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Strategies for Industrial Cooperation between South and North Korea to Realize the New Korean Peninsular Economic Initiative

Author Lee Seog-ki et al. Date 2019.12.11 Page

The New Korean Peninsula Economic Initiative (NKPEI), which seeks to foster prosperity in both Koreas through full-fledged, multifaceted. economic cooperation can be said to present a new vision for inter-Korean economic cooperation to both North and South Korea. However, the New Korean Peninsula Economic Initiative neither makes its methodology clear nor does it present a concrete, step-by-step approach for its goals. Moreover, the three major economic belts proposed in the plan, a combination of a specific regions and a specific industries, are likely to limit various approaches to economic cooperation between the two Koreas, and do not effectively reflect the North’s demand to become a partner in the realization of the initiative.

With these issues in mind, this study proposes strategic tasks that bridge the gap between The New Korean Peninsula Economic Initiative’s broader vision and detailed action plans. The first among these proposed tasks is a strategy for promoting new inter-Korean economic cooperation, with a focus on economic benefits and a consideration of North Korea as a principal agent in economic cooperation. And as a basic direction for industrial cooperation between North and South Korea, we proposed a comprehensive plan for inter-Korean industrial cooperation that encompasses various industries, such as simultaneously promoting cooperation in both labor-intensive and technology-intensive industries. Subsequently, we proposed a step-by-step implementation plan for the New Korean Peninsula Economic Initiative and major industrial cooperation strategies for realizing the New Korean Peninsula Economic Initiative based on the step-by-step implementation plan.

First, to establish the foundation for industrial cooperation between North and South Korea, we suggested enhancing production capacity of North Korean SMEs, expanding the utilization base of North Korean industrial manpower, cooperating in the manufacturing industry to improve agricultural productivity and infrastructure in North Korea, and forming the initial inter-Korean industrial cooperation bases. Second, we suggested strategies to expand the foundation for inter-Korean cooperation in technology-intensive sectors, focusing on expanding the foundation for technological cooperation between the SMEs of the two Koreas and establishing a joint special economic zone on the inter-Korean border. Lastly, we presented directions and promotional strategies for establishing bases for inter-Korean economic cooperation. Here, rather than constructing large-scale special economic zones in the early days of North-South Economic Cooperation, we suggested that the promotion of individual cooperation projects in Pyongyang (and other regions) and the construction of small and medium-sized economic development zones should be given priority. We propose that the Pyongyang and Nampo areas on the West Coast should be developed as the top priority, but also to actively explore the development of the Chongjin and Hamheung regions on the East Coast.