The structure of this draft chapter is as follows. In the first section, following an overview of data on inequality, we review the issues in the literature linking trade, foreign direct investment(FDI), growth and inequality. Poverty is not a major issue in Korea, and we focus on inequality (specifically, wage inequality). It is the effects of trade and FDI on the relative demand for skilled and less skilled workers that is of greatest importance in terms of effects on inequality. We then review the evidence on trade and FDI policy in Korea in the 1990s, and in the penultimate section consider the economic impacts, especially on productivity and wage inequality. The conclusion brings together the evidence to argue that growth in Korea, whether due to trade or FDI, has been shared equally among different types of workers. High levels of human capital have contributed to this outcome, and helps to explain why inequality and poverty are relatively low by international standards.
Trade, FDI and Equity in the Republic of Korea in the 1990s.