An export economy, a 1988 opening, and early trade

The notes set the story against a later global squeeze: after the financial crisis, they write, advanced economies and once-fast-growing emerging ones alike slowed, in a pattern of low growth, low interest rates, low prices, high unemployment and rising public debt. South Korea, despite scarce resources and a small home market, had widened its economic territory through a government-led export policy, but an external dependence they put at 70 percent of GDP left it always sensitive to crises abroad. That share is left as the essay’s claim, not recast as a later official total. Firms had gained, they say, as fast followers of trend-setters, copying or cheapening what others opened up, until the technology of China and other emerging countries caught up and that path reached a limit.

Inter-Korean economic cooperation is dated from 1988, aimed at economic gain on both sides. After the 7 July special declaration on national self-respect and unified prosperity, the October basic guidelines on South-North material exchange allowed trade with the North. In August 1990 the Inter-Korean Exchange and Cooperation Act and the Inter-Korean Cooperation Fund Act laid a legal base and a support system. Early trade is given as about 20 million dollars, a small, exploratory volume, often indirect through Hong Kong, Singapore or Japan, which made stable partners hard to secure.

1992’s 170 million dollars, slower growth, and a 1997 squeeze

In February 1992 the agreement on reconciliation, non-aggression and exchanges and cooperation entered into force, joint committees were set up, and trade is said to have jumped to 170 million dollars that year, an expansionary stretch. A subsidiary agreement later in 1992 set, in principle, a move toward direct trade and the creation of a clearing account. 1991 is named as the first year of commission processing, with student bags brought in from the North. After the North Korean nuclear issue halted high-level talks, a policy that tied cooperation to the nuclear file put new investment visits on hold.

The notes give 1993 trade as 185.69 million dollars in the sentence that also gives 7.6 percent growth, though one nearby line drops the usual ten-thousand unit; 1994 is given as 194.55 million dollars, growth 4.3 percent, a slowing rise. Commission processing, by contrast, is said to have jumped, from 7 million dollars in 1993 to 25.66 million in 1994: the North could earn scarce foreign currency without adding plant, the South could use lower processing fees. The October 1994 Geneva Agreed Framework, settling a nuclear negotiation between the North and the United States, is named as a turning point; cooperation then shrank sharply with South Korea’s IMF crisis in December 1997. Those figures stay in their years.

Three projects, one billion dollars, and a stop in February 2016

Cooperation that had been quiet expanded again, the notes say, under President Kim Dae-jung. After a summit and the 15 June joint declaration, economic projects were given a thicker institutional base, and three efforts showed results: the Kaesong industrial complex, the linking of railways and roads, and tourism at Mount Geumgang. In 2005, for the first time in the history of inter-Korean trade as they tell it, the volume reached one billion dollars.

Kaesong opened in October 2004, with a first shipment of products in December of that year, then grew through staged rounds of tenant firms; in 2010, tenant output is said to have passed one billion dollars. Until 2015, the notes say, shipments kept rising even though military tension interrupted them several times. In February 2016, after a North Korean nuclear test and a long-range missile launch, the running of Kaesong and all South-North shipments were stopped, leaving cross-border movement, in this telling, at none. That halt and those totals stay in the years the notes give them, and are not recast as a later official audit. The same Korean report, at fuller length, is on CampusDown.

Sources

1. Notes for a North Korean economy assignment on the outline and course of inter-Korean economic cooperation, and on directions for improving relations.
2. The 7 July 1988 special declaration and the October guidelines; the August 1990 acts; the February 1992 agreement; 1991 commission processing; trade figures for 1992–1994, including the notes’ own wording of the 1993 total, left in those years.
3. The October 1994 Geneva Agreed Framework; the IMF crisis of December 1997; the 15 June joint declaration and the three projects; Kaesong from October 2004, one billion dollars in 2005 and 2010, and the February 2016 halt as the notes state it.

Last updated: 14 November 2026