Posted: February 19th, 2012 | Author: Franziska | Filed under: Economics, Geo-Political Disputes, Politics
Viewing the political circumstances between North and South Korea, no one would have expected that these two states have a rather well functioning economic relationship.
After the Korean War ended in July, 1953 a new border was defined by the United Nations. However that border has never been officially acknowledged by North Korea. Up until today, there are political tensions between these two states, which lead to a very challenging political relationship. In 2010, North Korea attacked the South Korean island of Yeonpyeong, which is located in the Yellow Sea, very close to the established border. Today this attack is perceived as one of the heaviest military clashes after the Korean War and caused the stop of the political relation between these two states.
However North and South Korea do have one last common project, which provides both states with a small platform of cultural and economic interaction – the industrial complex in the city of Kaesong, North Korea.
More than 120 South Korean companies manufacture different goods in the industrial complex. The city of Keasong is located in the special economic zone, which has been established by North Korea to protect its people from the threatening capitalism from the South.
Nevertheless, every day deliveries are sent from South Korea to Keasong in order to supply the companies located in the Keasong Industrial Complex with the required resources for their production. Within 2011 the trade value between the two states increased to $1.7 billion. Additionally it has to be considered that more than 50,000 North Korean workers are employed by South Korean companies.
The positive effects for both parties may not be denied. North Korea provides inexpensive labor while South Korea does not pay the workers directly. The wages are paid to the North Korean government and no one knows exactly what the Korean workers earn by the end of the day. The winners are the North Korean regime which ensures to gain foreign currency to keep the country running as well as the South Korean companies which are able to reduce their production costs. One North Korean worker, who is employed by the South Korean companies operating in Kaesong, earns approximately $65.00 per month, whereas a worker in China would earn circa $300.00 per month.
Nevertheless it should be kept mind that Keasong offers a limited opportunity, for the people as well as for the governments to interact. The social interaction between the North Korean workers and South Korean Managers as well as Supervisors it might create a better comprehension and lead to a cultural exchange based on human equality.
Then again there are strong limitations to these interactions, on both sides. North Koreans are only allowed to enter the complex if they work there. Furthermore, should any South Korean be suspected to have made an undesirable political statement or any other action that is not according to the regulations, they will be expelled from North Korea. South Korea on the other side aims to implement a penalty point system to ensure correct behavior of their approximately 700 employees.
Considering the advantages both parties profit from and the limitations introduced by each country, it remains questionable whom to favor, as both countries do not seem interested in a social exchange between their people nor in spreading political equality.