Joong Ang Daily
Jo Dong-ho
8/1/2007
The environment for economic relations between South and North Korea has changed.
In 1998, when the Sunshine Policy was started, South Korea’s national per capita income was $7,355, while North Korea’s stood at $573. At the time, South Korea’s export volume was $132.3 billion, and North Korea’s was $600 million. In a nutshell, South Korea’s national per capita income was 13 times higher and its export volume was 220 times bigger than North Korea’s.
Since then, South Korea’s national per capita income has rapidly increased, to $18,372 as of 2006. Meanwhile, according to an estimate by the Bank of Korea, North Korea’s national per capita income hovers at around $900.
South Korea’s exports are worth $325.6 billion, nearly triple 1998 numbers, but North Korea’s export volume is merely $900 million.
Accordingly, the gap between the two Koreas’ economies has widened. Now, South Korea’s national per capita income is 20 times higher than North Korea’s. South Korea’s export volume is 325 times larger than North Korea’s.
In particular, South Korea’s economy has developed and matured a great deal in terms of quality because it opened its doors more widely after the financial crisis 10 years ago.
But North Korea still cries out for an independent, self-sufficient economy, leading to a wider discrepancy in the economies of the South and North.
In the meantime, economic cooperation between South and North Korea has developed a great deal. In 1998, trade volume between South and North Korea was worth around $200 million. In 2006, it was more than $1.3 billion. Today, large-scale projects by both the private and the public sectors are in progress, something that was unthinkable back in 1998.
Examples of these are a building project at the Kaesong Industrial Complex and the government’s project for social overhead capital, such as railways and highways between the two Koreas. A variety of agreements have already been prepared, such as one protecting investments.
As a result, South Korea is North Korea’s largest export market, its second-largest trade partner and largest investor. South Korea also provides support and more assistance to North Korea than other countries.
The number of visitors to North Korea has increased as well. In 1988, 3,317 people went to North Korea, but last year more than 100,000 people visited there.
The reason why I included these lengthy statistics is to underscore the change in South and North Korea’s economies as wellas their economic relations.
In the past, South Koreans wanted to buy products made in North Korea out of curiosity, but now an item from North Korea is simply commonplace.
A small project involving North Korea made headlines in the past, but now many go unnoticed.
However, the Sunshine Policy, which has been in place since the Kim Dae-jung administration, has not changed at all.
The Sunshine Policy was aimed at inducing North Korea to change and expanding contact and exchange with North Korea was a means to achieve that goal.
That is why we did our utmost to cooperate economically with North Korea and to increase assistance to the country. As seen in statistics, these efforts have produced significant achievements on the outside.
But in the process, we became preoccupied with the means and forgot about the original goal of the policy. We continued economic cooperation with North Korea even though it carried out a nuclear test. We wanted a summit meeting with North Korea even though it meant we had to put a tremendous amount of money under the table. The Donghae line is not of much use because the railway does not run northbound from Gangneung. We connected it because North Korea wanted us to.
Maintaining contacts and exchange with North Korea has become the ultimate goal of the policy. Because of the Sunshine Policy, in which the means have become the goal, North Korea receives assistance even though it sticks to its old-fashioned ideology.
Thus, now we need to straighten out the means and the goal. The environment for economic relations between South and North Korea has changed. We can’t define the Sunshine Policy as either a failure or a success.
We have long since passed the stage where we have to pour all our efforts into the means, but we have not changed our direction to focus our energy and attention on a new goal. It is meaningless that presidential hopefuls discuss whether they will embrace or abolish the Sunshine Policy in its entirety.
In the past, starting economic relations with North Korea was the top priority even though it meant “shoveling aid across the border.” The time has come to steer the policy in the right direction.
