By Hong Soon-jik
Chief Economist at Hyundai Research Institute
The inter-Korean economic cooperation for the last 18 years has improved remarkably in terms of both quantity and quality. And many politicians and economists say it should be further improved.
That's because they agree that the economic cooperation will contribute to improving inter-Korean relations in every arena, including society, politics and security.
The planned second inter-Korean summit should serve as an opportunity for both Koreas to discuss how to facilitate more economic exchanges. For that, they need to discuss ways to get rid of stumbling blocks while designing an economic roadmap for mid- to long-term cooperation.
In detail, the two sides should discuss ways to mutually prosper through establishing an economic community. In the meantime, the South needs to focus on building infrastructure and systems that can contribute to reunification of the Koreas. And through improved cooperation, the two Koreas should establish the foundation to make a leap to become the hub of Northeast Asia.
Before discussing ways to further improve economic ties, we need to closely examine the true meaning it holds in order to eradicate prejudice and wrong perspectives about inter-Korean economic relations.
Some have criticized that the relationship is more like a one-way one with the South providing things to the North and the North just accepting it.
But it is not true. When the cooperation improves, small to medium-sized South Korean companies will benefit from the cheap labor and land costs of the North, and the North will learn from the South about the private market system. This will, in turn, ease the economic difficulties in the North and ease the economic burden of South Korea when the two eventually reunify.
Also, the inter-Korean economic cooperation can act as a catalyst for South Korea to achieve its goal of becoming the hub of Northeast Asia. We can build railways through North Korea that link to trans-Siberian lines to Europe. This will help South Korea become the center of production and distribution in Northeast Asia.
Specifically, the economic cooperation surrounding the Mt. Geumgang tourism project and the Gaeseong Industrial Complex can be viewed as a good stepping-stone for the South to become a Northeast Asian hub.
Inter-Korean economic cooperation serves as a locomotive for building trust. Of course, inter-Korean economic cooperation is good for the economy, but it further contributes to softening tension on the Korean Peninsula in the arenas of politics, society and culture. As tension eases, “de-facto peaceful unification” could be seen as drawing closer.
So far, more than 1.5 million South Koreans have visited Mt. Geumgang and about 16, 000 North Koreans are currently hired by South Korean firms operating in Gaeseong. In a word, economic cooperation has thawed the once hostile inter-Korean relations, laying the foundation for peaceful reunification and making the DMZ reborn as a "Dream Making Zone."
Inter-Korean economic cooperation not only produces economic benefits but also serves as a locomotive for dismantling the Cold War structure and consolidating peace on the Korean Peninsula. World history shows us that economic cooperation has led to security and military cooperation.
This is also the case with Korea. The expansion of economic cooperation, reconnection of railways and roads, and mutual confidence between North and South Korea has created momentum for military cooperation.
Barbed wire and land mines were removed along the Demilitarized Zone (DMZ) for the Gaeseoung Industrial Park and the Mt. Geumgang tourism projects, turning the DMZ into a "Dream Making Zone.”
Like I emphasized before, inter-Korean economic exchange and cooperation is needed for economic benefits, but also for bringing peace and reunification.
However, many South Korean companies complain that it is hard to participate in economic cooperation activities due to complicated procedures to enter the North and do business there. Also, the differences in terms of economic differences and technology make it hard for the North to diversify export items to the South.
Therefore, the South Korean firms have a limited sphere for inter-Korean trade.
These stumbling blocks should be removed, so the two Koreas can make further economic cooperation and exchange. Such process is very important to raise the possibility of reunification.
In addition, it should be ensured that all the procedures involving inter-Korean economic cooperation or trade are transparent. Also, the South should launch promotional activities to induce public interest and support for increasing inter-Korean exchange.
Besides these, South Korea needs experts on North Korea who can logically convince the North of the needs for reunification. And work should be underway to further develop the successful Gaeseong Industrial Complex and the Mt. Geumgang projects.
The South Korean government is working towards paving the way for a new future. Now is the time for us to shed our closed minds of the Cold War era and make the most of our future aspirations oriented creativity. Peace on the Korean Peninsula is not a matter of choice and must be achieved no matter how difficult it is.
The South Korean government will make its utmost effort to establish peace on the Korean Peninsula by promoting inter-Korean reconciliation and economic cooperation.
In addition, we will try to break away from the Cold War mindset that divides the peninsula into two economies and draw up blueprints for an economy that encompasses the entire Korean Peninsula.
Korea should endeavor to achieve inter-Korean peace and co-prosperity through the rehabilitation of the North Korean economy as well as mutually beneficial economic cooperation between the Koreas. All of this will be possible when the Koreas create an economic community for prosperity.