South Korea’s Economic Strategic Interests in Latin America

Gilmar Masiero, University of Brasilia – UnB. gilmarmasiero@gmail.com

Abstract: In the 1990s, the segyehwa movement fueled the rapid internationalization of South
Korean companies. The phenomenon sought to integrate the South Korean economy with world
markets and is considered by some scholars as one of the primary sources for the economy
falling into successive currency, financial and economic crisis in 1997. The largest chaebols
were accused of being the main perpetrators of the crisis and were targeted for reform and
restructuring through the “big deals” and “workout” programs. After a series of macroeconomic
policies and difficult micro-level negotiations, the chaebols and the South Korean economy
found a path to overcome the crisis and returned reinvigorated to world markets. In the “new”
international market, regional trade agreements were spreading rapidly throughout the world
(from January 2004 to February 2005, for example, 43 agreements were notified to the WTO).
South Korea has been a leading country in this process signing bilateral agreements with Chile in
2004 and the United States in 2007; it is also considering the signing of a regional trade pact with
Mercosur. Pressured by the highly-skilled technological developments from Japan and
competitive lower labor cost from China, the Korean economy has been forced to reinvent itself
and look for business opportunities elsewhere. What are the main reasons to consider Latin
American countries a good place for Korean companies to find good business opportunities?
What are the impacts of the KORUS Free Trade Agreement in Latin American markets?
According to South Korean companies who are already based in Mercosur countries and
government representatives which countries of Latin America are best fit to receive the
promising new waves of Korean foreign direct investments? What projects have been
implemented and which ones are being planned? In this study, we seek to shed light on these
questions.

Methodology: The study will be developed in three phases. In the first phase a review of the
literature on South Korean investments in Latin America and Korean Free Trade Agreements
will be carried out. The second phase will focus on data gathering from government
representatives and Korean companies already working in the Mercosur on their experiences and
expansion plans for the Latin American market. The final stage will consist in the preparation of
a paper to be submitted for publication in a peer-reviewed international journal.

Aims of the study: This study seeks to assess South Korea’s strategic economic interests in
Latin America based on the study of the arrival and evolution of operations by companies
including LG, Samsung, Hyundai and CJ and government representatives in Mercosur countries.
Examination of the experiences of South Korean firms in Latin America can help with the
identification of the key public policies that can encourage South Korean FDI to Latin America,
as well as to provide insights of the advantages and disadvantages of further expanding bilateral
Free Trade Agreements and the Mercosul-South Korea Free Trade agreement currently under
consideration.