To Enter a New Stage of Economic Cooperation
The Korea Institute for International Economic Policy (KIEP) has advised South Korea and North Korea to enter a new stage of economic cooperation by concluding a comprehensive economic partnership agreement.
The KIEP said in its recent report that the North Korean economy has remained stagnant since sanctions imposed in 2016. “Although the North Korean economy has shown some improvement under the current leader, it has been a high-cost structure since the sanctions, that is, the economy has focused on withstanding the sanctions rather than improving its production efficiency,” it said, adding, “If the sanctions are extended, the entire economy will turn into an economy based on expropriation and its power to grow will be lost despite the leader’s consistent reform policy.”
It also mentioned that no growth is possible under the sanctions, as seen in the cases of Vietnam and Myanmar, and it is imperative for the North to convert its political and economic structures and pursue better relations with the countries including the United States in order to have the sanctions lifted.
According to the report, inter-Korean economic cooperation in the future should focus on accelerating the opening and reform of the North. “Although North Korea is trying to improve its investment environment and attract more investment from abroad to offset its insufficient internal investment resources, the efforts will bear fruit only after the sanctions are lifted,” the KIEP explained, continuing, “Still, it is in no position to accept a drastic reform program.”
The institute mentioned a comprehensive economic partnership agreement as a solution. “Once resumed, future cooperation needs to be protected both institutionally and statutorily, and the agreement can serve the purpose,” it remarked, adding that the agreement will guarantee stable economic cooperation activities for South Korea while allowing the North to experience statutory and institutional guarantees the international community needs.