State and market in Korea : host country bargaining power and FDI policy.

The purpose of this thesis is to detennine what constitutes desirable Foreign Direct
Investment (FDI) policies for the state in the age of globalisation. The study begins with
the realistic assumption that FDI has variable effects on host economies, and that
multinational corporations (MNCs) are fundamentally national finns doing business
internationally. This assessment of FDI reflects the needs of government efforts to
increase their bargaining power vis-a-vis MNCs in order to maximise the positive
effects of FDI while minimising its negative effects. Based on this view, I develop a
theoretical framework, namely the N eo Bargaining Model (NBM) , and identify the
factors that have an impact on government bargaining power. The model is applied to
the Korean state and produces the following findings that: (1) the bargaining power of
the Korean state has diminished constantly over time; (2) the Korean state's bargaining
power has been affected by internal factors (the decline of the developmental state) and
external factors (the progress of globalisation); and (3) the bargaining power of the state
affects its bargaining outcomes. Finally, these findings enabled me to argue that: (1) the
state must have strong bargaining power in order to attain more beneficial effects and
less hannful consequences from the MNCs; (2) in order to increase the bargaining
power of the state, an active role of the state in the market is required; and (3) lastly, the
NBM suggests ways for the state to increase its bargaining power, which are the key for
successful FDI policy in the global era.