Academic journal article North Korean Review

Between Politics and Economics in Seoul's North Korea Policy

Academic journal article North Korean Review

Between Politics and Economics in Seoul's North Korea Policy

Article excerpt

Introduction

The 70th anniversary of the division of the Korean peninsula is an appropriate juncture at which to raise the question of why economic cooperation between the two Koreas has been so limited. Given South Korea's economic rise and the ongoing search by its corporations for natural resources, low-cost labor, and new markets, alongside the North's efforts to attract foreign investment, this lack of inter-Korean economic exchange is surprising. Indeed, the Korean case displays a marked contrast with the ongoing cross-straits integration that has taken place between Taiwan and mainland China over the past three decades. The more limited nature of inter- Korean economic relations is of course inseparable from the intense geopolitical tensions between the two countries. These tensions are commonly understood to derive from the North's provocations, including Pyongyang's refusal to abandon its nuclear weapons program and hostile actions such as the alleged sinking of the Cheonan corvette in March 2010. No doubt, the North's actions do play an important role in creating and reproducing tensions on the Korean peninsula. However, South Korean policy toward the North should not be seen simply as passively responding, as it has undergone some significant changes over the years, from the strict anticommunism of the 1950s and 1960s, to the sporadic breakthroughs of the 1970s through the mid-1990s, to the decade of engagement under the Kim Dae-Jung and Roh Moo-Hyun governments, and to the resurgence of a hard line containment strategy since 2007. These advances and reversals suggest that North Korea's actions alone cannot explain the dynamics of inter-Korean economic cooperation.

The aim of this article is therefore to contribute to an alternative explanation that explores how political dynamics within South Korea have impacted inter- Korean economic cooperation. The South's economy has over the past three decades become increasingly internationalized, with chaebol conglomerates and small and medium enterprises (SMEs) alike being increasingly driven to expand production overseas in response to declining profitability within the domestic economy. Since the late 1980s, South Korean corporations have been negatively impacted by rising domestic labor costs, the emergence of new lower-cost producers in Asia and elsewhere, increasing protectionism in core country markets, and heightened pressure from the U.S. and international financial institutions for the liberalization of South Korea's neo-mercantile developmental model. In this sense, the spatial expansion strategies of South Korean capital amount to a compelling instance of what David Harvey has termed the "spatial fix," whereby limits placed on the process of capital accumulation can lead to the geographical relocation of production, thereby contributing to dynamics whereby capital is constantly being geographically reconstituted, thereby leading to the expansion of capitalism on a global scale.1 As the analysis will show, however, in seeking to understand why it is that North Korean has failed to fulfill the role of spatial fix for South Korean capital in recent years, such approaches need to take into account the political dimensions of such spatial dynamics.

Through drawing upon Antonio Gramsci's concept of passive revolution, it is argued herein that an analysis of the politics of the spatial fix can shed light on how inter-Korean economic relations have been shaped by the legacies of South Korea's post-war state formation and the manner in which these legacies have impacted the country's political culture. I reflect upon how successive administrations have diverged in terms of the nexus between inter-Korean policy and goals of national development. The progressive-l iberal camp, for example, adheres to the position that inter-Korean economic cooperation will be mutually beneficial and conducive toward peace on the peninsula. Conservatives, on the other hand, despite traditionally being more closely aligned to business interests, cite North Korean provocations as a threat that outweighs the opportunities that the North offers in terms of providing a "fix" to the ongoing profitability problems faced by South Korean capital. …

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