Localization Strategies in Response to Recent Changes in the Southeast Asian Labor Market Environment

4 Pages Posted: 28 Apr 2016 Last revised: 29 Apr 2016

See all articles by Sungil Kwak

Sungil Kwak

Korea Institute for International Economic Policy

Chankwon Bae

Korea Institute for International Economic Policy

Jae Wan Cheong

Korea Institute for International Economic Policy

Jae-Ho Lee

Korea Institute for International Economic Policy

Minlee Shin

Korea Institute for International Economic Policy

Date Written: December 4, 2015

Abstract

Southeast Asia still has the potential to attract FDI from Korean firms even though the labor market environment has been changing at a very swift pace as of late. For example, as the increase in FDI improves the total factor productivity of firms operating in Southeast Asia, the wages of workers in this region have accordingly skyrocketed. As income growth led workers in the region to devote greater attention to democracy and human rights. Ongoing changes in Southeast Asia’s labor market are likely to have an adverse impact on Korean firms operating in the region, though the extent of the impact will differ across industries, firm sizes, and technology levels. Therefore, we suggest that government policies for FDI should be redirected to support localization efforts of firms operating in Southeast Asia. As these firms operate in foreign countries, they do not create jobs domestically. The existing literature, however, tells us that they positively affect domestic productivity and employment. This provides a reason for governments, including Korea’s, to identify effective policy measures that can support firms to successfully meet challenges and localize in these ever-changing markets of Southeast Asia.

Keywords: labor market, Southeast Asia Localization strategy

Suggested Citation

Kwak, Sungil and Bae, Chankwon and Cheong, Jae Wan and Lee, Jae-Ho and Shin, Minlee, Localization Strategies in Response to Recent Changes in the Southeast Asian Labor Market Environment (December 4, 2015). KIEP Research Paper No. World Economy Update 15-24. Available at SSRN: https://ssrn.com/abstract=2771093 or http://dx.doi.org/10.2139/ssrn.2771093

Sungil Kwak (Contact Author)

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Chankwon Bae

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Jae Wan Cheong

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Jae-Ho Lee

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Minlee Shin

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

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