The changing of south Korea's international economic policy: a geopolitical economy perspective

Abstract

Since the success of rapid economic growth, South Korea, as a foreign-traded dependent economy, has initiated several policies to liberalize its outward direct investment (ODI) in order to maintain its competitiveness and drive its economic growth. The liberalization process of South Korean ODI helps promote South Korean capital abroad to various areas serving its needs of lowering production costs and securing natural resources and raw materials. As the world entered the 21st century with the acceleration of globalization, the global geopolitical situation has changed over time, especially in Asia, the rise of China has become real and threatens the hegemonic position of the US and its allies in East Asia, particularly South Korea.

This research aims to examine the relationship between geopolitical factors and the change in the international economic policy of South Korea that facilitate the flow of South Korean ODI. This research studies both external and internal factors of South Korean governments from Kim Dae-Jung’s until Moon Jae-In’s presidency, based on the Geopolitical Economy approach. To fill the gap in mainstream economics, this study discusses economic literature related to determinants that pull South Korean firms to invest abroad.

The findings reveal a relationship between Geopolitics and South Korea's international economic policy. For example, there was a changing international economic policy of South Korea to Kaesong Industrial Park in North Korea as a byproduct of the Sunshine Policy under both Kim Dae-Jung and Roh Moo-Hyun administrations, changing international economic policy under Global Korea of President Lee Myung-Buk that focus on nuclear energy development in the Middle East, and the New Southern Policy of President Moon Jae-In which facilitate South Korean investment throughout the ASEAN in response to China’s aggressive stance in the region and the simmering US-China geopolitical competition.