Investment from abroad gives better productivity

The contribution to job creation of companies with foreign investors increased steadily to 6 percent of employment in 2005, the Commerce Ministry said yesterday.
The government defines “foreign-invested company” as a firm operating in Korea in which foreign individuals or corporations have at least a 10 percent stake. The Commerce Ministry surveyed 1,139 such firms with $1 million or more in foreign investment.
Based on the survey, the ministry estimated that all foreign-invested companies in Korea employed 375,000 workers as of 2005, or 6.1 percent of all workers, up from 4.7 percent in 2004.
The exports of all foreign-invested companies represented nearly 17 percent of Korea’s exports in 2005, the ministry estimated. The firms’ exports have steadily increased since 2003, the ministry said, though it had no previous figures about the exports as a percentage of the national total.
On the other hand, foreign-invested companies’ domestic sales as a percentage of all local sales declined slightly to 12.9 percent in 2005 from 13.1 percent in 2004, the ministry said, citing a sharp drop in revenue at foreign-invested paper and electronics manufacturers.
The survey also showed that foreign-invested companies’ per-capita labor productivity was about 20 percent higher than at other firms here.
Foreign-invested companies were also more aggressive in investment in facilities and in research and development than other firms in Korea, according to the survey. “This clearly indicates that these companies are here for the long term,” said Yoon Yeong-seon, head of the ministry’s foreign investment planning bureau.
He added foreign-invested companies provided more dividend earnings to investors than Korean companies.

By Moon So-young Staff Writer [symoon@joongang.co.kr]