysis consists of an empirical study of publicly-available statistics and in addition to responses obtained from a questionnaire issued to companies with Japanese affiliations operating in Korea.