Motivations, Prospects and Challenges for Intern-Korean Economic Relations in a New Era

Abstract The historic June 2000 summit between the two Koreas has played an important role in the intensification of inter-Korean economic cooperation, traditionally acknowledged as one of the most crucial prerequisites for peaceful coexistence and eventual unification on the Korean peninsula. This study primarily deals with the motivations, problems and prospects for different types of future private and public economic relations between the two Koreas. Furthermore, taking into account the North's specific political structure and depressed economic situation as well as its poor location quality and the unfavourable experiences hitherto made by foreign firms, this study suggests that the ideal and efficient inter-Korean economic cooperation should be based on the North's ambitious economic reform combined with an active open-door policy, the achievement of co-prosperity led by the continuous growth of the North Korean economy, the limitation of South Korea's financial burden to an affordable level, the prudent marketoriented calculation and sectoral as well as regional targeting of South Korean investments in the North and the immediate reduction of military tension on the Korean peninsula.