This study aims to analyze North and South Korean relationships and examine the work required for exchange and cooperation between the two Koreas for unification. It also explores the preparatory requirements for the creation of a national economic community in an attempt at political suggestions for the improvement of Korea’s economic status as a unified nation.
The cold war ended with the breakup of the east European bloc and the organization of the Commonwealth of Independent States in 1990. However, the Korean Peninsula is still in a state of war and the U.S., China, Japan, and Russia have their own interests in the Korean Peninsula, which is likely to affect the unification of Korea considerably. Also, the internal problems of North Korea, adherent to a rigid socialist system, are decisive to the unification of Korea. There is no doubt that the collapse of socialism in East Europe resulted from an open economy. However, judging from the fact that no system has collapsed due to economic problems alone, the destruction of the North Korean system does not seem feasible unless internal conflicts in the ruling class and political and social instability cause a long-term economic crisis and alienation from surrounding nations. Accordingly, it is important to understand North Korea, prepare measures for cooperation and exchange, and formulate a policy to minimize economic and political shock.
To compare the economic capacity between the two Koreas as of 1992, North Korea’s GNP was USD 21.1 billion and GNP per capita was USD 943, while South Korea’s GNP was 14 times more and GNP per capita 7.2 times more. In terms of the trade size, North Korea’s trade scale is 54 percent lower than that of South Korea, but the economic difference between the two is likely to be reduced 1.7 times, considering the population growth rate of North Korea.
Also, North Korea has a large agricultural and manufacturing population, while South Korea has a large service industry population. The industrial economy in North Korea in general seems to lag 15 to 20 years behind that of South Korea.
Korea should become unified in a peaceful and democratic way by establishing a national community system through the peaceful conversion of the relationship of the two Koreas and a restoration of trust. However, since it is difficult to realize unification in a short time without fundamental changes in North Korea, there is a need for economic exchange, such as economic exchange and cooperation based on trust and peace rather than short-term economic profits or isolationist policy. Considering the uniqueness of the relationship between the two Koreas, economic cooperation, and gradual economic cooperation is important. Since the main agent of economic activity in North Korea is the government, while in South Korea it is the private sector, excessive competition among private businesses should be avoided. Institutional strategies for economic cooperation and exchange, such as transportation, investment, and dispute mediation at the governmental level in both parties should be developed. Despite these efforts, there still are possibilities for inflation due to economic differences, and economic imbalance due to the migration of a large North Korean population to South Korea in the process of unification, which is why Korea needs to prepare.
The efforts to improve the relationship between the two Koreas will result in the formation of a Korean national community, through which the two parties may be able to enjoy profit from the economy of scale, cut expenses caused by division, and solve problems caused by regulation. Such progress will serve as the new driving force for Korea’ becoming one of the world’s top ten economic powers.
To that end, both nations should contribute towards achieving balanced regional development, to minimize the economic gap between the two countries, solve problems caused by differences in productivity and living conditions between urban and rural areas, establish industrial infrastructure, promote qualitative improvements in welfare, and create a land transportation route that links China and Europe through the construction of the Siberian railway.
남북한 경제공동체형성을 위한 정책과제(Policy tasks for the formation of an economic community for south and North Koreas)
|Series Title; No||정책연구시리즈 / 93-12|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KDI; KDI School|