Institutionalization of the reshoring facilitation policy and difficulties - From Korean experience

In 2013, the South Korea Government enacted the “Act on Assistance to Korean Off-shore Enterprises in Repatriation" in order to support reshoring decisions form Korean manufacturing firms. The document - presented at the recent forum of economic think thank of Asian countries, found such a policy was not satisfactory as it was expected. More specifically, very few firms have been decided to reshore and the ones implemented this strategy declared difficulties to adapt to new circumstances. The main problems are related to institutional issues and reshoring costs. As far as the former issue (institutional elements),  criteria requested to be eligible for incentives have been resulted too strict, also because most of the reshoring candidates were SMEs, and the proposed incentives did not fit with the SMEs features. At the same time, firms underestimated the visible and invisible costs connected with reshoring. In order to implement a successful reshoring operation, companies are requested to innovate their manufacturing activities; moreover, the productivity at the home country should exceed the higher costs they have to cope with when relocating. Therefore, reshoring policies should encourage and support firms' innovation efforts and  minimizing unexpected location costs. Finally, regional governments should be allowed to directly deal with firms offering them customized incentives.