The Politics of Inter-Korean Economic Cooperation

20 07 2009

NK-SK TrainLeonid A. Petrov, The Asia-Pacific Journal, Vol. 29-3-09, July 20, 2009.

It has been ten years since the Democratic Peoples’ Republic of Korea (DPRK or North Korea) embarked on a path of change. The first major course correction occurred in 1998 when the DPRK amended its constitution. A new cost accounting system in economic management was introduced, and a new political line of Songun (Army-First Politics) was promulgated in addition to the Juche ideology of national self-reliance. Although this adapted form of Marxism-Leninism continued to guide the country on its way to “Korean-style socialism,” the proposed changes would bring some elements of economic liberalisation and commercialisation of the economy. As part of this cautious plan, several enclaves scattered across the country were allocated by the DPRK government exclusively for inter-Korean cooperation.

Pyongyang’s readiness for cooperation was welcomed and supported by Seoul which, with the ascendance to power of a liberal group led by Kim Dae-jung in 1998, stopped waiting for North Korea’s collapse. South Korean business conglomerates volunteered to sponsor a number of joint projects in which Koreans from the North and the South could communicate, work and relax. Two inter-Korean summits took place in June 2000 and October 2007, reviving the hope for reconciliation and closer cooperation between the two parts of the divided country. The development of inter-Korean economic cooperation can be measured by the pace of growth of special economic zones’. It can be divided into two stages: 1998-2003, during which the Mt. Kumgang resort and Kaesong Industrial Park area were created and market economy activity inside North Korea intensified; and 2003-2009, when cooperation in these special economic zones continued to evolve before suddenly stalling, coinciding with the rapid curtailment of economic freedoms inside North Korea.

Despite expectations that cooperation in Mt. Kumgang and Kaesong would bring about a substantial impact on the economic policy of the DPRK, the results were hardly encouraging. Still there is no consensus as to the consequences of such cooperation on the long-term economic course of North Korea. After the 10 years of inter-Korean cooperation, most international experts continue to assess the North Korean regime as “Stalinist” and “secluded,” and its economy as “moribund.” Optimists insist to the contrary, however, that despite the return of socio-economic despair, the country is on the move and the changes have been profound. They believe that under favourable circumstances the DPRK might follow China and Vietnam in building a dynamic market-oriented economy. Pessimists too admit some positive changes of the last 10 years but dismiss the possibility of fundamental reform in North Korea. They predict inevitable economic catastrophe and regime collapse, followed by open civil conflict and violent unification…

See the full text in The Asia-Pacific Journal, Vol. 29-3-09, July 20, 2009



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