Is New Zealand missing out? An analysis of South Korean FDI in New Zealand

Abstract

Foreign direct investment (FDI) is a field which has drawn opinions from those of various cohorts, whether their backgrounds be affiliated with the field of commerce or not. The range of differing opinions is not uncalled for, as there is a considerable level of ambiguity surrounding its exerted effects. However, governments' overall positive inclinations towards FDI coupled with increasing globalization and the formation of an interdependent global platform has rendered the practice to flourish over recent decades. Questions have been drawn towards New Zealand's inducement of FDI with special emphasis placed on countries with which it has extensive economic ties. A country which has been raised in such discussions is South Korea due to its emergence as a major undertaker of OFDI and its striking of an increasingly closer relationship with New Zealand. This study examines South Korea's undertaking of FDI in New Zealand and as to whether such FDI levels are underwhelming when compared with South Korea's FDI flows to other nations of similar characteristics to New Zealand. Literature assumes market size to be a key determinant behind the undertaking of FDI, and this is emboldened in the case of Korean entities with the major motive for FDI to be entrance into the host country's domestic market. Utilisation of key economic variables for the drawing of comparator nations has been undertaken to compare levels of South Korean FDI in each, and the responsibilities of governments to induce FDI has also been raised in this study. Findings suggest Korean FDI levels in New Zealand to not be underwhelming when compared with countries with similar markets. Evidence also suggests investment programs specifically tailored for Korean entities to result in greater levels of Korean FDI being received by those who engage in such practices.