North and South Korea: Is Cooperation Economical?

This past weekend, CNN reported that North Korea has been making attempts to bring peace amongst South Korea.  North Korea is asking the South Korean’s to “open their hearts”, and try to ease the tension that has been going on for decades.

But what I was curious about was to look at this from a different viewpoint than merely political standards.  These talks could be stepping stones to opening up North Korea to the global economy as a whole.  North Korea, a communist nation, has been hit with low economic growth dating back to the 1970’s due to limited trade with the outside world.  South Korea, however, has become one of the fastest growing developed countries in the world, ranking 15^th in GDP.  South Korea also managed to avoid the global financial crisis in 2008-present.

From a geographic standpoint, it would seem logical for South Korea to improve its ties with North Korea.  Even now there is the Kaesong Industrial Region, which has brought numerous jobs to North Koreans due to cooperation with South Korea.  If North Korea were to have more joint expenditures with South Korea, perhaps the success reached upon South Korea over the past decades could rub off on the neighboring country. 

On the other hand, North Korea continues to stand as a threat for not only South Korea (recently in 2010, two South Korean marines were killed by North Korean troops), but for many countries around the world.  Trading with a country that does not stand by the rest of the WTO or other trade organizations could cause backlash towards South Korea.

I personally believe that South Korea should consider trading more with North Korea.  As long as it has the approval from their current trade organizations, developing increased trade with geographically close countries seems to be a smart move.  Not only that, but as it can be seen in international trade, South Korea may hold an absolute advantage on whatever they produce for North Korea, but there will be some products or services that North Korea can offer towards South Korea (comparative advantage).  Though I doubt any improved economic decisions will be made anytime soon, it would be interesting to keep an eye on the political talks that are planned to occur more this year.

On what degree do you believe North and South Korea should get along?  Is it beneficial for both parties to cooperate economically?

References: CNN World. http://articles.cnn.com/2011-01-07/world/north.korea.proposal_1_pyongyang-and-seoul-mount-kumgang-dprk?_s=PM:WORLD

(Post by Evan Amano)