January 1, 2006｜Korean Peninsula
Ri Sin Hyo
Researcher, Korean Association of Social Scientists (KASS)
1. The International Environment is Changing Once More
Developing friendly relations between the DPRK and other countries and regions of the world based on the principles of complete equality and autonomy, mutual respect and non-interference in internal affairs, and mutual benefit is the consistent policy of the DPRK government. The epoch-making steps relating to the establishment of special economic zones taken by the government in recent years could be described as an important part of this.
The establishment of special economic zones in the DPRK evolved out of the compelling need actively to develop external economic relations appropriate to the changing international environment and equitably to develop the ethnic economy of the North and the South.
The collapse of socialist markets in the early 1990s had a terrible impact on the DPRK’s economy, as those markets accounted for 70-80% of our country’s external economic relations at that time.
Under these circumstances, the government of the DPRK needed to achieve a transformation in the focus, form and methods of external economic exchange and formulated a policy on the establishment of special economic zones, along with a series of other important measures. This was because special economic zones broaden the scope of external economic exchange, rather than focusing solely on trade exchange, joint ventures and collaboration, and has the potential to play a leading role in opening up external markets.
Moreover, behind the establishment of such DPRK special economic zones as the Kaesong Industrial Zone is the desire to develop the ethnic economy through North-South economic cooperation and exchange. Right now, when the bright prospect of the unification of our homeland has begun to open up through the adoption of the historic June 15th North-South Declaration, what is needed is for the Korean people to join forces and conduct broad-ranging economic cooperation and exchange aimed at unification and the development of the ethnic economy, in keeping with the orientation towards compatriots hoping for solidarity, cooperation and unification. The most rational format for strengthening North-South economic cooperation would be to create an industrial development zone and use it as a base for expanding and reinforcing exchange.
This is because, with the territory having been divided up by external interests, if special economic zones were established with differing systems, philosophies and methods of management, and products, technologies, labor and money flowed between the North and South in the process of their operation, the factors of production of the North and South would be mobilized and used rationally. This would increase economic efficiency and, eventually, result in the development of a good environment and the accumulation of experience for North-South economic cooperation, as well as promoting the development of a well-balanced ethnic economy.
In keeping with an environment in which the standing and role of Northeast Asia in the development of the global economy is increasing, the establishment of special economic zones in the DPRK also has the goal of strengthening regional economic cooperation. One of the crucial features of global economic development over the last 20 years has been the extremely rapid tempo at which East Asia has been developing.
The fact that the focus of the global economy is moving towards East Asia means that the countries of this region, more than any other, need to strengthen economic cooperation and exchange. Moreover, I believe that reinforcing regional cooperation between the countries of Northeast Asia, which play a particularly vital role within East Asia, is especially important.
Geographically speaking, the DPRK’s special economic zones are positioned at the center of Northeast Asian economic exchange, so if these zones were used as hubs, all countries would be able to make huge savings on transport costs, China and Mongolia would be able to secure a strategic outlet onto the East Sea, and favorable conditions would be put in place for the development of Far Eastern Russia.
Given such facts, the DPRK government has taken the groundbreaking step of establishing various forms of special economic zone.
The DPRK’s special economic zones each have their own unique characteristics, so in my next paper I would like to discuss the progress of and future prospects for their development in each region.