Over the past 25 years of membership, Korea has managed to become a true champion of trade openness. Korea has not only worked with the OECD to reform its foreign direct investment (FDI) policies and services regulations, it also went further by contributing to the development of relevant monitoring and measurement tools and contributed as a result to shaping global economic governance. Indeed, Korea was one of the most active countries in the development of the common methodology agreed upon by OECD Members for the OECD STRI (Services Trade Restrictiveness Index). The STRI has been designed to help countries understand where bottlenecks can be found at a very granular level and go into the details of regulations. Over the years, Korea became a perfect illustration of the extent to which the STRI can help strengthen domestic reforms and promote trade in services liberalisation. Ultimately, the long-term cooperation between Korea and the OECD has enabled a considerable surge in FDI flows, a sizeable increase in trade in services and a deeper integration in global value chains (GVCs) (Figure 1).
Korea’s rapid evolution from an industry-led economy to a diversified GVC powerhouse will be detailed further in this chapter, notably by reflecting on the domestic reforms undertaken by Korea since the 1990s to liberalise its economy. The Background section describes Korea’s ambitious reform process towards FDI between the end of the 1990s to today. It is followed by an analysis of the growth performance of the services sector in Korea during the same time period and highlights the regulatory reforms undertaken by the Korean government to accelerate the country’s servicification of GVCs. The final section concludes and highlights Korea’s success in leveraging the insights from the OECD toolkit on trade and investment to increase its participation in GVCs, to unleash its services sector and to become a leading reformer in the Asia-Pacific region.