How Peculiar Are South Korean OFDI to Russia?

Abstract

This paper investigates nature of the Korean OFDI in the middle-income countries during the period 20122019. The goal is to identify any common features or differences with the observed structure of the Korean OFDI in Russia. The study is based on an assumption that a country’s investment strategies are determined by businesses. In general, business makes investment decisions based on the priorities for resource optimization and profit maximization on a global scale. Under this approach, investments to Russia would be a part of a more global strategy of Korean firms. Also, authors discuss prospects for the Russia-Korea investment cooperation under the US sanctions and how ongoing structural changes in the global economy can influence investment decisions of Korean companies.Obtained results suggest that during the period under investigation, structure of the Korean investment in Russia was similar to the structure observed in other middle-income countries. There are clear signs that investments were motivated by gaining access to the market (in other words, they were market-seeking by nature). In the near-term increase in Korean investments to Russia is unlikely due to global recession triggered by Covid-19 pandemic and risks of harder US sanctions.

Keywords

• ofdi
• russia-korea investment cooperation
• korean business
• sanctions
• russia
• south korea