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Tensions over history between South Korea and Japan, dating back over 100 years, have now spread to economic and military issues. Although the two countries normalized relations in 1965, history issues have remained sensitive to this date.

A quarter of Japanese manufacturing is done overseas with the subsidiaries of Japanese multinational corporations (MNCs) venturing overseas to extend global value chains (GVCs) that begin in Japan. Under the resulting structure, the majority of Japanese manufacturing exports head towards overseas subsidiaries with capital ties to headquarters in Japan.

Foreign direct investment (FDI) into Japan has been increasing recently, contradicting the belief Japan is a closed market. Per the Japan External Trade Organization (JETRO), total FDI for 2016 increased more than USD $30 billion over the prior year and 2016 represented the third consecutive yearly increase. Increased FDI from Asian multinational corporations (MNCs) has been noteworthy, recording a 16.7 percent jump over 2015.

The Korean government has been well-known for the significant support it gives to startups pursuant to its “Creative Economy” policy, which aims to stimulate economic growth through innovation and job creation. Ironically, given this strong backing, there have been an increasing number of Korean startups investing abroad to bypass the strict regulations of their home country. Although Korean startups have advanced technology, they are hamstrung by burdensome government regulations.