The United Nations Statistics
Division classified countries into
two major groups: “less developed
countries (LDCs)” and
“developed countries (DCs).” This classification is based on the country’s economic
indicator, GDP and per capita income.
However, this designation received some
criticism because it implies that less developed countries are inferior to developed
However, the UN explains that the country designations “LDCs” and “DCs” are simply intended for statistical convenience and do not express judgment about a member country’s economic state. A less developed country is also called a developing country.
To name a country according to its special economic features, a new term, “an emerging market economy” was created in the 1980s. An emerging market refers to a country that has some characteristics of a developed market but does not meet the standards of a developed market economy.
In the aftermath of the Asian financial crises in 1998 and 1999, developing and emerging countries began to strengthen their policy to attract foreign direct investment (FDI). They had strongly believed that FDI inflow was the short cut to achieving sustainable growth.
In recent years, these countries have learned that not only should they attract foreign firms with advanced technology to accelerate industrialization, but they should also try to keep the FDI in the country for a longer period of time. This is why developing countries have to provide aftercare services for foreign-invested companies operating business in the host country.
On that note, Korea is cited as one of very few countries that has adopted the Foreign Investment Ombudsman system in 1999. This system was established by the Foreign Investment
The Office of the
Foreign Investment Ombudsman
focuses on preventing and
settling various grievances facing foreign
investors. The team is comprised of professional specialists, including lawyers,
accountants, financial analysts and labor
On August 25, a delegation of 14 high- ranking officials from Pakistan visited our office. The delegates, who wanted to learn about the Foreign Investment Ombudsman system, were from the Ministry of Finance and the Department of Planning and Development and Economic Coordination of Presidential Office. They were amazed to learn that foreign investors in Korea have influence in the process of enacting new laws and regulations related to foreign investment.
Similarly, on August 29, another delegation of 10 government officials from Uzbekistan visited our office to learn about the Korean Ombudsman system and the benefits available in the country’s Free Economic Zones.
In the aftermath of the global economic recession, a new phenomenon has prevailed. Even developed countries began to attract FDI to increase their GDP and employment rate. They have started offering incentives for FDI from any country, regardless of whether it has an economy that is developed or still developimg.
According to the OECD’s recent publication, the inflow of FDI into developing countries in Asia was USD
410 billion in 2012. This amount has
been on the rise
since then, recording a 5.3 percent increase
in 2013, an 8.5 percent increase in 2014
and a 15.6 percent increase in 2015. A
similar phenomenon has occurred in
developed countries. The total amount of
FDI in the European Union was USD 250
billion in 2014, increasing by 93 percent in
2015 and 14 percent in 2016. In contrast,
the total FDI inflow into the OECD and
G20 member nations in 2014 was about
USD 440 billion. The amount increased by
64 percent in 2015 and 30 percent in 2016.
The competition for FDI attraction will continue to increase in the coming years. So the importance of FDI inflows for developing countries and Korea must not be overlooked.
The Foreign Investment Ombudsman and his grievance resolution body collect and analyze information concerning problems facing foreign firms, request cooperation from relevant government agencies, propose new policies investment promotion system and carry out other necessary tasks to assist foreign-invested companies in resolving their grievances.