Sunday, June 04, 2006

Is N Korea following the footsteps of China?


I read an interesting article on the US-Korea free trade agreement. The possible future agreement is being viewed as "the biggest U.S. free-trade deal since the North American Free Tree Agreement and the most important development in U.S.-South Korean relations since the two countries signed their military alliance in 1953." There is no question as to the economic impact of the deal on the US-Korea bilateral trade. What really caught my attention was the issue of North Korea and the Kaesong industrial park. I googled Kaesong to find more information on the project. According to wikipedia, North Korean government designated part of Kaesong as an industrial zone which would allow foreign investment. It seems similar to that of the Chinese special economic zones that were established in China, which played a significant role in the Chinese economic development. In Kaesong industrial park, the wages are set at around 50$ a month, a great economic incentive for south Korean investors. 50$/month is artificially low wage, and a great bargain compared to the rising labor prices in South Korea. In addition, the workers are educated and there is no language barrier. North Koreans seem to finally understand the changing times of the global economy and seem ready to embrace certain elements of market economy. In my opinion, it seems like a win win situation for both South and North Korea, and signals the beginning of economic integration.
The US government does not seem to be pleased with the Kaesong Industrial Park, and the increase in trade between the two Koreas. Many lawmakers in the US congress believe the industrial park goes against the strict economic sanctions placed against north Korea.
Rather than criticizing the recent economic reforms like the Kaesong Industrial park, the US interest may be best served by encouraging economic integration. China is an example of how economic development can positively influence bilateral diplomatic relations. Other critics believe north Korean economic development will only help sustain the north Korean authoritarian regime. I believe economic integration will smoothen the political transition and with the ultimate goal of unification. The European Union comes to mind when thinking about how economic integration can lead to political integration. The EU originally was formed as the European Coal and Steel Community. The economic integration over the years led to political integration with the creation of the European parliament, and other supranational political bodies. If the US have it their way, North Korean regime may topple in the future, but it will most likely incur a heavy cost. Instead of letting the north Korea fall further deep into poverty, the most effective policy is to show a positive example and encourage change through moral suasion, an element of Confucianism.
What are your opinions on this issue?

Reference:
http://news.yahoo.com/s/nm/20060604/pl_nm/trade_korea_usa_dc_2
http://en.wikipedia.org/wiki/Kaesong_Industrial_Region
http://today.reuters.com/News/CrisesArticle.aspx?storyId=SEO131951

4 comments:

Grom said...

I suppose you could say that acts of economic integration, such as the Kaesong industrial complex, will "smoothen" the transition.

It seems to me that the South Korean government is doing all it can to prop up the Northern regime. They are willing to let millions of people, who are constitutionally considered citizens of their country, suffer brutality and death under one of the most oppressive regimes in recent history.

The South Korean reunification ministry's goal isn't to reunify with the North, it is to prevent it. By ignoring all wrongs North of the DMZ and giving economic aid to the North Korean regime they are prolonging its existence. Reunification would be an economic disaster for South Korea, and the South Korean government is determined to prevent it, regardless of the human costs.

Anonymous said...

While China turns a friendly shoulder to the US and it's allies it is also increasing it's military strength at an alarming rate. It is a well known fact that they understate their military spending each year. In the near future they will have a blue water navy. Do not forget that they are a Communist government. Just because they have opened up their markets does not mean that they have the same ideals as we do. They suppress in thier people every freedom that we hold dear. They adjusted thier economy profile just to increase their own military might and thusly their status as a world power. If the same is done with North Korea then the free world would only only be shoring up the strength of our enemies whether anyone wants to beleive it or not. The best thing for North Korea is a regime change to a truely democratic country and not one in name only. If I may quote the words of Ronald Reagan “No arsenal, or no weapon in the arsenals of the world, is so formidable as the will and moral courage of free men and women.”

newshound said...

Sorry, I thought I'd help generate some talking on your new blog, so I figured I'd post EVERYWHERE!

Thoughts on this are mixed. According to some sources, the North Koreans themselves are getting nothing out of this deal, it's just another method of surreptitiously funding the army. And the South Koreans are looking worse and worse on the world seen by having actually taken the deal for Kaesung in the first place.

It's essentially a slave-shop. I don't think it compares to the opened Chinese market in most ways, though I suppose it's yet to be seen if the area around Kaesung becomes North Korea's answer to Shanghai.

rowan said...

i have to agree with grom.

since the inception of the sunshine policy what has been achieved? SK has pumped many millions of dollars into NK, while Nk has made no effort to change whatsoever.

I was actually surprised (for some reason) to find that most high school students don't support unification because they no longer have the same feelings toward NK as their grandparents, probably because its been 2 generations and seems a world apart from SK, but the main reason given was that it would be too expensive. They are happier to send up enough money to keep most of the NK people alive while supporting the status quo rather than bear the cost of unification. The only difference that I can see between these students and the politicians is that the students are honest about their intentions.

I have to agree with the US government strategy of encouraging a collapse of the nK regime, followed by an interim government and a gradual move toward development and relations with the rest of the world. This would however have to be a very slow process given the extreme incompatibility between north Korean society and liberal democracy, and all the things that it brings with it. Perhaps after that a more successful unification could be pursued if it was still wanted.