- Elgar Korean Law series
Edited by Seung Wha Chang and Won-Mog Choi
Chapter 5: Laws on Trade in Services in Korea
Joon-Gi Kim 1. INTRODUCTION With the acceleration of liberalization and deregulation and the development of the Korean economy, the importance of the services sector has begun to approach the levels of advanced countries. Korea’s trade in services not only leaped from US$ 50 billion in 1998 to US$ 147 billion in 2007, but the share of foreign direct investment (FDI) inflow into the services sector rose from 33.2 percent in 1998 to 72.4 percent in 2007.1 Similarly, services, including construction, as well as electricity, gas and water, accounted for 60.9 percent of GDP and 71.6 percent of employment in 2006 while 14 percent of Korea’s exports were services.2 The largest service sectors in 2006 were real estate, renting and business activities (18.6 percent), wholesale and retail trade, restaurants and hotels (13.7 percent), construction (13.2 percent) and financial intermediation (12.3 percent).3 Korea’s continued economic growth depends largely on the free flow of international trade in services. Liberalization in the service sector both facilitates and stimulates the competitiveness of domestic companies, attracts foreign investment into the country and ultimately expands the business opportunities of Korean services firms in foreign markets. Based upon its relative lack of productivity, the services area can realize enormous advantages by introducing more supply-side competition through trade liberalization. Statistics show that the service sector’s labor productivity, for example, hovers around 58 percent of that in the manufacturing sector, a gap that is continuing to increase.4 Korea is formally obligated to set standards and requirements Foreign Direct Investment...
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