1.7
Restructuring the Korean Peninsula for the Twenty-First Century
21세기를 향한 한반도 구조 개편(RR98-42)
Edited by Won Bae Kim with Assistance of Young-Sub Kwon and Young-ah Lee
1998. 12․223 pages․English
Background and Purpose
Recently, Northeast Asia has begun to attract attention as an extremely important subregion. There are natural links and complementarities between China, Mongolia, the Russian Far East, the Korean peninsula, and Japan. In terms of geo-economic position, the Korean peninsula has the potential to become the vital land bridge from East Asia to Europe. This potential, however, cannot be realized without a cooperative environment in Northeast Asia. The most critical element is North-South Korean relations. If two Koreas cooperate each other, they can not only help augment their own economies but also contribute to economic cooperation among Northeast Asian countries. While searching for a suitable role of the Korean peninsula in Northeast Asia, essays in this volume address issues concerning with Korea's unification, regional economic integration of Northeast Asia, territorial integration for the Korean peninsula, institutional reforms necessary for both Koreas, and reorganization of Korea's physical structure.
Methodology and Major Areas of Analysis
Robert Scalapino discusses the role of a unified Korea in a political context of Northeast Asia. He points out that the critical questions to be answered first are when and how Korean unification will occur. Considering the enormous costs and political and social consequences of unification through North Korea's collapse or another conflict in the Korean peninsula, Scalapino discounts the likelihood of these scenarios. Instead, Scalapino regards an evolutionary, peaceful
unification. Scalapino lists three options for the unified Korea: isolation, alignment, and balance. Given the geo-political position of Korea, isolation is not a viable option. Whether alignment, balance, or some combination of them, the unified Korea can play a role as a facilitator of regional cooperation. With its augmented economic strength by unification, Korea can promote regional cooperation through actively leading the process of developing natural economic territories.
Lee-Jay Cho focuses on the topic of regional economic cooperation. Regional diversity in demographic features, industrial structures, techno- logical levels provides a force and a rationale for regional economic integration in Northeast Asia. Given the low confidence level between the countries in Northeast Asia, Lee-Jay Cho recommends to begin with functional cooperation in sectors such as finance, transportation, tele- communication and energy. Cho identifies 4 major projects for immediate attention. They are: 1) the establishment of the "Northeast Asian Development Bank" as part of financial infrastructure building; 2) building a regional transportation and logistics system for Northeast Asia; 3) the construction of natural gas pipeline grid; and 4) promotion of special economic zones and infrastructure building in the Tumen River area.
Won Bae Kim suggests the possibility of the Korean peninsula to play a role of mediator in Northeast Asia. Kim suggests a strong possibility for the Korean peninsula to become a center of global business and logistics for Northeast Asia.
Turning the Korean peninsula to become a business and logistics hub for Northeast Asia requires, first of all, North-South cooperation in trade, production, and transportation. Given the animosity between the two Koreas, a gradual approach is suggested by Won Bae Kim: 1) to form linkages between selected open areas or special economic zones in a few sectors; 2) to expand economic cooperation into diverse sectors and geographical areas; and 3) to formally integrate the two economies and build a unified transport and other infrastructure system. The design of territorial structure should pay attention to quality of life issues including economy and ecology. The current urban structure of South Korea, which is dominated by a few large cities, should be modified towards a structure of network cities wherein several medium-sized cities to collaborate and enjoy inter-urban agglomeration economies rather than
relying on the single-city agglomeration economies.
Recognizing the inseparability of North-South Korea cooperation from broader regional cooperation in Northeast Asia, Yong-Suk Oh suggests a gradual approach for North-South Korean cooperation. He proposes a model of inter-nodal linkages and development spread by which North-South cooperation can proceed. Combining North Korea's free trade zones with South Korea's industrial zones is recommended to be a first step. And then North-South Korean cooperation can expand to joint development efforts targeting the areas of DMZ, tourist places, and industrial estates. Eventually, a full-scale cooperation is aimed to bring the two Korean economies together.
In the similar vein, Mark Valencia discusses ways to utilize strategic areas in preparation for the unification of the two Koreas. Valencia lists the following areas and resources for North-South cooperation: 1) the environment of DMZ and the fisheries in its offshore extension; 2) fisheries and petroleum resources in and around Tok Do; 3) exploitation of possible petroleum resources in Korean bay and off North Korea's East Coast; 4) offshore monitoring of dumped nuclear waste in the East Sea; 5) cooperation in investment and production in the Rajin-Sonbong Special economic Zone; and 6) the promotion and preparation of the unified Korean peninsula as a transportation hub for Northeast Asia.
Valencia agrees with Kim on the importance of the Trans-Korean railway in establishing an integrated transport system in Northeast Asia.
Chung Lee regards the transformation of the North Korean economy is one of the most important task for the unified Korea to become a global business magnet for Northeast Asia. Specifically for transforming the North Korean economy into a market economy, he suggests a two-prong approach. Firstly, for the privatization of state-owned enterprises, a top-down approach is suggested.
Chung Lee recommends specifically compensation rather than restitution, the give-away method rather than a sales approach in view of experiences from East Germany. Secondly, for the privatization of non-state enterprise, a bottom-up approach is proposed based on China's experience of reform. Chung Lee suggests broad institutional reforms and in particular the reform of informal institutions. That means the Korean business community will have to become reliable, behave in accordance with international business ethical standards, and
become open-minded about foreigners and other cultures, which inevitably touches upon changes in informal institutions such as cultural beliefs.
From a more physically oriented perspective, Ki-Suk Lee discusses the need to build a world-class urban network and free trade zones in order for Korea to become a global business magnet for Northeast Asia. Ki-Suk Lee, however, cautions that free trade zones in this wider context should differ from traditional ones, which were more or less specialized in production or distribution only. A new version of free trade zone should contain multiple functions such as international trade, finance, and services in addition to manufacturing function.
Free trade zones have also to be flexibly placed and replaced as the need arises.
The final essay by Kyu Bang Lee and Dong Ju Kim focuses on the role of the Korean peninsula as a logistics hub for Northeast Asia. They outline a two-stage approach to materialize the idea. In the first stage, before unification, maritime and air transport take priority over land transport because of the division of two Koreas.
Conclusion and Policy Implications
All the authors in this volume are in agreement on the role of a unified Korea as a facilitator of regional cooperation and the possibility of a business and logistics center for Northeast Asia. Another important conclusion we can draw from this study is that Korea has to make strategic efforts in various fronts including the security of the Korean peninsula in order to realize the above potential role. Geo-economic strategic planning is one area through which economic integration between the North and the South Korea as well as between the Korean peninsula and Northeast Asia can be facilitated. Although the need for regional economic cooperation is clearly recognized among the countries of Northeast Asia, the prospect for regional cooperation in the security area is not clear. Considering the inter-relatedness of economics and security, time has come to discuss about the establishment of a multilateral organization. Through such organization, uncertainties surrounding the Korean peninsula and potential conflicts between states can be mitigated.
