The Impact of Political Risks on the Investment Attractiveness of South Korea

Abstract Political risk, like all other risks, has an adverse effect on any economy and especially on FDI. There are many studies trying to answer the question whether it plays significant role for foreign investors' decision to allocate resources or not. The current article makes an attempt to study the relationship between political risk and Foreign Direct Investment (FDI) in South Korea, using data for the period of 1996-2016. The results of the analysis showed that political risks along with economic indicators have an impact on the volume FDI flows to South Korea. Through the data analysis carries out in the study, it was stated that only four political factors (Trade Turnover, Property Rights, Government Effectiveness and Rule of Law) plays statistically significant role in FDI attractiveness of South Korea. Keywords: South Korea, Political risk; Foreign Direct Investment;