Tag Archive | "development"

How North and South Korea Have Changed Since the Korean War

With the 70th anniversary of the end of World War II over the weekend, KEI takes a look back at what has changed on the Korean Peninsula from the 1945 to today. The three boxes compare a unified peninsula before the Korean War to North and South Korea in the 2010s. By looking at GDP, economic production, the number of radio stations, literacy and urban population, it becomes clear how far the peninsula has come in the past seven decades and how far apart its two halves remain today.

SK-NK Graphic1

Graphic created by Jenna Gibson, Associate Director for Communication Technology and Programs at the Korea Economic Institute of America, with assistance from Bradley Sancken, Jina Shin, Christopher Kang, and Lilka Marino at the Korea Economic Institute of America.

Photo a composite of photos by bradhamonds of Seoul and lawrenceyeah of Pyongyang on flickr Creative Commons.

Sources:

CIA World Factbook

38 North

“Japanese Colonialism and Korean Economic Development, 1910-1945”

Maddison Project

“The Population of Korea”

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Assessing China-DPRK Trade and SEZ Potential: The Dandong Trade Fair

By Adam Cathcart

As the rest of the world gets accustomed to seeing Kim Jong-un walk with a cane, we might do well to figure out what, if anything, is changing about the way that the broader North Korean state engages with the economic powerhouses that engulf its southern and northern peripheries. KEI’s Director of Research recently assessed the outlook for improved inter-Korean economic relations in the aftermath of the surprising visit of a high-level North Korean troika to the closing day of the Asian Games in Incheon. And while there have been no equally high-level trips to Beijing from Pyongyang, North Korea’s economic relations with China, particularly developments along the shared frontier, are arguably as important to the future of the DPRK economy.

There has been an awful lot of ammunition provided lately to proponents of the point of view that Chinese-North Korean relations are in a downward spiral. The North Korean hijacking of a Chinese vessel from a small port outside of Dalian in September certainly did not help matters. But to point only to the problems and disputes — while they are many — should not blind us to the ongoing daily interactions and transactions that fuel the North Korean consumer economy and keep the DPRK afloat.

This past June, I prepared a research paper for KEI that showed that North Korea’s strategy for Special Economic Zones with China was changing rapidly, and argued that the power struggle around Jang Song-taek was intimately tied to the lack of progress on the Yalu River showcase SEZs at Hwanggumpyeong and Wihwa Islands. The new Economic Development Zones that Pyongyang proposed in lieu of these Chinese-financed zones have since made very little headway. In the meantime, the North Korean government has welcomed a University of British Columbia professor again to Pyongyang to lecture on SEZ law, small-scale training programs are going forward (often off-site, in places like Singapore), and the Rason Special Economic Zone has hosted very small seminars on SEZ set-up. In general, however, SEZs remain extremely peripheral to the broader economy and in many cases are nascent and conceptual at best.

The upcoming Sino-DPRK trade fair in Dandong, scheduled for October 16-20, thus should serve as an ideal test case for a number of things. (The formal title of the event is ‘The Third China-North Korea Trade, Culture and Tourism Exhibition Fair / 第三届中朝经贸文化旅游博览会.) I’d like to lay out five questions, and then offer some preliminary answers or possibilities:

1. What does Chinese information about the trade fair tell us about the direction of the China-North Korea trade ties?

Since the North Korean state has put forward virtually no preliminary public information about this event, we are largely beholden to Chinese state press releases. In one such release dating from September 19, the bureaucratic bodies listed as organizing the event on the Chinese side are the China Committee for the Advancement of International Trade (Liaoning Committee and Dandong Committee), the sub-committee on Industry/Trade & Banking of the China Committee for the Advancement of International Trade, the Liaoning Province People’s Association for Friendship with Foreign Countries, the Dandong City Government, and the Dandong Frontier Cooperative Zone Management Committee (丹东边境合作区管委会).

While there is less information available about North Korean interlocutors, it stands to reason that the North Korean members of the old Hwanggumpyeong and Wihwa Island SEZ joint management committee will be there, even if the SEZs themselves are not the centerpiece. These would include the provincial party secretary for North Pyong’an province, who appears to have survived the Jang Song-taek purge without a scratch.

Curiously, the name of the old Hwanggumpyeong and Wihwa SEZ committee appears to have been subtly altered to the Dandong Frontier Cooperative Zone Management Committee (丹东边境合作区管委会). This would fit in with the alterations by the CCP of Jang Song-taek out of the history of bilateral economic relations; photographs of Jang and pictures of the 2012 celebration of the SEZ launch outside of Dandong have now been covered up at the Yanbian Korean Autonomous Prefecture Museum.

2. To what extent are these businesses planning to avail themselves of the previously Jang Song-taek-affiliated SEZs just outside Dandong?

To a degree, this is one of the big questions that the trade fair itself will help to answer. The inaugural 2012 trade fair was very much tied in to the SEZ development, and benefitted from being on the heels of the big Jang Song-taek swing around the Northeast and Beijing in August of that year. The 2013 fair got caught in a kind of netherworld where it was clear the Sinuiju SEZs were not particularly going anywhere; the slogan for that year’s Trade Fair was appropriately amorphous and indicative of the need for some renewal: ‘新丹东、新机遇、新平台/New Dandong, New Opportunity, New Level.’  While PRC media touted the signing of 30 investment contracts at that fair for an alleged total of $500+ million USD and 50 investment contracts for an alleged total of $109 million USD, some portion of these were among minerals firms and little specific information was given about investment and trade contrasts specific to the SEZs.

This year’s event has had very little information released from the Chinese side that indicates that the Hwanggumpyeong and Wihwa Island SEZs are going to play any significant part in the proceedings. The inclusion of the term ‘safety/安全’ in the overall slogan for the Trade Fair would seem to function not just as a caution for North Korean comrades (see: fishing boat incidents in 2012, 2013, and 2014) but to Chinese companies that their investments in the DPRK are not a wholesale gamble. Of course, the legal protections of the SEZs between Dandong and Sinuiju were supposed to handle many of these concerns in the first place.

3. What role will tourism play at the fair, specifically tourism to the northwestern part of the DPRK?

It seems that the 2014 fair has made a conscious decision to broaden out the tourism and ‘folk-art’ aspects of bilateral exchange. The number of North Korean firms said to be coming to Dandong to participate is around 100 (this is up from 50 the year prior). Tourism along the border is picking up significantly and the North Korean border cities seem to be making more efforts (on a very small scale, usually) to accommodate Chinese tourists, about 190,000 of whom visited DPRK in 2012.

However, the Chinese market for tourism to North Korea is already rather saturated. A recent flight to the new airport at Tonghua from Beijing indicated that ambitions for tourist trips outstrips demand significantly, and China’s excess capacity along the border region has yet to be filled. The airport at Changbaishan (near Fusong) is another case in point, and new rail construction along the border is going at a good clip as well. The current amount of tourism to DPRK seems unlikely to make such construction expand for the next decade, so we will simply have to listen to the big dreams of the tour operators heading to Dandong with the hopes of making major progress.

4. Is this fair purely about bilateral relations, or will companies from third countries, and Taiwan and Hong Kong, also turn up?

Companies from 10 or more nations external to China and Korea are slated to attend. Russia will be a presence, but so, too, will Pakistan and India be represented among firms at the fair. In the past, firms from Taiwan and Hong Kong have participated, and that seems likely again this year.

5. What performing arts ensemble and/or officials will the North Koreans send, and what might that say about the importance with which they are approaching the event? What role will cultural exchange play?

Last year’s fair can be counted as a success on this front; a big opening gala in Dandong included a performance by the Mansudae Arts Troupe, which was a sure signal (if an indirect one), that Kim Jong-un approved of the bilateral fair and attached importance to it. This year, the Samjiyeon Ensemble of the Mansudae Arts Troupe seems the most likely group to represent North Korea’s large performing arts sector. Speaking from the standpoint of Party culture in both DPRK and PRC, Kim Jong-un could make a strong statement about his desire to improve relations with China by attending a test concert of the Arts Troupe ensemble before it goes to Dandong (as he did before the Unhasu Orchestra went to France), but given recent events, this seems highly unlikely. A small arts troupe from Dalian travelled to North Korea earlier this year, but cultural exchanges between the two countries are down significantly from their 2010-2011 high. Apart from getting a large North Korean ensemble onto Chinese soil, the main achievement of the fair in culture will probably be to sell yet more North Korean landscape and nature paintings to Chinese collectors. A broadening of bona fide people-to-people exchanges (such as exchanges of language teachers) seems again unlikely, so the fair’s emphasis on ‘culture’ needs to be seen in a rather limited light.

Adam Cathcart is a Lecturer in History at University of Leeds and Editor-in-Chief of SinoNK.com.  

Photo from Prince Roy’s photostream on flickr Creative Commons.

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Korea and Global Climate Change Negotiations

By Troy Stangarone

On September 23, South Korean President Park Geun-hye and more than 120 world leaders attended the United Nations Climate Summit in New York during the annual opening of the General Assembly. The summit, held as a prelude to the United Nations Climate Change Conference in Paris next year where world leaders hope to conclude a treaty to replace the Kyoto Protocol, served as an opportunity for world leaders to discuss ideas on how to address the issue of climate change and make pledges towards future contributions. While European nations have usually been at the forefront of efforts to curb climate change, in recent years Korea has become increasingly involved in efforts to address climate change.

Traditionally, the issue of climate change has been difficult to address for a series of reasons. Globally, there has been a division between developed and developing countries over who should bear the burden of adjusting to climate change. While developed countries have pushed for all nations to reduce emissions to combat the challenge, developing countries have sought to be exempt from emissions reductions to avoid slowing their economic growth. However, while a solution that only involved developed countries might have previously worked, with China and India now two of the world’s largest emitters, a solution that brings together the developed and developing world is needed. At a local level, issues such as how the adjustment will impact the international competitiveness of industry and the extent to which climate change is seen to be occurring have also impacted the ability to develop domestic support for mitigation initiatives.

In the case of Korea, the issue of climate change is relatively new to the agenda, but its economic development has made Korea a significant source of emissions. The Global Carbon Project estimates that annual emissions from Korea have grown from 13 metric tons in 1960 to 616 metric tons last year, making Korea the 7th largest emitter of carbon in the world behind China, Japan, the United States, and Germany among others. Though, on a per person basis Korea is only the 22nd largest emitter with each Korean emitting on average 13 tons of carbon last year. However, while the average Korean emits less carbon than the average American, they do emit more carbon on average than their counterparts in Japan, Germany, or China where emissions as a whole are greater than in Korea.

Under the Lee Myung-bak administration, Korea began to play greater role internationally as a rising middle power across a range of issues, one of which was climate change. As a middle power, Korea has often sought to serve as a bridge between the developed and the developing world. On the issue of climate change, Korea has pursued a series of policies both domestically and internationally that have raised its profile on the issue.

Following the global financial crisis, South Korea utilized its stimulus package as an opportunity to promote green growth initiatives domestically. In 2009, South Korea pledged to cut greenhouse gas emissions by 30 percent from business as usual in 2020 despite being classified as an Annex I (developing) country under the Kyoto Protocol and not having an obligation to cut emissions. Korea followed this up in 2012 by becoming the first nation in Asia to pass legislation to set up an emissions trading scheme (ETS) which is set to come into effect in 2015.

The initial legislation for Korea’s ETS targeted reductions across a range of sectors including a 61.7 percent reduction in emissions from electricity, a 27.7 percent reduction in semiconductors, 31.9 percent in automobiles, 34.3 percent in transportation, and a 27 percent reduction in household emissions. While pressure from the auto industry has led to a delay in a vehicle emissions tax designed to reduce emissions from automobiles, the ETS is still expected to come into effect next year with carbon priced at levels comparable with Europe’s ETS.

Korea also established the Global Green Growth Institute (GGGI), which later became a formal international organization, to help bring together research and best practices to address climate change and other environmental challenges through sustainable and environmentally friendly economic growth. The best practices developed at the GGGI could then serve as a means for developing countries to embrace policies that would promote growth, but also limit future greenhouse gas emissions.

On the international level, Korea serves as the host country for the Green Climate Fund (GCF). The GCF, which is part of the United Nation’s efforts to address climate change, is designed to provide financial assistance to developing countries through public and private investment as they transition to more sustainable forms of economic growth.  At the recent UN Climate Summit, President Park pledged up to $100 million for the GCF’s efforts, while six other countries made pledges raising the total pledged to the GCF to $1.3 billion. Including earlier pledges by Germany and Sweden, $2.3 billion has been pledged to the Fund.

Much as with President Park’s efforts to change perceptions of the impact of unification, Korea is making efforts to change perceptions internationally on the costs of addressing climate change. At the UN Summit, Park noted that “How we view the climate agenda — as boon or bane — will bring huge differences,” while noting the benefits that can come from developing new energy technologies. Korea also contributed intellectually to the debate on whether the costs of climate change would be a “boon or bane,” as President Park said, by being one of seven countries to commission a study through the Global Commission on the Economy and Climate that found that the benefits of improved health, better air quality, and lower fuel costs could potentially mitigate the costs of adjustment.

While Korea is a relatively new participant in the effort to address climate change, it has played an increasingly important role through its efforts to help better understand the challenges and to contribute to the development of policies which would support both a greener world and continued economic growth in developing countries. Additionally, by implementing its own ETS and investing in green technologies, Korea demonstrates to other developing nations that there are steps they can take to improve the environment without sacrificing economic growth.

Troy Stangarone is the Senior Director of Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Rae Allen’s photostream on flickr Creative Commons.

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Economic Growth Since the Financial Crisis: Korea and the BRICs

By Troy Stangarone

Economic analysts are always trying to predict the next hot economy and coin a popular phrase to back up their claim. Perhaps one of the most successful was Goldman Sachs, which famously coined the term BRICs in 2001 to draw attention to the long-term economic potential of Brazil, Russia, China, and India among the emerging economies. Since 2001, the term has become part of the economic lexicon and even morphed into a loose political grouping which South Africa joined with the idea of playing the “s” in the grouping.

While Korea is more economically advanced than all of these economies, it might have been a logical answer for the “k” in brick and still makes for an interesting economic comparison. Not because these countries economic profiles are innately similar, but rather as a benchmark for how Korea has performed, especially since the Global Financial Crisis.

Korea also makes for an interesting comparison with the BRICs as it is an economy that they ideally want to emulate. As a recent article for Foreign Affairs, The Backwater That Boomed, notes Korea has grown at an average of 7 percent a year for the last half century and become a wealthy, technologically advanced nation, as well as one of Foreign Affairs “Six Markets to Watch.” In contrast, two of the BRICs — India and Brazil — recently made the latest, less flattering economic catch phrase, the Fragile Five. This latest phrase denotes countries that face an overreliance on foreign direct investment to drive growth at a time when investors are pulling funds out of developing economies as the Federal Reserve begins to taper the latest round of quantitative easing.

GDP Growth Rates for Korea and the BRICS since 2009

Korea and BRIC GDP Final

All data from World Bank except for 2013. 2013 data from IMF estimate or as reported in Yonhap News and Russia Today.

So, how have Korea and the BRICs performed over the last five years? Overall, China and India have had the strongest growth. However, India has begun to slow in recent years and is in need of further economic reforms. China’s economy has also slowed to a lesser extent as it begins to transition towards greater domestic consumption.

When the crisis hit the global economy in 2009, Korea, along with China and India, was able to avoid a recession. In contrast, Russia’s economy contracted by 7.8 percent and Brazil had a small recession. In the years since, Korea’s economic growth has surpassed Brazil in three out of the four years and Russia in two, including 2013 when it outperformed both.

While China and India have grown at significant rates in recent years, Korea has consistently grown at rates comparable to Russia and Brazil in this new post-crisis era. In the weeks ahead we will continue to look at how these five economies have performed over the last five years.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

Photo from jonasginter’s photostream on flickr Creative Commons.

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Bridges of Understanding: The Peace Corps & The U.S. – Korea Alliance

By Gerard Krzic

Anyone visiting Korea and sightseeing at a rural Buddhist temple usually passes over a stone bridge that crosses a stream or river before entering the main temple grounds.  It has been said that the bridge represents crossing oceans as one moves from the land of daily hardships to the land of enlightenment and understanding.  Like these stone links between two lands, the alliance between the United States and the Republic of Korea has moved each country toward mutual understanding and cooperation across the Pacific Ocean.  This bridge of collaboration over the past 60 years has been built upon the interaction between the people of both countries.  One organization that has contributed to this strong bond is the United States Peace Corps.

Chonju MarketFrom 1966 to 1981, nearly 2,000 Peace Corps volunteers and staff members shared their lives with their Korean counterparts in health, education and social service projects.   They were witness to the tremendous work ethic of the Korean people as the groundwork was being laid for the Korea we see now in the 21st century.

Rick Laylin was a member of the first group of Peace Corps volunteers, known as “K-1,” who arrived in Korea in 1966 to answer President Kennedy’s call for Americans to give two years of their lives in service to the developing world.   Rick recalls Korea of that time: “Korea was still struggling to develop its unique identity in the aftermath of the Korean War and, especially in the countryside, 150 miles south of Seoul, seemed to border on the impoverished.”

Rick Laylin JeonjuRick’s first-year assignment was to teach English as a Foreign Language (TEFL) at The Boys High School in Jeonju, a city in the southwest part of the peninsula. In his second year, he was posted to Chonbuk National University to develop a TEFL training program for teachers from around the province.  Rick remembers entering that second year assignment:  “That second year was a totally different experience from the first year, and not nearly as frustrating as the first year since I now had a year’s worth of experience to draw upon. I made several new friends in the process, but still had the old friends as well, so it was doubly rewarding.”

In his two years there, Rick developed many friendships, aided by his first co-teacher, mentor and friend, Mr. Kim Jeong Seok.  Through Mr. Kim’s patient guidance and his own sensitivity to the Korean culture, manifested in a lot of non-verbal behavior such as bowing, handshaking, and smiling, Rick felt that he adjusted well in spite of the initial difficulty learning Korean. In particular, he felt the Korean people, in spite of the difficult living conditions, were welcoming and accommodating.

Rick Laylin MentorFast forward to October, 2009:  Rick found himself back in Korea 43 years after he had first arrived on the peninsula. This time he was there as a member of one of the Korean Revisits sponsored by the Korea Foundation for former Peace Corps Volunteers.   He visited his old schools in Jeonju and met with his old colleagues.  When asked to reflect on his time in Korea as a Peace Corps Volunteer, Rick reminisced that the Korean people were extremely hospitable, warm, friendly and above all, forgiving of his youthful ineptitude when it came to teaching.   He felt that his greatest contribution was not only the English teaching he provided but also the mutual understanding created through his presence in the town.  The Korean people could see that there were Americans who found great satisfaction living and working with them:  “I think that the message that they got from me was that I was genuinely happy to be there and working with their students to improve their English speaking skills, which could help them to get ahead in life.”

Nine years after Rick had completed his Peace Corps service, the 41st group of volunteers arrived in Korea in January of 1977.  I was fortunate to be a member of that group.   Having left the U.S. for Korea on my 24th birthday, I was about to embark on a journey that would transform my life.

YecheonAfter a three-month training program focusing on Korean language, culture and TEFL pedagogy.  I arrived at my site – Yecheon, a rural village in the northern part of  Gyeongsang Buk province.  Similar to Rick, I also taught English, but my assignment was in Dae Chang Boys Middle School.

At first, being immersed in a totally Korean-speaking environment without other native English speakers brought the usual adjustment difficulties and homesickness.  Mistakes in communication – using honorific forms inappropriately, failing to distinguish the differences in sound among certain Korean vowel and consonants – made me very aware of the process of learning a foreign language and appreciative of the struggles many of my students were having learning English.

However, over time and in large part due to the graciousness of my Korean colleagues and friends, my language skills improved and my cultural insights sharpened.  I learned of the importance of human relations (인간관계),  preserving the “kibun” (기분) of others,  and reading “nunji” (눈치).   As Rick had Mr. Kim for a mentor, I also was fortunate to benefit from my co-teacher, Mr. Kim Hee Kyeong, who guided me through my first year in Korea.  My second year was devoted to teacher training as well. I extended my service time for a third year and along with two other volunteers developed a mini-service corps of Korean college-aged students who provided volunteer services in exchange for English lessons.  The students thought of it as our own “mini”Peace Corps.

Calligraphy KrzicMy recollections of Korea were the simple experiences I shared with the people on a daily basis: going on the annual student trip to Gyeongju as a chaperone with over 300 students crammed into slow trains and small rooms in a traditional Korean inn (여관), sitting side-by-side with elementary and middle school students while learning Korean calligraphy, cracking the  ice that had formed in the water basins we had to use when washing up outside on frigid winter mornings, sharing taxis to race home before the nightly curfew (동행금지), seeing the joy of our rural students win prizes in the provincial English speech contests over their more advantaged urban peers, witnessing first hand the visible results of the economic development in the form of the early Hyundai car known as the Pony, sharing whispered and animated conversations with my Korean colleagues about domestic and international politics over pots of 막걸리 (makgeolli) or bottles of 소주 (soju).

In my post Peace Corps life, I have had the privilege to continue my learning of other cultures and interacting with professionals throughout the world in places as diverse as Palestine, Israel, Brazil, South Africa, the former Yugoslavia, and Hungary. Yet, I always look back upon my years in Korea as something special – the place where I learned about the world outside America’s borders.

Rick LaylinRick and I are not the only Peace Corps Volunteers who feel our service in Korea was the most transformative experience of our lives.  Many returned volunteers have gone on to distinguished careers in government service, education, non-profit agencies, and the private sector, largely in part due to their time in Korea.  And, although the Peace Corps presence in Korea ended in 1981, the alliances formed in the 15 years that the program was active has led to the creation of the “Friends of Korea”  (FOK).

Established by returned volunteers, FOK, in conjunction with Korean government agencies, has published “Through Our Eyes,” a book chronicling the Peace Corps experience in Korea, organized a traveling photo exhibit throughout Korea and the U.S., and discussed plans for a collection of the Peace Corps experience in the National Museum of Korean Contemporary History.  All these efforts are testaments to the continuing impact that Korea has had on their lives.

For those interested in joining or learning more about Friends of Korea, please visit our web site at http://www.friendsofkorea.net.

Gerard Krzic is a returned Peace Corps Volunteer Korea, 1977-1980 and member of the Friends of Korea Board. The views expressed here are the author’s alone.

All photos were provided by Gerard Krzic and were given  permission to be used for this post.

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North Korea’s Economic Diplomacy with Southeast Asia

By Sarah K. Yun

After the failed April 13 rocket launch, North Korea seemed to be headed towards increased isolation from the international community. The United Nations Security Council tightened the sanctions regime, while the United States canceled the 24,000 metric tons of food aid that had been part of the “Leap Day” Agreement. However, within just a few weeks there were signs of active economic diplomacy by North Korea. While Pyongyang’s diplomatic efforts with Southeast Asia and China are particularly visible, what are the implications of North Korea’s attempts to rekindle old relationships?

From May to August, North Korea began kicking its diplomatic outreach into high gear. In May, Kim Yong-nam, Chairman of the Presidium of the Supreme People’s Assembly, traveled to Indonesia and Singapore. While no official agreements resulted from the meetings in Singapore, Kim’s meetings with the Indonesian President Susilo Bambang Yudhoyono and Foreign Minister Marty Natalegawa resulted in cooperation in communications, information technology, and economic/trade issues, while increasing the exchange of visits between government officials and journalists. Additionally, on June 1 Indonesia agreed to send $2 million in aid to North Korea.

The following month Cambodian foreign minister Hor Namhong visited North Korea to discuss security issues and bolster bilateral ties, while Kim Yong-il, Secretary and Director of International Affairs of the Korea Workers Party, visited Laos, Vietnam and Myanmar. In return, Lao and Vietnamese government officials visited Pyongyang in July. Also in July, North Korea’s foreign minister Park Ui-chun visited Cambodia to participate in the ASEAN Regional Forum and engage in side meetings mostly focused on trade and investment.

From August 5 to 10, Kim Yong-nam visited Vietnam and Laos to try to yield concrete results from the previous trips. On August 6, President Truong Tan Sang of Vietnam said that the “Vietnam-DPRK relations of friendship will grow stronger in mutual interests amidst the deep concern of the top leaders of the two countries.” Vietnam agreed to donate 5,000 tons of rice to Pyongyang as aid towards North Korea’s recent heavy floods. In Laos, the two countries completed four cooperation agreements to include issues of cultural exchange, information and technology, economic cooperation, education and sports.

Despite the fluctuating trade volume between North Korea and Southeast Asia, what are the incentives for countries to engage with each other at the current juncture? For North Korea, there is a significant need to diversify its trading partners. According to South Korea’s Ministry of Unification, inter-Korean trade decreased from $1.9 billion in 2012 to $1.7 billion in 2011. Even then, the figures are largely dependent on the output from the Kaesong Industrial Complex. On the other hand, while estimates vary, North Korea has become increasingly dependent on trade with China where bilateral trade increased 62.4% from 2010 to 2011. With mounting pressure to diversify its trading partners, Southeast Asia is a viable candidate given its geographical proximity and economic growth. According to the IMF, Myanmar, Singapore, and Thailand were eighth, ninth and eleventh respectively as North Korea’s import partners. While Myanmar, Singapore and Thailand were North Korea’s tenth, fourteenth and fifteenth largest trading partners.

Additionally, there are many lessons that could be learned from the Southeast Asia’s development experience. Singapore could be a model for attracting foreign direct investment and managing special economic zones. As Vietnam’s economy grows, the country could provide an alternative model besides the Chinese development model. Indonesia could be a case study on natural resource management. For the purposes of information gathering and political control, North Korea could benefit from engaging with Laos, Myanmar and Thailand. There are also historical ties in Southeast Asia, which creates a less threatening relationship. Many Southeast Asian countries, such as Indonesia, the Philippines and Singapore, were involved in the Non-Aligned Movement, which influenced North Korea’s foreign policy framework after the Korean War.

Southeast Asia also identified opportunities in engaging with North Korea. As ASEAN tries to take a more active role in the regional security and economic structure, North Korea could become an example of ASEAN’s symbolic politics and global role to create an alternative space for engagement. With China’s continuing rise, North Korea’s diplomatic outreach also represents an opportunity for ASEAN to balance China’s growing role in the region to an extent. Indonesia, as the largest country in the region, may have a vested interest in playing an alternative mediator role, particularly on non-nuclear issues.

Beyond Southeast Asia, there have also been other internal and external developments which may hint at the prospect for further engagement and opening on the part of North Korea. It has been reported that on June 28 Kim Jong-un announced a new development plan which includes the downscaling of work units in cooperative farms, allowing increased autonomy to enterprises and factories, and transferring economic projects from the military to the cabinet. In August, North Korea sent a 50 person delegation to China, including Jang Sung-taek, vice chairman of the National Defense Commission. During the summit, the two sides agreed to actively develop the Rason special economic zone and the Hwanggumpyong/Wihwa Island economic zone. Moreover, North Korea and Japan will hold high-level talks to discuss various issues including the abductee issue.

To be sure, indications of reform should be measured with the realities of North Korea. The Kim Jong-un regime will still want to maintain a considerable amount of market control to balance external engagement. The execution and level of genuine reform, including labor market reform, still remains untested. Furthermore, the Kim regime would have to resolve the inherent conflict between the legacy of juche ideology vis-à-vis reforms and opening to the outside world.

Although many are observing North Korea’s growing diplomatic efforts in the Asia Pacific with much interest, it is too early to assess true reform. However, this could serve as an opportunity for the United States, South Korea and their friends. By introducing non-traditional players such as Indonesia, Vietnam, and Singapore, North Korea’s interests and trading partners could be diversified. This could create additional entry points into the new Kim regime. This model might hold the potential to be employed on projects in developing industries in North Korea, such as technology, communication, infrastructure, education, and culture/entertainment. These efforts could potentially de-couple the technocrats from the Kim royal family. In response to North Korea’s increasing relationship with their northern neighbor, China could serve as a platform for small and medium enterprises to invest in the northeastern provinces to build greater ties with North Korea. Such projects would take place in anticipation of Rason’s rapid development.

Cooperation between the United States, South Korea, Southeast Asia, as well as China, could induce North Korea to undertake economic reform and ultimately reduce tension. On one hand, the changing circumstances in North Korea mean that the U.S. and South Korea’s close coordination is crucial in understanding internal debates and foreign policy developments within the Kim regime. On the other hand, changing the current dynamic in the region with new players and creating incentives for economic development could induce change in the North Korean society.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from Mac Coates photo stream on flickr Creative Commons.

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South Korea’s Role in International Development

By Joy Kim

South Korea is currently the world’s 15th largest economy. This fact strikes many as amazing given that Korea’s Gross National Product (GNP) per capita increased by more than 243 times over the span of 50 years, from $82 in 1961 to $20,000 in 2006. The baby boom generation who were born in the 1950s can attest to the dramatic changes in lifestyles following the GNP growth, from starving childhood to enjoying free phone calls via a smart phone application with their children studying overseas.

With positive changes in the lives of individual citizens, the nation as a whole also transformed its status in the international community, as Korea went from an aid beneficiary to a donor. Korea’s official acceptance into the OECD’s Development Assistance Committee (DAC) in 2009 marked the first time that a beneficiary turned donor joined the ‘assistance club’. Moreover, hosting the fourth High-Level Forum on Aid Effectiveness in Busan last November contributed in establishing Korea as a donor country.

Korea’s changed economic and social status in the international community has brought more responsibilities and engagement in international development; Korea is increasing its official development assistance (ODA), actively sends volunteers overseas, and researches innovative ways to contribute to developing countries. However, challenges exist because of its lack of experience as a donor.

Korea benefited greatly from foreign aid during the reconstruction of the country after the Korean War in 1953 when the majority of aid came from the U.S. and Japan. With Korea’s membership in OECD-DAC, Korea has expressed its goal to increase its foreign aid to 0.25% of its Gross National Income (GNI) by year 2015, which amounts to $3 billion. This is a twofold increase from the current amount.

Aside from the monetary foreign aid assistance, Korea has been actively engaging in establishing development institutions for effective coordination and promotion of volunteering programs. Similar to the United States Agency for International Development (USAID), the Korea International Cooperation Agency (KOICA) was established in 1991 to implement the government’s grant aid and technical cooperation programs. KOICA works on all aspects of development from education to disaster relief.

Korea has also been actively participating in overseas volunteer programs. Similar to the Peace Corps program in the U.S. which traces back to 1960, Korea has an integrated overseas volunteer program called World Friends Korea (WFK). Korea is a beneficiary of the Peace Corp activities, as volunteers helped to reconstruct the war devastated Korea from 1966 to 1981. Now, World Friends Korea coordinates various overseas volunteer programs, from cultural exchanges to IT education.

More importantly, international development is not a foreign concept to the Korean people anymore. The concept of charity and responsibility, as well as willingness to help developing countries, is developing as a cultural norm in the Korean community. Many NGOs are being established, including Good Neighbors, a Korean NGO that is currently working in 30 countries, and the first Korean NGO to achieve the General Consultative Status with the United Nations. Big private companies such as Hyundai are also launching their own overseas volunteering programs.

While Korea’s repositioning in the international community as an aid giver follows similar models and organizations of that of experienced donor countries, Korea should and is able to contribute additional unique and practical assistance given its own development experience. Korea has been active in sharing and transferring its development knowledge and technology to current developing countries since 2004. Through the Knowledge Sharing Program (KSP) under the Korea Development Institute (KDI), Korea provides practical and useful policy alternatives based on similar cases experienced by Korea in the past. Many developing countries turn to South Korea for inspiration and lessons for development. However, developing countries should also recognize that the development of a country is ultimately in the hands of the citizens of the country. Foreign aid can catalyze development, but cannot achieve development alone. Volunteers alone cannot reform the developing countries. Knowledge sharing can serve as a guideline or support, but nothing can be a blue print for the ultimate path to prosperity. After all, Korea’s development success also had many different contributing factors; its export-led macroeconomic policy, the intensely motivated citizens, and a nationwide campaign (Saemaul movement) for rural development to name a few. However, political turbulence and uprisings along the way were also unavoidable. Every country faces different political cultures and economic contexts that Korea’s development model cannot be exactly copied and pasted.

Korea has as much to gain as to give through more active participation in the development community. With Korea’s dedicated efforts in upgrading Korea’s image in the international community as ‘Global Korea’, active engagement in development assistance can act as positive diplomacy. In addition, through cultural exchanges such as World Friends Korea’s Korea Taekwondo Peace Corps Program, Korea is able to spread and educate global citizens about Korea’s unique culture, in this case martial arts.

Challenges also lie ahead. Even with best intentions, international development assistance cannot come to fruition if the activities from different organizations are not coordinated well at the ground level. With the government, various NGOs, and private sectors jumping in on the international development bandwagon, coordination is needed to deliver good results. Also, the best students do not necessarily make best teachers. While Korea is one of the few countries that succeeded in effectively utilizing foreign aid to build its domestic economy, Korea now needs more development professionals who are experts in transferring knowledge, and effectively coordinating and implementing aid and volunteer activities.

With Korea’s capabilities to assist developing countries through financial and educational means, now is the time to reciprocate the favor that Korea received from the world half a century ago.

Joy Kim is an M.A. candidate at the Elliott School of International Affairs at The George Washington University. The views expressed here are her own.

Photo from Ken Bank’s photo stream on flickr Creative Commons.

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Driving Change in the DPRK

By Nathan Lee

While the Leap Day deal this past February offered a glimpse of optimism into U.S.-North Korea relations, its failure was an outcome that surprised few. Under the agreement, the U.S. would have provided 240,000 metric tons of food aid to North Korea, and North Korea would have allowed international nuclear inspectors to return. But the Democratic People’s Republic of Korea (DPRK) instead announced on March 16th plans to launch a satellite in April, and this essentially nullified the agreement. Observers noted that a discrepancy between U.S. and DPRK interpretations of what constituted a long-range missile launch was ultimately to blame. But in any event, the DPRK defiantly carried out the launch despite admonishments from the international community not to, the U.S. cancelled the food aid, and any potential for improved relations once again quickly dissipated.

Following the failed rocket launch on April 13, Deputy National Security Advisor Ben Rhodes made the following announcement:

What this administration has done is broken the cycle of rewarding provocative actions by the North Koreans that we’ve seen in the past. Under the previous administration, for instance, there was a substantial amount of assistance provided to North Korea…Under our administration we have not provided any assistance to North Korea.

Mr. Rhodes may have been attempting to score political points by depicting a tough Obama administration, but like his predecessor, President Obama has yet to resolve the major issues related to the DPRK such as its nuclear program as well as issues related to proliferation and human rights. In fact, if the failed Leap Day deal has demonstrated anything, it is that North Korea continues to persist as one of the U.S.’s greatest foreign policy challenges.

Similarly, South Korea has also been unable to induce any change from North Korea. President Lee’s hard-line policies have elicited indignation from the DPRK, with tirades ranging from a refusal to ever work with the Lee administration, to promising a “sacred war” on the South. During the terms of both U.S. and South Korean presidents, the DPRK has been undeterred from conducting a litany of provocations, including a nuclear test in 2009, the sinking of the Cheonan, the shelling of Yeongpyong Island, as well this year’s rocket test.

However, despite the inability of the U.S. or ROK governments to achieve nominal progress with the DPRK, incremental change is being made through the important work of non-governmental organizations (NGOs) and educational institutions operating in North Korea. Organizations such as the Mennonite Central Committee are helping farmers increase crop yields and develop sustainable agriculture practices. Stanford University, in conjunction with the Nuclear Threat Initiative and Christian Friends of Korea, has been engaging with North Korean officials on tuberculosis control. The Eugene Bell Foundation is also similarly working to treat multi-drug resistant tuberculosis throughout North Korea. There are other NGOs that continue to play such critical roles in the DPRK. A few weeks ago, I was fortunate to hear about the work that another one of these institutions has been undertaking. Dr. Jerry Nelson, professor emeritus from the University of Missouri, presented on how the University has been working to improve agricultural conditions on communal farms through academic exchanges and by providing expertise to the farms. His presentation underscored two important issues regarding NGO efforts in the DPRK.

First, the food and nutrition situation in rural North Korea may be worse than we think. Reports of famine and malnutrition in North Korea are now well known. Scholars such as Sunyoung Park (Seoul National University) and Daniel Schwekendiek (Sungkyunkwan University) have identified in their research that young North Koreans are shorter than their southern peers due to nutrition deficiencies. But nutrition is in such a dismal state that even the size of bullocks used for tilling fields appears to be decreasing, according to Dr. Nelson. Nutrition of work animals may seem to be an ancillary concern when humans are suffering from starvation, but such a degenerative phenomenon among livestock will perpetuate farmers’ reliance on backbreaking manual labor. In a country where spare tractor parts are lacking and any available fuel prioritized for the military, the strength and size of bullocks is essential for agricultural production. Although European NGOs are working to increase the size of these animals through improved nutrition and selective breeding, progress could take decades.

Second, despite positive trends transpiring in North Korea such as increased access to foreign media, North Korea’s rural population still face enormous challenges in their daily lives with little hope for positive change. Rural farms and their workers are caught in a vicious cycle, driven by the exigency of short-term output requirements while facing scant resources and limited production capabilities. Such conditions leave little room to incorporate relatively feasible medium-term solutions that have been proposed by experts like Dr. Nelson, such as utilizing crop rotations and the limited fertilizer more efficiently. With no opportunity to implement these relatively simple processes, farmers cannot improve their agricultural yields.

While official U.S. or South Korean policy on humanitarian aid remains constrained by North Korean policies on its nuclear program, NGOs and educational institutions have been working to improve the lives of ordinary North Koreans beyond simply giving food aid to North Korea. Although such aid is important in a country where malnourishment is so pervasive, simply continuing to distribute food aid will perpetuate the North Korean government’s dependency on aid and the U.S. and South Korea’s tendency to use it to incentivize policy changes. Instead, the valuable work that the aforementioned organizations are conducting should be supported and permitted to operate even following provocations, because these efforts actually have the potential to improve longer term conditions in North Korea.

South Korea’s Unification Minister Yu Woo-ik recently launched a campaign to solicit voluntary contributions to supplement official funds for unification, referring to these funds as unification “jars.” While this may represent a pragmatic approach towards mitigating the anticipated costs of unification, governmental strategies should also strive to incorporate the successes and lessons learned from these NGOs. Such long-term efforts to improve health and improve agricultural conditions will go a long way in building a basic foundation that will ultimately help mitigate the very costs that the unification fund might seek to address. Moreover, beyond implementing these various initiatives, these organizations are also playing an important role by building relationships and trust in North Korea, and by serving as direct witnesses within the DPRK while the rest of the world remains relatively uncertain of what is really taking place in the country.

The final point on the efforts of NGOs, governments, and international organizations operating in North Korea is that just like DPRK citizens themselves, they remain subject to the policies that the regime dictates. And for all the criticism these NGOs may receive, they are providing relief in North Korea because the state itself is unable to provide such basic services. North Korea’s leadership alone bears full responsibility for the disastrous state of economic and social affairs in the DPRK, and until the regime adopts true comprehensive reforms, the important work that NGOs perform will be hindered needlessly. More importantly, millions of citizens will continue to suffer needlessly.

Nathan Lee is currently a graduate student at Georgetown University’s School of Foreign Service.

Photo from Abraham Kim, Korea Economic Institute.

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The Future of Global Korea

By Sarah K. Yun

Since his inauguration in 2008, President Lee Myung-bak has promoted a “Global Korea” policy for Korea to be a more active and responsible member of the international community. However, with the upcoming presidential election and potential pendulum swing in South Korea’s leadership, what is the future of Korea’s growing global leadership role?

With the U.S.-ROK alliance as the bedrock of its growing global presence and the “Global Korea” policy, Korea has pushed for improved and active bilateral relations across the world. Korea has not only solidified relations with its neighbors such as Japan and China, but also strengthened ties with Russia, countries of Southeast Asia, Latin America and Africa. President Lee Myung-bak was the first Korean head of state to visit Africa, while existing ties with Europe strengthened with the Korea-EU FTA. Korea has also boosted cooperation with ASEAN.

Korea has worked to improve efforts to fight poverty and contribute as a responsible member of the international community through official development aid (ODA) and peacekeeping missions in Afghanistan and Somalia, and disaster relief to Haitai and others. As the only country in the world that transformed itself from an aid recipient to aid donor within five decades, Korea spent $862 million in ODA in 2009, and has planned to double its ODA budget by 2012 and triple it by 2015.

In 2010, Korea successfully hosted the G-20 Summit in Seoul, elevating its status as an economic leader and global summit convener. It was the first non G-7 country to host the summit. In 2011, Korea hosted the fourth High Level Forum on Aid Effectiveness, participating and leading in issues related to global development and poverty reduction. Korea has been working closely with the United Nations Development Program (UNDP) and other multilateral organizations for knowledge sharing and technical assistance. In March 2012, Korea hosted the second Nuclear Security Summit in Seoul. From May to August 2012, the World Expo takes place in the coastal city of Yeosu. Korea will also host the 2018 PyeongChang Winter Olympics.

Moreover, Korea’s culture and pop culture, including Hallyu (Korean Wave), has swept across the world throughout Asia, Latin America, North America, and Europe. Korean companies have also contributed to Korea’s global presence. Korea’s soft power has shown to be active and influential.

“Global Korea” has clearly not been a misnomer in the recent years. At the same time, democratic politics in Korea is extremely dynamic and dramatic, which often makes policy predictions difficult especially in an election year. In this year of change, will “Global Korea” hold?  Although a large-sized country with a developed economy is unlikely to need such a policy, a small middle-power country like Korea has a stronger need for such a policy approach to help it find a competitive advantage on the world stage. In other words, a policy such as “Global Korea” is inherently in Korea’s interest to remain competitive. President Lee’s green growth initiative is also similar in nature in that Korea needs to preserve its national capital for sustainable long-term growth. Embedded in “Global Korea” is also the country’s position to stay effective as a world leader. On the other hand, Korea is strategically tying its new global position with a shared growth vision, which takes the edge off the potential negative impacts of national branding.

The one potential hurdle may be that the core issue in the current election campaign is the issue of social welfare. Consequently, both parties may become more focused on domestic policies as opposed Korea’s place in the international community. However, an agenda focused on Korea’s role on the global stage and shared growth should be a non-partisan issue, as the need for increased global and regional governance is stronger than ever before. Therefore, while the terminology and some of the function may change, the idea of Korea having a greater global role should be sustainable under future administrations and the assumption that Korea will continue to strive to maintain its middle-power leadership in the world.

Continuing Korea’s leadership in the world may continue to take shape in many forms, including international summit convener, economic role model, soft power leader, and others. On the other hand, there are three agenda items for Korea to enhance its leadership in the world. The first is to become an industry hub, just as Hong Kong and Singapore are financial hubs and Bangkok is an international development center in Asia. The second is to boost international volunteer programs such as KOICA to engage young leaders in Korea’s global participation. The third is to improve the social safety net that has been impacted by the financial crisis and strengthen the civil society that is beginning to solidify as a significant player in Korean society. At the same time, Korea has to delicately balance domestic and international issues in order to continue as a global leader.

Korea has shown remarkable resilience from historical violence and divisions. It has risen to be one of world’s most stable and dynamic democracies and markets, becoming a role model for many developing countries. Korea is a country that bridges the divide between developed and developing countries. With this responsibility, it would be a misstep to forgo Korea’s emerging leadership role under any administration.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from underclasscameraman’s photo stream on flickr creative commons.

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Partner, Balancer and Model: Korea’s Engagements in Southeast Asia

By Sarah K. Yun

Traditionally, Korea’s major diplomatic and trade partners consisted of the United States, Japan, China, Europe, and Russia. Under President Lee Myung-bak’s “New Asia Initiative,” Korea has boosted its engagements in the Asia-Pacific, especially smaller neighbors in the region. The rationale is that Korea can serve as an excellent and non-threatening model for economic and political development. Southeast Asia and ASEAN are perfect case studies for the success of Korea’s “New Asia Initiative.” Korea is expanding its involvements in all three diplomatic pillars – economic, security, and non-traditional security including socio-cultural issues.

The most active pillar of Korea’s diplomatic engagements in Southeast Asia is economics and trade issues. ASEAN became Korea’s third largest trading partner in 2008, second largest overseas investment destination, and second largest construction market. At the same time, Korea is ASEAN’s fifth largest trading partner. Since 2005, trade between Korea and ASEAN nations has increased 82% from $53 billion to $97 billion in 2010. In 2010, the Korea-ASEAN FTA was implemented, and bilateral trade is expected to increase to $150 billion by 2015.

When it comes to development assistance, Korea’s top five recipients of official development assistance are ASEAN countries. Together they received more than $700 billion in aid from Korea. With more than 550 million people and an abundance of natural resources, Southeast Asia is a valuable economic partner for Korea’s growth. Southeast Asia also sees Korea as an important economic partner with strong technology, infrastructure, and human capital resources.

Korea is also a growing player in the security structure of Southeast Asia. It is a Dialogue Partner of ASEAN and a member of the ASEAN Regional Forum (ARF). Since 1997, the Korea-ASEAN Summit Meeting has been held annually. Both Korea and Southeast Asia have a common interest in balancing peaceful relations with the U.S., China and Japan, while being wary of Chinese military power.

With regards to non-traditional security issues, Korea has begun to extend its reach in Southeast Asia. Key issues that Korea is involved with are environmental and energy conservation, illegal drug and weapons trafficking, piracy control, pandemic disease, and global terrorism. Furthermore, the Hallyu (Korean Wave) in the form of Korean music, TV, films and culture, has swept all throughout Southeast Asia, which works to improve the reputation of Korea in the region. On March 2009, the ASEAN-Korea Center was launched in Korea to strengthen ties and conversation. Additionally, people-to-people exchanges are substantive. Approximately 200,000 Southeast Asians work in Korean factories, and more than three million Korean tourists visited Southeast Asia in 2010. Through its socio-cultural exchanges, Korea has become a model for many everyday Southeast Asians.

The Korea-ASEAN relationship has strengthened dramatically over the last two decades. Korea went from a sectoral dialogue partner of ASEAN in 1989 to a full dialogue partner in 1991. In 2004, a comprehensive cooperation partnership was established, which was elevated to a strategic partnership in 2010. Korea is a vital economic partner, reliable security balancer, and a model of soft power in Southeast Asia. Southeast Asia is a case study in how Korea has successfully plugged itself into the existing frameworks of the region, such as ASEAN and the ARF, to play a complimentary security role, while paving a new path of partnership with new tools such as the FTA and cultural diplomacy.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from Edwin Maolana’s photo stream on flickr Creative Commons.

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About The Peninsula

The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.