1. KORE 2024 Economic relations between South and North Korea since 2000 Chan Shuk Man, Marceline Au Sin Yee, Sheila

2. 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

3. Content 1.Background 2.Political overview in ROK 3.Recent progress 4.Push Factors 5.Limitations 6.Conclusion

4. 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

5. Political overview in ROK Kim Dae Jung Roh Moo Hyun Lee Myung Bak Park Geun Hye ApproachSunshine - 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

6. 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

7. 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

8. Recent progress

10. Capital cities Co-developed regions

11. Capital cities Co-developed regions Geographical advantages

12. 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

13. 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

14. Recent progress Kaesong project (KIC) Mutual benefits Facilitate citizens’ employment Employ 52,000 workers Gain currency revenue Include $90 million earnings every year ●Enjoy low cost of labour ●Re-develop gloomy manufacturing industry ●Increase competitiveness among China, ASEAN countries DPRKvsROK Both citizens from DPRK and ROK get along very well?

15. 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)

16. Push factors

17. 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) DPRKvsROK $1,260USD$2,6224USD Wealth gap widened from 1,870% (2012) to 2,080% different (2013) DPRK was pushed to seek help from ROK

18. 2. Sincere attitude of ROK Berlin Declaration Determined ROK’s willingness ROK were sincere to help Building infrastructure Developing agriculture

19. Limitations

20. 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

21. 1. Unfavourable trade and investment economic environment in North Korea Socialist economic system North Korea’s Exports and Imports by Year

22. 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

23. 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 1. Unfavourable trade and investment economic environment in North Korea

24. 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 2. Military provocations

25. 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”?

26. Suspicion voice Really help to relieve the problem of food shortage? OR keep the socialist regime survive? Controvercies in the society cannot be neglected 3. ROK aid to DPRK under dispute

27. 4. DPRK’s excessive dependence on China for external economic cooperation North Korea’s Foreign Trade: Share of South Korea, China and Japan

28. 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

29. 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 4. DPRK’s excessive dependence on China for external economic cooperation

30. Conclusion Unfavorable factors affecting the Inter-Korean Economic Cooperation unstable and fragile economic relation The importance of economic unification before entire unification

31. THANK YOU

32. Reference Armstrong, C. K. (2013). Tyranny of the weak: North Korea and the world, 1950-1992. Bruce, K. (2013). The U.S. Should Support New South Korean President’s Approach to North Korea. Heritage Foundation http://www.heritage.org/research/reports/2013/04/the-us-should-support-new-south-korean-presidents-approach-to-north-korea Chun, H., & Rhee, Y. (2014). Inter-Korean Economic Cooperation and Economic Cooperation in Northeast Asia. KDI Policy Forum, 257, 1-18. Mark, M. Mary, N (2014) Foreign Assistant to North Korea. Congressional Research Service https://www.fas.org/sgp/crs/row/R40095.pdf Moon, C. (2012). The Sunshine Policy: In defense of engagement as a path to peace in Korea. Seoul, Korea: Yonsei University Press. Lee, S. (2012). ROK Policy on North Korea and Inter-Korean Economic Cooperation: Prospects and Analyses. International Journal of Korean Unification Studies, 1-31. Kim, K. R. (2000). Establishment of the South-North Economic Community: A South Korean Perspective. International Journal of Korean Unification Studies, 71-95.

33. Reference Kim, J. S., (2010). An Effective Direction for the “Unification Fund” Debate. Korea Institute for National Unification Online Series. CO10-35, pp.1-4 Oh, S. Y. (2001). Inter-Korean Economic Relationship and its Prospects: Policy Implications. International Journal of Korean Unification Studies, 143-164. Park, H. J., (2010). Expanding DPRK-China Economic Cooperation and the Future of the DPRK Regime: A "Rentier-State" Analysis. Korea Institute for National Unification Online Series. CO11-19, pp.1-8 Will, R (2015). North and South Korea's Kaesong complex shaken by pay dispute. CNN http://edition.cnn.com/2015/05/07/asia/north-korea-kaesong/