hankyoreh

3 major belts in "New Economic Map for Korean Peninsula"

South Korean experts on the North Korean economy argued that South and North Korea should discuss an approach to inter-Korean economic cooperation that involves a diverse range of economic actors, including small cooperating businesses across North Korea rather than only in its special economic zones, and is not monopolized by trading companies affiliated with the ruling Workers’ Party of Korea (WPK), military, or other privileged institutions.

“The institutional environment for inter-Korean economic cooperation has improved substantially with the economic reports introduced in the Kim Jong-un era with the ‘North Korean-model economic management approach,’” argued a report titled “North Korean Economic Reforms in the Kim Jong-un Era” published on Dec. 10 by the Korea Institute for Industrial Economics & Trade (KIET).

“While the North Korean economy still centers around state-run businesses, economic reforms have resulted in state-run businesses receiving legal guarantees on production and sale to the market in areas where the state does not supply goods, which has laid the institutional groundwork for economic cooperation aimed at the shared prosperity of South and North,” the report said.

The report was written by seven experts on the North Korean economy from various areas, with affiliations including KIET, the Korea Institute for National Unification (KINU), and the Bank of Korea (BOK). It was the first report on the North Korean economy published in collaboration by different institutions since the Panmunjom Declaration on Apr. 27.

“With the economic reform measures, the institutional constraints barring direct trade, toll processing, and investment by South and North Korean companies have been significantly loosened,” the report noted.

“While it remains uncertain whether North Korean authorities will permit direct participation in inter-Korean economic cooperation by state-run enterprises associated with the Cabinet, South Korea is obliged to proactively demand economic cooperation involving direct contact between South and North Korean businesses,” it suggested.

The report argued that discussions with Pyongyang should focus on ending the monopolization of inter-Korean economic cooperation by trading companies affiliated with the WPK, military, and other privileged institutions and allowing companies and institutions affiliated with North Korea’s Cabinet to take part directly. In particular, the researchers called for “identifying ways of avoiding economic cooperation as much as possible with military-affiliated enterprises and related institutions,” noting that the “military confrontation [between South and North Korea] is unlikely to be fully resolved even with progress in denuclearization.”

“One approach that may be considered would involve [South and North Korea] adopting a reporting-based system for inter-Korean economic cooperation, while requiring government approval when pursuing businesses and projects connected with the North Korean military,” they suggested.

The report went on to argue, “For the vision of a new Korean Peninsula ‘economic map’ to be achieved, economic cooperation must not be pursued exclusively in terms of defined enterprise categories and limited methods in specific regions of North Korea.”

“The changes to the North Korean economic management system in the Kim Jong-un era should be leveraged into economic cooperation that involves participation by a diverse range of economic actors throughout North Korea, including small businesses affiliated with its Cabinet,” it said. The message stressed the need to prioritize processing trade directly involving small businesses including Cabinet-affiliated factories producing clothing and daily essentials, which are located throughout North Korea.

“Once this becomes possible, the result may be that inter-Korean economic cooperation projects previously implemented in a limited way in specific regions will become cooperative efforts pursued universally throughout North Korea,” the researchers predicted. Their argument against restricting cooperation to specific regions was based on political and military grounds rather than economic factors such as the availability of electricity and accessibility to areas of South Korea.

By Cho Kye-wan, staff reporter

Please direct comments or questions to [english@hani.co.kr]