KORE 2024
Economic relations between South and North
Korea since 2000
Chan Shuk Man, Marceline
Au Sin Yee, Sheila
Main arguement
1. Two koreas encounter limitations which hinder genuine economic
cooperation, let alone reunification
2. Economic cooperation that plays an indispensable role is still necessary as the
first step for reunification
Content
1. Background
2. Political overview in ROK
3. Recent progress
4. Push Factors
5. Limitations
6. Conclusion
Background
2000
- Kim Dae Jung proposed ‘government-funded research institutes of two sides
- Started discussion on the formation of South-North Economic Community
- Berlin Declaration outlined four tasks
- June 15 Joint Declaration
•
DPRK did not refuse
•
Marked the official launch of economic cooperation
Political overview in ROK
Kim Dae Jung
Roh Moo Hyun
Lee Myung Bak
Park Geun Hye
Approach
Sunshine
- Mutual respect
- Recongition
Moderate
- Continued Sunshine
- USA pressure
Hardline
- Principled North Korea
- Flexible and noramlity
Trust-building, Hardline
- Closely cooperation
with China, USA
Remarkable
events
- Korean Summit
- 65% public
support
- Six-party talks
- 2nd Korea Summit
- 2007 declaration
- 45 items of agreements
- Six-party talks
- Unsolved nuclear issues
- Vision 3000:
Denuclearization and
Openness
- Pure food aid by request
- Refusal of all officials
dialogues
- DPRK Nuclear testing
- Reopened of KIC and
Mount Kumgang
Recent progress
Forms of cooperation
1. Inter-Korean trade and investment
2. Inter-Korean economic cooperation projects
•
Mt Kumgang project before 2000
•
Kaesong Industrial Complex project since 2004
3. Economic assistance and aid given by ROK to DPRK
Recent progress
Trade figures
2000: Trade reached $425.15 million USD(Oh, 2001)
2007: $1.8 billion USD, ⅓ of total trade volume in DPRK (Lee, 2012)
2008: $399.4 million USD
2009: $256.1 million USD
2010: $117.9 million USD
2011: $0.2 million USD
Fluctuate but continuous
Changing form from trade to
joint-economic cooperations
Recent progress
Capital cities
Co-developed
regions
Geographical
advantages
Capital cities
Co-developed
regions
Recent progress
Mount Kumgang project
•
Since 2000
•
By chaebol, Hyundai Asan (현대아산) from Hyundai Group
•
Trade generated
•
$114.5 million USD in 2007
•
$0.8 million USD in 2011
•
Always suspended due to political instability
•
Together with a relative re-union campaign
•
More than 22,000 people met lost families
Initiated other cooperations
Recent progress
Kaesong project (KIC)
•
Started from 2004
•
By chaebol, Hyundai Asan (현대아산) from Hyundai Group
•
Trade generated
•
$ 41.7 million USD in 2004
•
$ 1697.6 million USD in 2011
•
Temporarily closed in 2008, 2010 and 2013
•
Continue operating since 2013
•
Win-win syngery
Recent progress
Kaesong project (KIC)
Mutual benefits
DPRK
• Facilitate citizens’ employment
•
Employ 52,000 workers
• Gain currency revenue
•
Include $90 million
earnings every year
vs
ROK
● Enjoy low cost of labour
● Re-develop gloomy
manufacturing industry
● Increase competitiveness
Both citizens from DPRK and
among China, ASEAN
ROK get along very well?
countries
Recent progress
Humanitarian project
•
•
One-way support
•
300,000-500,000 metric tons of food and fertilizer
•
Supported NGOs’ projects by funds
Figures
•
$104.5 million USD (2000 Kim Dae Dung)
•
$419.3 million USD (2006 Roh Moo Hyun)
•
$67.1 million USD (2008 Lee Myung Pak)
•
$11.4 million USD (2011 Lee Myung Pak)
•
$12 million USD (2013 Park Geun Hye)
Push factors
1.Continuous natural disaster in DPRK
•
Massive floods and famine since 1990s
•
•
Collapse of DPRK’s economy
Per-capita GNI (based on purchasing power parity)
DPRK
vs
$1,260USD
•
ROK
$2,6224USD
Wealth gap widened from 1,870% (2012) to 2,080% different (2013)
•
DPRK was pushed to seek help from ROK
2. Sincere attitude of ROK
• Berlin Declaration
• Determined ROK’s willingness
• ROK were sincere to help
• Building infrastructure
• Developing agriculture
Limitations
Limitations of Inter-Korean Economic Cooperation
1. Unfavourable Trade and Investment Economic Environment in North Korea
2. Military Provocations
3. ROK Aid to the DPRK under Dispute
4. DPRK’s Excessive Dependence on China for External Economic Cooperation
1. Unfavourable trade and investment economic environment
in North Korea
• Socialist economic system
North Korea’s Exports and Imports by Year
1. Unfavourable trade and investment economic environment
in North Korea
•
The trade and foreign capital inflow are insignificant in size
•
The amount of real exports per capita recorded $65 in 2006
= 1/11 of China
1. Unfavourable trade and investment economic environment
in North Korea
•
North Korea’s Inbound Foreign Investment
•
Fail to attract foreign investment
•
•
Backward industrial infrastructure
•
Inadequate legal institutions
•
Rigid bureaucratic system
Difficult to build a close economic tie with DPRK
2. Military provocations
•
DPRK: develop nuclear weapons
•
strengthen military power
•
Prolonged military ambitions
•
Inspite of the Six-Party Talks
•
•
Military provocations still took place
•
e.g. Cheonan corvette & bombardment of the Yeonpyeong Island in 2010
Lee Myung-bak administration halt nearly all inter-Korean economic cooperation
3. ROK aid to DPRK under dispute
•
Economic Polarization
•
Huge reunification costs
•
Giving too much assistance to DPRK
•
•
Criticism
Keep on providing aid OR “economic
sanctions”?
3. ROK aid to DPRK under dispute
• Suspicion voice
• Really help to relieve the problem of food shortage?
• OR keep the socialist regime survive?
• Controvercies in the society cannot be neglected
4. DPRK’s excessive dependence on China for external
economic cooperation
North Korea’s Foreign Trade: Share of South Korea, China and Japan
4. DPRK’s excessive dependence on China for external
economic cooperation
China’s Investment in North Korea
•
Wide range of Investment
•
Industrial Infrastructure
•
Distribution
•
Manufacturing
4. DPRK’s excessive dependence on China for external
economic cooperation
•
In late 2010 and early 2011: China and DPRK signed a
few bilateral agreements
•
Special Economic Zone on Hwanggeumpyeong and
Wihwado islands
•
Economic and Trade Zone in Rason
•
Need NOT to rely on the inter-Korean economic
cooperation
Conclusion
•
Unfavorable factors affecting the Inter-Korean Economic Cooperation
•
unstable and fragile economic relation
•
The importance of economic unification before entire unification
THANK
YOU
Reference
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