Sample Translations
Gyeongtae Min Seoul Pyongyang Mega City E ng l i s h
Book Information
Seoul Pyongyang Mega City (서울 평양 메가시티) Miraebook Publishing corp. / 2014 / 27 p. / ISBN 9788959892914 For further information, please visit: http://library.klti.or.kr/node/772
This sample translation was produced with support from LTI Korea. Please contact the LTI Korea Library for further information. library@klti.or.kr
Seoul Pyongyang Mega City Written by Min Gyeongtae
PG 5-13 Prologue The Future of Korea depends on us today.
“In 2030, Seoul and Pyongyang function as if they were one city. The region has grown to become a mega-metropolitan area and a great economic zone connected by a high-speed network based on state-of-the-art transportation and communications technology. The region not only hosts government organizations of the North-South Korean Federal government, but also the offices of various international organizations such as the Asian Union (AU), Asia Infrastructure Bank (AIB), Eurasia Train, etc., which sprawl across major metropolitan centers such as Seoul, Pyongyang, Incheon, Nampo, Haeju and Gaeseong. North and South Korea, the United States, China, Russia and Japan have agreed to transform the Korean Peninsula into a global free economic trade zone under conditions that would allow NorthSouth Korean economic integration and joint investment in the region. The region that used to symbolize military tension and political division has been transformed into a center of free economic activity and investment, open to all countries around world. Now, the SeoulPyongyang megalopolis has become the central hub of Northeast Asian trade, logistics, tourism, conventions and business".
Can this actually happen in Korea? Can the Korean economy overcome its current problems and continue to grow? Where should the next generation of Koreans find hope? The answer
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to the question depends on how we can overcome the obstacles that face us today. This book pursues out-of-the-box thinking to formulate how we can take advantage of the economic potential of North Korea, and tries to find some clues there. The book starts with an assumption that the future of the Korean economy actually depends on how we solve the current North Korea problems. 2 |Even if an emergency situation were to come tomorrow, we still need to pursue economic cooperation today As the paradigm for the world economy changes, Northeast Asia, in the middle of which the Korean Peninsula is located, is entering a period of critical transition. All nations are engaged in fierce competition today, and there is a sense of dire urgency in Korea that the engine of economic growth is losing steam after the heyday of high economic growth, the success of a few elite corporations notwithstanding. Moreover, with economic the rise of China and the world economy being restructured under G2 hegemony, Korea is sometimes under pressure from China and the United States to choose between the two and take sides. In such a critical time, without a sound national growth strategy, national security cannot be guaranteed. The Korean Peninsula is a place where the interests of surrounding foreign powers contrast sharply with each other. Therefore, economic and political changes in this region have influenced the interests of many nations throughout history.
The current changes in Northeast Asia can affect the entire Eurasian continent as well as the world economic order. As the economic influence of China on the Korean Peninsula increases, China is exercising enormous power on North Korean issues. Japan is currently trying to improve its diplomatic relations with North Korea, which could even extend as far as active economic support. Russia, having reassessed its national interest in the Far East region, is
investing in North Korea based on strategic economic collaboration. As many nations are trying to exert their influences on North Korea located in the middle of the Northeast Asian region, it is not an exaggeration to say that our survival depends on our relationship with neighboring countries.
If we are not proactive in our preparation for the unification of the Korean Peninsula in our lifetimes, it is possible that another chance may not come around. If the division of the Korean Peninsula continues when the engine for economic growth is losing steam in Korea, both North and South Korea will fall prey to other powers in Northeast Asia and the potential power of a unified Korea will be buried forever. Therefore, it is crucial to realize that North Korean issues are directly related to our security, economic interest and our very future survival itself. If we fail to make a sound strategic judgment and take advantage of the opportunity we have, not only we will be unable to utilize the potential of a unified Korea, but we will lose the opportunity as we watch China, Russia and Japan making aggressive investments in North Korea in pursuit of their interests.
What would happen if the current North-South division continues as it is? The influence of China on the Korean Peninsula is increasing every day. The economic dependence of South Korea on China is already enormous. It is much more so for North Korea, whose economy is almost entirely dependent on China--so much so that it makes one worry that the country might become a satellite state of China. Moreover, should the North Korean regime collapse suddenly, there is a high likelihood that it could lead to the expanded presence of China in North Korea, rather than a South Korea-led unification. If North Korea becomes a satellite state of China or if there emerges a puppet government backed by China, it would become harder for South Korea to survive among the powerful nations of Northeast Asia. Moreover,
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if North Korea can no longer function as a buffer state and Chinese influence expands, the situation looks not ideal from the perspective of the United States.
The most effective way to prevent this is to promote economic cooperation between North and South Korea. There is a tendency for us to think that the unification of Korea will occur naturally with the collapse of the North Korean government. However, for such a scenario to occur (North Korea being absorbed into South Korea), many obstacles must be overcome. First, the collapse must occur in a way that does not threaten the security of South Korea. Second, neighboring powers around the Korean Peninsula must agree to it. However, if North-South Korean economic cooperation is disrupted and confrontation ensues between the two countries, North Korea will likely seek a closer alliance with China in order to survive, which will intensify its dependence on China. If the North Korean government collapses under such a situation, the chances of South Korea-led unification will be severely compromised. That is, the collapse of North Korea without South Korea being prepared and ready for it, will lead to a permanent division.
The best way to approach unification from an economic perspective is to gradually narrow the gap between the two via economic collaboration. Even if North Korea collapses as a result of political instability, the fruit of mutual economic collaboration would remain and, in the long term, will have reduced the cost of unification. Moreover, from a political perspective, too, exchange and collaboration between North and South Korea must be achieved for us to affirm our leadership role in the unification process before the international community. This is the reason why mutual economic cooperation must be sustained despite the various conflicts and issues that actually arise from the process. Instead of just hoping for the collapse of the North Korean government, it is crucial to aggressively seek ways to
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expand our influence over North Korea. That is, even if the North Korean government were to collapse tomorrow, it is important for us to pursue economic cooperation with North Korea today with a priority.
|All investment in North Korea will benefit us The vision of Seoul-Pyongyang Mega Capital City is to create an open profit-sharing system that replaces the traditional system of international relations in which nations compete among themselves to pursue economic cooperation while maintaining peace in Northeast Asia. That is, the goal is to create at the center of the Korean Peninsula the most effective place to apply a new division of labor structure between North and South Korea and pursue mutually complementary economic collaboration. However, this should not take the form of unilateral economic aid from South Korea to the North. A sustainable model of mutually beneficial economic cooperation between North and South Korea must be created in the early phase of investment project in order to bring about a virtuous cycle of investment. South Korean investment in North Korea differs fundamentally from all other investments made there. Knowing that North and South Korea will be eventually united in the future, investment to develop North Korea is tantamount to investing in us. Accordingly, the development of infrastructure in North Korea should be viewed as investment in a unified Korea and investment in our future.
An economic union of the two Koreas is always a profitable business from the perspective of M&A. Therefore, if possible, we must delay political unification while making efforts to establish economic cooperation. This could be considered as a “creative economy� for Korea in its truest sense in that it utilizes the convergence of economic energy of North and South. To this day, there is a pervasive perception that unification will be an economic burden to
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South Korea. According to this perception the enormous financial burden that West Germany had to assume during its unification process with East Germany would be too much for South Korea. However, we must realize that the benefits of unification would exceed the costs. What we are currently paying for the division of the Korean Peninsula is an overhead cost, while the investment we are making in North Korea to develop infrastructure is an investment for the future. However, we must think outside the box in order to raise the money to finance the cost of developing that infrastructure.
It was reported that the top 10 Korean corporations are holding 104 trillion won in cash. One of the reasons why they are holding such an enormous amount of cash is because they are unable to find suitable places to invest. North Korea could be a great destination for those investment funds. In fact, Korean corporations must be given a right of first refusal before foreign investors come in and snap up economic assets. Furthermore, if we want the economic success we have achieved so far to develop into sustainable growth in the future, investing in North Korea could be a breakthrough opportunity for the South.
What we must keep in mind is that, if we try to monopolize the economic benefits of Korean unification, we will not be able to obtain cooperation and support from neighboring nations. In order to achieve successful unification, we must switch to a system that fosters mutual growth and profit sharing with our neighbors. It is necessary to develop an open economic zone in which the enormous costs associated with developing North Korea as well as the profits generated from that process are shared among our neighbors in the Northeast Asian region. We need wisdom to transform the current military and political tension and confrontational situations into energy for economic growth. In order to achieve this goal, we must play the role of aggressively and proactively coordinating the existing conflicts of
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interest among neighboring foreign powers and suggest a new vision and sell that vision to them.
Now is the time for us to show proactive leadership in designing the future of Korea and Northeast Asia. Why not develop the most effective system in which Korea shares the benefits of its unification through the peaceful economic cooperation? North and South Korea must work together to create a new heart for the future Korea. Furthermore, let us envision making Korea into the center of economic integration in Northeast Asia. It is entirely up to us whether we will design and suggest the destiny of the Korean Peninsula or go down the road of decline from the peak of success today.
August, 2014
Min Gyeong-Tae
PG21 – PG 35
The Answer for Creative Economy is in North Korea
|Economy first, politics later. Until now, the development of North-South Korean relations has been affected in complex ways by political, ideological, military and social factors. On the other hand, the economic factor has played only a supporting role. That is, the prevailing opinion was that various
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environmental requirements must be satisfied and the political problem should be resolved first before North and South Korea can achieve economic cooperation and generate profits. Accordingly, political changes had to be considered first in designing the method for North and South Korean integration. The focus was on transforming North Korea into a “normal” nation first and establishing a political system after going through a series of processes. The political factor was considered a determining one and the economic factor a supporting one.
However, there was a crucial and fundamental reason why such an approach did not produce any success so far. It was perhaps natural, then, that we were not able to come up with a political solution. The reason was that, paradoxically, the division of the Korean Peninsula created a system that benefited all parties involved--North Korea, South Korea and even the international community. In fact, when you carefully examine in detail the cases where attempts towards a “political solution” reached a stalemate, contrary to appearances, it was the “economic interests” of individuals, groups or nations that were primarily driving the conflicts in reality. There exist groups and nations that are interested in sustaining the division of the Korean Peninsula—North Korean military and political groups in South Korea that want to use the military tension on the Korean Peninsula to maintain their power and vested interests and neighboring foreign powers that do not want unification.
If they think that it would benefit them, even under the circumstance where they are hostile to each other, they would promote their interest via implicitly helping each other. Instead of pursuing long-term national interest, they would focus on seeking the interest of their group and short-term benefit for themselves. They believe that the intensification of North and South Korean conflicts and confrontation could help preserve their vested interests.
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Accordingly, the method of North-South Korean unification that requires fundamental changes in politics was never part of their interests.
Start with economic cooperation rather than focusing on political integration
We need to approach this problem in different ways in order to solve it. Instead of waiting for political changes to occur, we must first pursue economic cooperation. That is, both North and South Korea must first consider their economic interests in solving complex North-South Korean issues. If we can envision a system in which peace on the Korean Peninsula can lead to economic benefits for both Koreas, only then will we obtain a real solution for solving North-South Korean issues and a new engine of growth. We need to suspend the small interests of myopic minority interest groups and convince the public of the great possibility of continued prosperity on the Korean Peninsula in the future. Instead of holding onto small interests that can be obtained from the division, we must switch to a system in which the unification would generate greater benefits for all.
Based on this vision, let us focus on cooperative projects that could produce economic benefits instead of focusing on political unification. Let us leave aside the different economic systems of North and South Korea and prepare to create a structure of industrial cooperation in which the Korean Peninsula of the future can function as one. In fact, there is a positive side to delaying political unification for as long as possible. Having two economic systems in North and South Korea will allow us to control population flows and maintain the disparities in wages and welfare for some time. This way, we can use these disparities to sustain a mutually complementary cooperative relationship. On the contrary, radical political unification could result in an unbearable burden to South Korea. Therefore, the ideal situation
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is one in which we can promote economic cooperation while strategically delaying political unification.
If we can maintain this ideal state, it is possible to minimize the cost of unification as much as possible. If we can develop industry in North Korea, it will help them become economically independent and increase employment, which will in turn indirectly produce welfare benefits to North Korean people. This way, we must gradually reduce economic disparities between North and South Korea while finding a way to take advantage of the low wages in the North. Then, when we reach the stage where the income differential between North and South Korea narrows and cultural differences are reduced via frequent exchanges, political unification will naturally occur in time.
In addition, if we can go a step further and create significant benefits through North-South Korean economic cooperation, we can perhaps come up with a way to share our vision with neighboring nations and engage in a more sophisticated diplomacy and international relations in Northeast Asia. For this vision to be convincing, a new environment must be created for Northeast Asia through peaceful economic cooperation between North and South Korea and the vision must be sufficiently impactful for various participating groups and nations to share the benefits. However, there is a limit to applying the existing model of industrial development in developing countries to North Korea. As I explained in the later part of Chapter 1, the Northeast Asian development model strategy is no longer effective.
Today, we need a model of economic cooperation for North and South Korea that is appropriate for the newly emerging economic paradigm. The new economic cooperation plan should not be based on one-way economic aid from South to North Korea, but on a
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sustainable system of cooperation in which both sides can benefit from the efforts from the early stage. Until now, the effect of North-South Korean economic cooperation has been underestimated. Exploring possibilities from an economic perspective was not free from political realities. However, from now on, we must actively review a strategy that utilizes North Korea for the survival of South Korea as a nation as well as the future prosperity of the Korean Peninsula.
|Creative economy on the Korean Peninsula through North-South Korean economic cooperation President Park Geun-hye administration defined a creative economy as an economy in which science and information and communications technologies are combined to develop advanced industries, and the fusion of industries and culture create new added values. That is, a creative economy promotes new industries based on new ideas and the industries in which new technologies and existing technologies converge with the existing ones. In the end, the supreme goal of creative economy is to create new jobs.
What, then, is the “creative economy for the Korean Peninsula�? It is an approach in which the growth engine of creative economy is found on a national level, that is, in the convergence of North and South Korea. Instead of deriving a solution to creative economy from the convergence of specific technologies, industries or cultures, I am suggesting that we use new productivity and added values in all possible areas that could be produced from North and South Korean cooperation. The convergent energy of North and South Korea will emerge in all areas of political, economic, social and cultural spheres on the Korean Peninsula. Therefore, its impact is incomparably greater than that produced by the convergence of any industries, or between industries and cultures. Through new possibilities
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created by the mutually complementary division of labor structure between North and South Korea, we can expect enormous potential in terms of solving various issues the Korean economy faces today such as a lack of jobs, an aging population and the loss of its growth engine.
Possibility of creating the creative economy on the Korean Peninsula using North Korea A creative economy in the Korean Peninsula that uses North Korea could not only invigorate the Korean economy but also become a breakthrough to help overcome the economic crisis. First, it is a solution to the problems associated with the low birth rate and the aging population. Today, South Korea imports laborers from other countries due to the low supply of local labor. Economic integration with North Korea can not only solve the chronic deficiency in low-skilled workers but also suggests a way to change the population structure. It will reduce the average age of the overall population and balance the gender ratio. When the North and South Korean populations are integrated and the Korean Peninsula grows to become the economic center of Northeast Asia, it will result in a domestic market of 80 to 100 million including a mobile population in related industries such as tourism. It provides a realistic solution to invigorating industries via increased domestic demand.
Economic cooperation with North Korea could also be a solution to the unemployment problems facing the Korean economy today. It will not only create new jobs for young people, but encourage retirees with professional experience to go to North Korea to utilize their expertise in education, consulting and mentoring, which will double the impact of job creation. Moreover, the enormous infrastructure required in the early phase of North-South Korea economic cooperation will bring a new boom in the construction industry that surpasses the Middle East construction boom of the past.
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If directly connected to the Eurasian continent via a Northeast Asian transportation network that goes through North Korea, the Korean Peninsula will emerge as a new center of distribution and logistics. We can even dream of creating various businesses that we could not have imagined before. If we can combine the North Pole air routes and Eurasian transcontinental railways, the ports at Busan, Wonsan and Najin will offer new opportunities as a new center of distribution in Asia, something like Singapore. If we can utilize the geographic advantage of the Korean Peninsula and combine the tourism resources of North Korea and the service industry knowhow of South Korea, it will be possible to imagine a new level of tourism industry.
Thomas Frey, a world renowned futurist and the executive director of the DaVinci Institute in the United States, predicted that the future of a unified Korea is bright and the national economic competitiveness will improve substantially. Furthermore, he said. a unified Korea will be full of energy and will become one of the world leaders in the future. It is capable of creating high profits based on strong creativity and competitiveness, and will expand into the world. As you can see, North and South Korea can work together to construct a creative economy on the Korean Peninsula, and its possibilities are boundless. We need to carefully look into what is required, what processes must be undergone, and what possibilities are out there to achieve this outcome.
North Korean economy is waiting for creative innovation Joseph Schumpeter, a world renowned economist of the early 20th century, picked creativity and innovation as the most important factors for economic growth. The kind of innovation Schumpeter spoke of meant combining new things. From this point of view, creative
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economy and Schumpeter’s innovation mean the same thing. Creative economy is about producing new products and services by combining existing elements with innovation and new ideas, while creative innovation is an attempt to do new things that others have not attempted before. If you continue using old methods while a new paradigm is rising, you are eliminated from competition through the process of creative destruction. That is, the existing paradigm is destroyed by new technology and a new paradigm emerges. Creative innovation is accompanied by the destruction of the paradigm that led the existing system.
However, when we look at the reality of North Korea, the existing system is so poor that there is not much to be destroyed by creative innovation to begin with. Other than the Pyongyang area, the condition of industrial infrastructure and facilities is such that it is not an exaggeration to say that they are non-existent. Paradoxically, however, this could actually work in favor of North-South Korean economic cooperation. The reason is because, under these conditions, it would be more efficient to develop new industrial infrastructures from scratch in a newly developing special economic district in each region and provincial cities, rather than repairing or enhancing the existing industrial infrastructures and facilities.
North Korea is great as a test bed for innovative experimenting and applying new technology and infrastructure that South Korea needs. In South Korea, a system that is too well developed sometimes becomes an obstacle for new technological innovation. It is often the case that a new technology in the mature stage of development is rejected by the market or not adopted because of the inefficiency associated with being overlapped with the existing investment. In this case, applying the new system to North Korea rather than South Korea would be good for both North and South Korea. We can skip the process of “creative destruction” of the existing system in South Korea and apply the “innovation of creative
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economy� in North Korea.
Experimenting with creative innovation via integration of North and South Korea is a very unique environment that no other countries in the world have. North and South Korea in reality are extremely dissimilar today. However, if we assume that North and South Korea will be united in the future, the differences between the two could imply complementarities. From the perspective of South Korea, North Korea is a great place for testing diverse innovations of creative economy. From the perspective of North Korea, South Korea is a great workhorse of economic growth that no other underdeveloped countries in the world have as their neighbor.
|Profit and loss statement for Korean unification According to the research results of Chosun Ilbo/Media Research published in January 2014, the number of people who believe Korea should be unified as soon as possible has fallen by half compared to 20 years ago, while the number of people who preferred the existing state as it is today without unification more than doubled during the same period. Also, 48.6% of the respondents believed that the cost of unification is greater than the benefits. In giving a reason why they did not feel unification was necessary, 29.2% cited the economic burden.
As such, we tend to believe that Korean people will have to bear the enormous cost of unification as it was the case in Germany. During German unification, the income differential between West and East Germany was only 2.1 times. On the other, the difference in income between North and South Korean is more than 40 times, while the share of the population who needs economic support is also much higher for North Korea in comparison to the case in East Germany. For this reason, there is a prevailing thought that the economic burden for
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South Korea would far exceed that of East Germany. In particular, there is an increasing negative perception on the part of young people regarding the prospect of Korean unification.
However, it is clearly not true that unification will be a burden to South Korea. According to research conducted by the Korea Research Institute for Human Settlement on infrastructure investment in a future unified Korea, it will take at least 122 trillion won over 10 years in order to develop the North Korean economy. This is 12 trillion won per year, and only 1% of the GDP of South Korea as of 2013. However, the economic effect gained from unification over the same 10 years would reach 300 trillion won.
The lesson from Germany: spend on investment, not on cost It could be argued that German unification, purely from the perspective of economic efficiency, is a case of failure. German unification started so suddenly and without much preparation. After unification, 1.28 trillion Euros was expended over 13 years as non-capital costs. However, 49.2% of this was spent on pensions, labor market support and other welfaretype expenditure. On the other hand, investment in road, railways and other infrastructure development projects accounted for only 12.5%. Not much of the unification cost was used for direct economic development. If Germany’s unification was done through gradual economic integration and not through a radical unification-by-absorption process, East Germany would have been able to support a significant part of their welfare cost themselves, reducing the tax burden for West German citizens.
The case of Germany, a country that had to bear enormous economic costs due to the drastic process of unification, is an important lesson to us. If Korean unification is achieved not through a radical unification-by-absorption process that accompanies the fall of the North
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Korean regime but through a gradual process of integration via peaceful North-South Korean economic cooperation, unification could start generating benefits to South Korea from the early stage of unification, rather than causing an economic burden.
Moreover, what we should not forget is that it is not just unification that incurs costs. We are already paying a huge cost for Korea’s division. If you consider the military cost born by North and South Korea, the unnecessary cost of diplomacy, the pain of the separated families and the North Korean refugees, and “Korea risks,” we are constantly paying for this division every day. If the cost of unification is an investment in the future of the nation, the cost of sustaining the division is an overhead cost that disappears. Therefore, we must consider the cost of unification not as economic aid to North Korea, but an investment for greater future benefits.
According to studies done by the Korea Institute for National Unification Act and the Asiatic Research Institute of Korea University on the cost and benefit of North-South Korean unification, they both estimated the benefits would exceed the costs. This is contrary to the conventional perception of the past that unification would not bring any benefits due to its enormous cost. If their predictions are accurate, the concern for the cost of unification in the past was probably inflated to some extent.
According to the Korea Institute for National Unification Act, assuming that Korea is unified in 2030, the cost of unification that is expected to be incurred until 2050 is 831 trillion won in the public sector and 3,621 trillion won including private investment, while the benefits of unification will reach 6,800 trillion won. However, investment in the private sector is an investment in production by private businesses, and therefore the total cost including tax
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burden is reduced to 900 trillion won or below. Moreover, according to the Asiatic Research Institute of Korea University, assuming that economic integration begins in 2015 and Korea is unified in 2025, the estimated cost until 2050 would be 3,111 trillion to 4,746 trillion won, while the benefits would be 4,909 trillion won. Unification will vary widely, depending on to what level we will increase the average income of North Korea citizens. The calculation of cost and benefit of unification could also vary widely depending on the method used. What we must notice here is that, the more gradually we implement the integration process of North and South Korea, the more benefits we can expect to gain.
Such calculation excludes intangible benefits of which it is hard to estimate the direct economic effect. Moreover, the cost of unification will eventually disappear after some period of tax support, while the benefits of the unification is permanent. If unification can restore Korea as a complete nation, tangible and intangible benefits that could be gained from it would be unimaginably and inestimably big. Jeon Seong-whun, former president of the Korea Institute for National Unification, points out that, after having lived under the state of the division for more than 60 years, people have become numb to the fact that we are paying the cost of division every day. Furthermore, he believes that, if the burdens of the division such as the threat of war and limited diplomatic position disappear, the benefits of unification will far exceed the estimated costs.
|Unification will benefit neighboring powers: making the Korean Peninsula an open international economic zone The Korean Peninsula has been an important strategic military location throughout history. Accordingly, neighboring foreign powers made much effort to establish their presence on the Korean Peninsula. Today, due to a confrontational regional atmosphere and the North-South
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division, the Korean Peninsula is unable realize its full potential. The military conflicts of the past have been now transformed into a state of economic war and the strategic value of the Korean Peninsula is even higher. Should there be a situation when surrounding countries move into open conflict and/or tension on the Korean Peninsula increases, it will cause a serious adverse impact on the Korean economy. 19 This is about the time when we need to design a new system that could replace the military tension in Northeast Asia. We must transform the energy concentrated on the Korean Peninsula into a driving force behind economic growth. Located in the junction where continental and maritime powers meet, the Korean Peninsula is a dynamic place where we can utilize the power of convergence. If the Korean Peninsula has been so far a strategic location for military purposes, we must from now on start switching from the current Northeast Asian economic system, where each nation pursues exclusive national interests, to an open system in which we share the benefits with our neighboring countries through economic exchange. Rather than hoping for a Korean unification in which South Korea reaps the fruits of economic growth of North Korea, we must envision a more strategic plan to grow the “pie� of a unified Korea by sharing its benefits with other nations.
According to one estimate, should North and South Korea resolve its military confrontation and pursue peaceful unification, the total security cost spent on the Korean Peninsula would come down by 20 trillion won annually, North and South Korea combined. Moreover, it would not only impact North and South Korea but also lead to reduction in military cost of neighboring countries, which itself will amount to trillions of won per year. According to Korea Research Institutes for Security and Unification, the defense budget of North and South Korea combined is currently 44 trillion won (34 trillion for South Korea, 10 trillion
won for North Korea), which will be reduced to 29 trillion won after unification. We can reduce the size of the military and redirect that to labor power. Also, we can reduce the socioeconomic cost associated with military confrontation. Furthermore, if a multi-nation security system among Korea, US, China, Japan and Russia could be formed during the process of Korean unification, the combined defense cost of Korea, China and Japan would be expected to come down by 66 billion dollars (approximately 70 trillion won) annually. The competition in military build-ups between the US and China will lessen and the conflicts among China, Korea and Japan will decline, which will contribute to improvement in the tense atmosphere in Northeast Asia.
Likewise, we need to continuously make efforts to promote the fact that Korean unification will enhance the security of Northeast Asia and benefit all neighboring nations. Also, we must try to channel the reduction in military and security costs derived from such a process to investment in the economic development of the Korean Peninsula. While reducing the military tension, we must induce the creation of new economic interests. That is, we can gain strength for peaceful economic cooperation by channeling the energy of unification in a completely different direction.
President Park Geun-hye, in her keynote speech at the Davos Forum on January 22, 2014, stressed that Korean unification can be a boon for not only Korea but also other nations around the Korean Peninsula. In particular, she declared that, should massive social overhead capital investment be made in North Korea, the benefits of development could be shared among neighboring nations including, in particular, the Three Northeastern Provinces of China (Liaoning, Jilin and Heilongjiang) and the Primorsky Krai region of Russia. China, Russia and Japan are constantly trying to find investment opportunities to take advantage of
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the geographical strengths of North Korea. Rather than responding to this in a hostile manner in terms of trying to stop the sale of national assets, we must approach the issue from the point of view of sharing the cost of developing North Korea with other nations.
Moreover, we must in fact present this as an attractive investment opportunity so that our neighboring nations, as well as the United States and Europe, would find it attractive to invest in North Korea. Through such efforts, we must transform the Korean Peninsula into a region of peace and create an environment in which many nations are willing to support the economic integration of North and South Korea. The Korean Peninsula must become an open economic zone before various interested nations can discover the economic benefits of investing in the development of North Korea. Through this process, we must try to induce various interest groups and neighboring nations not to interfere with the unification of Korea and instead play a positive role in the process.
If we can transform the Korean Peninsula into a central hub of economic exchanges among various Northeast Asian nations and create a system in which various participating groups can share profits from it, military tensions will naturally decline. Instead of trying to resolve political and military conflicts using political means, this is a time we need to change the way we think and use the sharing of economic interests as a starting point for a solution.
PG 129-135
Vision of a Mega Capital City in the Korean Peninsula
Seoul-Pyongyang network economy
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As a way of creating the most efficient and organized North-South Korean cooperation system on the Korean Peninsula, I would like to propose the “Seoul-Pyongyang Network Economy,” in which we create a railway line from Seoul to Pyongyang and connect various coastal cities along the way. If we can create in this region a transnational free economic zone jointly run by North and South Korea with a concentrated population and industrial bases, we can use our powerful network infrastructure in high speed transportation and communications technology to rapidly spread and distribute the industrial power of South Korea in North Korea. At the same time, we can create a mutually beneficial economic zone in which South Korea can aggressively take advantage of the comparative economic advantages North Korea has.
The Seoul-Pyongyang Network Economy zone is a series of urban networks formed on the basis
of
state-of-the-art
technological
infrastructure
in
high
speed
transportation/communications/energy. Here, the network between the two cities does not necessarily mean an existing physical connection. The effect of a network based on high speed transportation and communication technology will eliminate space restrictions between Seoul and Pyongyang and integrate the two regions into one economic zone.
Under such conditions, even if North Korea does not “possess” the means of production directly, they can simply “connect” to the metropolitan infrastructure of Seoul to create an environment to develop their network economy. We are using the new possibilities of network economy to transform the paradigm for North-South Korean economic cooperation methods. It is possible to use this as a foundation to pursue cooperation in a “new economy” for North and South Korea that were traditionally not possible under the existing SeoulPyongyang economic zone. This area has the best conditions for realizing the potential of
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network economy for North and South Korea. Let’s take a look at the reasons one by one.
Development of a mega capital city in the Korean Peninsula In the early phase of North-South Korean economic cooperation, the Seoul-Pyongyang economic zone can be considered a “mega city region” in that it will become a transnational free economic zone. However, in the later phase of development with mature economic development and political integration, it is expected to perform the role of a “mega capital city” that includes both Seoul and Pyongyang as the center of politics and diplomacy and the comprehensive metropolitan area of the unified Korean Peninsula. If so, it may be possible to distribute its functions as capital city and government organizations to various cities that comprise the megalopolis rather than concentrating them in one city, based on the characteristics and strengths of each city. That is, the ideal capital city of a future Korea is not a single city but should in the form of a network of many cities in a megalopolis area, sharing political and economic functions among them.
If we connect the coastal cities in the Seoul-Pyongyang conurbation using network infrastructure, we can form a greater economic zone in which they can systematically function as a single city. This region is not only the driving force behind the growth of the Korean Peninsula, but also has the potential to become the center of the pan-Yellow Sea economic zone. It already has the Incheon International Airport, which plays the role of hubairport in Northeast Asia, and includes 3 ports—Incheon, Nampo and Haeju. If we can establish a high speed transportation network that runs across the length of the Korean Peninsula, it could easily connect to China and Russia by land. A mega capital city is the core location that could bring about the overall growth of the Korean Peninsula most effectively by connecting the major metropolitan areas of both North and South Korea.
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Mega City Region (MCR): A greater economic zone with a population of more than 10 million that is connected around the core city. If the idea of a metropolitan area in the industrialization period meant simply the central city and satellite cities around it, the mega city region focuses on strengthening the innovative potential of the cities by connecting the central city and the satellite cities. It is sometimes referred to as megapolis or megalopolis.
Mega Capital City Region, MCCR: It is an idea that I am newly proposing. I would like to call the greater economic zone that encompasses the area that connects Seoul and Pyongyang and all the major cities between and around them a “mega capital city region” of the Korean Peninsula. It is a mega city region that functions as the capital city of a nation, its political center.
Expanding the idea of metropolitan space The idea of space and distance is not fixed and can change with the progress of technology. As human history evolves, the idea of space has also evolved. For example, if you examine the daily mobility pattern of Central Europe, the average distance per day in 1800 was only 20m, which increased to more than 30km in 1990. The average distance moved has evolved with the progress of transportation technology. What is interesting here is that, the average time spent on moving did not change and remained about 1 hour. (Refer to Table 6-1)
If so, what is the maximum distance we can move in an hour with today’s technology? The average speed of a high speed train being built in China has already exceeded 300km per hour. With today’s technology, Seoul and Pyongyang, a distance that covers 200km, is commutable within an hour. The time is coming when Seoul and Pyongyang can be considered an
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identical metropolitan area.
The progress in the means of transportation will not stop at simply improving physical connections, but will result in a different way of thinking about cities and space. It became common during the 1990s to commute to Seoul from new cities in the outer metropolitan area. Similarly, we might see a new life pattern of commuting between Seoul and Pyongyang during the 2020s. The change in the way we think about space means that there exists a tremendous potential that will revolutionize the future of Korea around the mega capital city region.
The best place for economic cooperation between North and South Korea In terms of topography, the Korean Peninsula is high in the east and low in the west. Considering that population and the industrial infrastructures of North Korea are heavily concentrated in the west, a Seoul-Pyongyang megalopolis is best for spatially connecting the functions of North and South Korea. That is, it will be like the Gyeongbuseon Highway between Seoul and Busan, along which industrial and transportation infrastructures are best developed in South Korea, but extending itself in a northwesterly direction.
The network urban structure of a mega capital city region takes the form in which cities along the west coast in North Korea can easily receive the benefits of the advanced industrial competence and infrastructures of South Korea in the metropolitan area of South Korea. The Pyongyang and Nampo areas are located relatively close to the metropolitan areas of South Korea, which makes it easy to use high speed transportation to facilitate physical connectivity. In particular, universities are concentrated in this area, and these schools have excellent talents in terms of human resources. Therefore, these cities are good for developing national
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research institutes, corporate R&D centers and venture business complex for developing new growth industries.
Incheon has a hub-airport of Northeast Asia and is excellent for playing the role of a gateway to the mega capital city region. We can develop the area around the Incheon International Airport as a duty free economic trade zone and develop it into an international city of free economic trade that will be the center of air and maritime transportation, communications, businesses and leisure. The three major ports of the mega capital city region—Incheon, Nampo and Haeju—form a sea gateway to pan-Yellow Sea economic cooperation, connecting the Korean Peninsula to the world. Nampo and Haeju ports in North Korea should be developed as a center of international trade and distribution for the mega capital city region, based on the concept of role sharing and functional connectivity between Incheon and Pyeongtaek ports in South Korea.
In order to gain accessibility to major ports of the mega capital city region and the Incheon International Airport, connection to a high speed transportation network is required. In order for the mega capital city region to efficiently connect to the Trans-China Railroad in China and the Trans-Siberia Railroad in Russia through a high speed transportation network that runs across the Korean Peninsula, it is necessary to create an infrastructure over a greater area. The west coast area in which the mega capital city region is located will play a central role in the development of the west coast area of the Korean Peninsula that encompasses Mokpo, Gwangju-Gunsan, Jeonju-Incheon/Seoul-Haeju/Gaeseong-Nampo/Pyongyang-Sinuiju. Both competition and cooperation are expected from the industrial coastal area in China. Therefore, we must develop the area as a competitive new growth industry region based on North-South Korean cooperation.
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