Despite the clouds of tear gas hanging over South Korea's major cities, there is no immediate indication of a flight by foreign businesses or money managers.
"It's not like South Africa," said one executive who asked not to be identified.With an economy growing at a 15 percent annual rate after inflation and a booming export market, South Korea is one of the great success stories of the last 40 years and is likely to remain so. Moreover, South Korea has had few peaceful political transition in the past thousand years.
"There have been student riots there for 20 years," Peter Everington of Thornton Management (Asia) Ltd. told The Journal of Commerce. "It's just that we are now reading about Korea where previously we didn't."
"It comes as a surprise to point out to people that we have had the same thing in Japanfor 20 years - with rockets fired at Narita airport - despite the impression of such order and discipline," he said.
The political unrest is likely to affect foreign investment most in short- term financial decisions, political and economic analysts say.
Companies considering a factory or a joint venture in South Korea may hesitate, they say, and companies already set up in South Korea may make conservative short-term financial decisions until they can better assess the political climate.
Hans Belcsak, president of New York-based S.J. Rundt & Associates, a consultant on international business, says a handful of his clients have declared premature cash dividends to the parent company in order to repatriate profits or have delayed a planned infusion of work ing capital.
"The situation is raising a lot of questions," he said. "More so in U.S. boardrooms than among U.S. subsidiaries on the spot."
But Nick Latkis, president of the New York-based U.S.-Korea Society, which represents over 100 Fortune 500 companies, said he has found little if any concern among his members, especially when compared with earlier political outbreaks in Iran and the Philippines. "I may be too early," he said. ''Frankly I'm surprised we haven't heard anything."
Many analysts said the relative lack of anti-U.S. and anti-foreign investor rhetoric in the South Korean student demonstrations, combined with the widespread economic benefits most South Koreans have received from the nation's export drive, have allayed some of investors' worst fears.
Because exports and high rates of growth play such a central role in most Asian states, economics tend to play a major role in politics.
South Korea's stock market is selling at eight times earnings and the limited vehicles available to foreign investors are trading at premiums of up to 100 percent.
British-based Thornton Management's specialist portfolio of smaller Asian markets has 10 percent in South Korea. "I'd like 35 percent if the vehicles were available," Mr. Everington said.
A senior Western diplomat argues that student protest in South Korea is ''pretty much the acceptable voice of dissent. After university, you get a job and become part of the system. That's why it is tolerated."
Several people acknowledge concern over the increased size of the protests and their apparent backing from some of those who are "part of the system" - as evidenced in the clapping and horn-blowing as people pass demonstration sites.
"It will probably get noisier, and that might worry some people, but I see no fundamental change," Mr. Everington said.
The diplomat believes "there is no chance" that PresidentChun Doo-hwan will bow to pressure on constitutional reform. "He will carry on cracking down as hard as is necesary, as bad as that might seem to Western eyes."
Political observers accept that Mr. Chun would be lucky to get 10 percent or 12 percent of the vote in a free election. It is also assumed that when he seized power he promised his fellow general, Roh Tae-woo, the second term.
Hand-picking a successor or having military backing for a government is not unusual in Asia; most democracies in the region are adaptations of what might be called the pure formsfound in the United States or Britain.
* In Thailand, a civilian administration governs with the consent of the military. Coups are not uncommon, so governments tend to do only those things the military will tolerate.
* Taiwan carefully controls its dissidents, only this year officially allowing an opposition party to be formed.
* Indonesia's ruling party earlier this year won 299 of the 400 seats in parliament in an election generally seen as honest - but in which it was an offense to criticize the government's basic tenets.
* Singapore boasts a Westminster-style democracy based on constituencies and its elections are undoubtedly clean. Yet, after two opposition members were elected in the last poll, Prime Minister Lee Kuan Yew publicly floated the idea of changing the system to prevent any non-government candidates from being elected.