Trade and investment cooperation between the Republic of Korea and Vietnam: dynamics, challenges, and prospects

Over the past several decades since the establishment of diplomatic relations, the trade and investment cooperation between the Republic of Korea and Vietnam has reached an unprecedented level. Since 2022 Vietnam ranks third among the Republic of Korea's trading partners, while South Korea has been the leading investor in Vietnam. The article examines the dynamics and structure of investment and trade cooperation between South Korea and Vietnam from 1992 to 2024. Particular attention is paid to changes in the sectoral structure of trade and investment, as well as the influence of cultural, historical, and political factors on the development of cooperation. The study particularly focuses on assessing the current state of cooperation in the field of direct investment. It is determined by a number of internal and external factors, such as changes in Vietnam’s investment policy, including the introduction of restrictive measures in investment legislation (raising the minimum wage, applying a global corporate tax, and introducing a selective investment screening system), the effects of the pandemic on global production networks, as well as increasing competition for the Vietnamese market among major investors from Northeast Asia. The authors believe these factors will limit quantitative growth in trade and investment, but will serve as drivers for the development of scientific and technological partnership between the two countries.