Professor Stephan Haggard's Paper Covered by Korean News Agency.
Aug 20, 2007
, Yonhap News Agency
In the paper, Marcus Noland and Stephan Haggard of the Washington-based Peterson Institute for International Economics contrasted economic interaction between the Koreas with that between North Korea and China.
Both have risen considerably, more dramatically with South Korea and more steadily with China, during the period of 1990 to 2005, according to the paper.
Seoul may be concerned about China's slight but consistent lead in trade with North Korea and the possibility of Beijing's "economic colonization" of the northern part of the Korean Peninsula, Noland and Haggard pointed out.
"The picture changes, however, if transactions on commercial terms, and those embodying a concessional or grant element are disaggregated," they wrote.
South Korea's economic ties with the North are characterized by heavy state involvement and substantial non-commercial components, such as outright transfers, while China's trade and investment with Pyongyang occur more on market-conforming terms, they argued.
Seoul's transfers to the North include food and fertilizer aid, as well as large-scale projects by non-governmental organizations seeking "cultural tourism" and "knowledge partnership," their paper said.
The high-profile Kaesong industrial complex and Mount Kumgang tourism business constitute a "grey area" between commercial and non-commercial transactions, they said.
The paper's estimate of South Korean and Chinese official support to the North showed a visible difference in recent years, with the former hovering over US$600 million in 2005 compared to around $200 million for Beijing.
"The ironic message is that North Korea's deepening economic integration with China is largely market-based, while exchange with South Korea has a growing official component," their paper said.
"Whatever is perceived political utility in the short-run, this particular profile raises serious questions about the transformative effects of South Korea's engagement with the North."
Both have risen considerably, more dramatically with South Korea and more steadily with China, during the period of 1990 to 2005, according to the paper.
Seoul may be concerned about China's slight but consistent lead in trade with North Korea and the possibility of Beijing's "economic colonization" of the northern part of the Korean Peninsula, Noland and Haggard pointed out.
"The picture changes, however, if transactions on commercial terms, and those embodying a concessional or grant element are disaggregated," they wrote.
South Korea's economic ties with the North are characterized by heavy state involvement and substantial non-commercial components, such as outright transfers, while China's trade and investment with Pyongyang occur more on market-conforming terms, they argued.
Seoul's transfers to the North include food and fertilizer aid, as well as large-scale projects by non-governmental organizations seeking "cultural tourism" and "knowledge partnership," their paper said.
The high-profile Kaesong industrial complex and Mount Kumgang tourism business constitute a "grey area" between commercial and non-commercial transactions, they said.
The paper's estimate of South Korean and Chinese official support to the North showed a visible difference in recent years, with the former hovering over US$600 million in 2005 compared to around $200 million for Beijing.
"The ironic message is that North Korea's deepening economic integration with China is largely market-based, while exchange with South Korea has a growing official component," their paper said.
"Whatever is perceived political utility in the short-run, this particular profile raises serious questions about the transformative effects of South Korea's engagement with the North."
