Korean Domestic Business Investment Declines

Korea has seen a decline in its business investment within the country. Why? Take a look at the reasons cited by Korean officials. Sound familiar?

One cause of sluggish facility investment is high-flying land prices and the inflexible labor market," said an official of the Finance Ministry.

The ministry cited several other factors, including the worsening profitability of domestic small and mid-sized companies and export-oriented firms due to competition from Chinese manufacturers. The ministry also noted the growing difficulties to create new profit models as the economy matures.

Korean companies' growing risk-averse managerial style in the wake of the Asian financial crisis also contributed to the stagnating corporate facility investment.

"To boost facility investment, we should foster innovation-focused, small and medium-sized venture firms and value-added service industries," the official said.

Read more here.