Kaesong Industrial Complex: Is It Changing the DPRK?   by Sarah Yun

The Kaesong Industrial Complex (KIC) is the archetype of inter-Korean economic cooperation. Since its inception in 2004, however, the existence of the KIC has been under constant scrutiny and attack from both Koreas. North Korea has recognized the KIC as an economic incentive and decided to use it as a trading and negotiating factor. South Korea has embraced the KIC as a potential instrument for profit by leveraging the North’s cheap labor, proximity, and low training cost. Furthermore, the KIC is a means of bolstering legitimacy for both sides, providing direct foreign currency to the Kim Jong-il regime and political support for Lee Myung-bak. Incentives and wealth created by the complex are too significant for either country to ignore. Due to economic stakes created, interaction on various levels has increased between the two Koreas, labor and human rights standards have shown signs of improvement and North Koreans’ perception of South Koreans has improved. Steps should be taken to continue to leverage the incentives in order to better engage with the DPRK.

Kaesong Industrial Complex: Is It Changing the DPRK? is an excerpt from Part IV of the 2009 SAIS U.S.-Korea Yearbook.

Sarah Yun is a first-year M.A. candidate at SAIS concentrating in Korea studies, China studies, and international economics. She holds a B.A. in political science and business institutions from Northwestern University. Prior to SAIS, Sarah served as an AmeriCorps volunteer with a program that trains young leaders in the areas of civic participation, community development, and nonprofit work. Sarah also worked at the Women’s Business Development Center as the director of Asian American Women’s Program and Special Projects. Sarah has traveled and lived in many different parts of the world, especially in Asia. Her primary academic interests include North Korean relations with South Korea, the United States, and China and North Korean development, human rights, and democracy.