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(ClipartKorea)

A sharp rise in South Korean companies’ investment in the US has been impacting the American economy through the creation of high-quality jobs and the South Korean economy through increased exports of intermediate goods, data show.

A report published Monday by the Korea International Trade Association-affiliated Institute for International Trade on the current status of US investment by South Korean businesses and their economic creation effects included analysis findings showing that “South Korean businesses are contributing to the US economy in various ways, including employment, economic growth (GDP), and exports.”

The states where South Korean businesses such as Hyundai Motor have been focusing their investments — including Georgia, Ohio and Arizona — are swing states that are expected to be crucial in deciding the outcome of this year’s presidential election.

The annual average pay for a worker at a South Korean business operating in the US was found to be higher than for other foreign businesses. As of 2021, it stood at US$104,000, exceeding the US$87,000 average for employees at foreign businesses in the US.

South Korean businesses also accounted for the eighth-highest per capita annual pay among businesses from 27 countries operating in the US.

“South Korean companies in the US are contributing to creating high-quality jobs primarily in high-value industries,” the IIT observed. It also calculated that South Korean businesses had contributed US$19.6 billion toward US economic growth in 2021.

The impact of the sharp rise in investment has extended not only to the US economy but to South Korea’s as well. Analyzing the effects of this investment on exports, the IIT found that each 10% increase in direct investment in the US translated into an increase of 0.202% in exports to the US.

The increase in exports was mainly observed in intermediate goods. The South Korean companies that have established production in the US procure a large part of their raw and subsidiary materials from South Korea.

The report did not look at the effects of the increased US investment on employment in South Korea. As companies have built large-scale factories in the US, experts have recently voiced concerns about quality jobs disappearing from South Korea.

“Due to the nature of the KITA as an institution focusing mainly on export and import statistics, we did not analyze the impact on South Korean employment,” explained Doh Won-bin, a senior research fellow at the IIT.

“The possibility of domestic jobs decreasing is something that will need to be addressed in additional analyses by various institutions,” Doh suggested.

By Jun Seul-gi, staff reporter

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