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institute for global dialogueinstitute for global dialogue

Garth Shelton

OCCASIONAL PAPER NO 61

KOREA & SOUTH AFRICA:

Building a strategic partnership

July 2009

INSTITUTE FOR GLOBAL DIALOGUE

MissionThe Institute for Global Dialogue is an independent South African non-government

organisation that provides policy analysis on the changing global environment and

its impact on South Africa for the benefit of government and civil society.

Core programmesThe activities of the Institute centre on four programme areas:

1. Africa Research

This programme aims to promote research and analysis with a view to enriching debates

and understandings about the development challenges which confront African countries,

both domestically and internationally.

2. Multilateral Analysis

This programme aims to analyse multilateral institutions as they influence global processes

of change with a view to understanding their impact on South Africa and the global South.

3. Foreign Policy Analysis

This programme aims to provide policy analysis and recommendations on South Africa’s

foreign relations to the South African government, parliament and civil society.

4. Southern Africa

This programme aims to analyse and promote an understanding of factors that advance or

hinder regional co-operation, sustainable development, and security in southern Africa.

OCCASIONAL PAPER NO 61

KOREA & SOUTH AFRICA:

Building a strategic partnership

Garth Shelton

Institute for Global Dialogue Johannesburg, South Africa

July 2009

Published in July 2009 by the:

Institute for Global DialogueIGD House, Thornhill Office ParkBekker Street, Vorna ValleyMidrand, South Africa

PO Box 32571, Braamfontein 2017, South Africa

Tel +27 11 315 1299Fax +27 11 315 2149

www.igd.org.za

All rights reserved. This publication may not be copied, stored, or transmitted without the prior permission of the publisher. Short extracts may be quoted, provided the source is fully acknowledged.

ISBN 978-1-920216-24-5

Produced by Acumen Publishing Solutions, JohannesburgPrinted by Lawprint, Johannesburg

About the author

Garth Shelton is an Associate Professor of International Relationsat the University of the Witwatersrand.

Table of contents

Acronyms and abbreviations 4

Introduction – the rise of East Asia 5

The Korean miracle 6

The Korean developmental state 7

Industrial policy 9

Korea’s success factors 12

Innovation, education, and management 14

North Korea – economic stagnation 16

The Six-Party Talks and denuclearisation 17

The question of verification 20

Kim Jong Il’s successor? 22

Korean unification? 24

South Korea, the world and Africa 26

The Korea–Africa Forum 30

Korea and South Africa 36

Crafting a strategic partnership 40

Suggested plan for enhanced Korea–South Africa relations 42

Conclusion – partners in development 42

Endnotes 45

Appendix A: Seoul Declaration, November 2006 52

Appendix B: Korea’s initiative for Africa’s development 53

Appendix C: Together we shall open a road to advancement 55

Acronyms and abbreviations

AfDB African Development BankASEAN Association of South East Asian NationsCSIR CouncilforScientificandIndustrialResearchDPRK Democratic People’s Republic of KoreaEPB EconomicPlanningBoardEU European UnionFDI foreigndirectinvestmentFTA freetradeareaG20 group of 20 countriesGDP grossdomesticproductGNI gross national incomeGNP grossnationalproductICT informationandcommunicationtechnologyIGD Institute for Global DialogueIMF InternationalMonetaryFundIT informationtechnologyKDI Korea Development InstituteKEPCO Korea Electric Power CorporationKIEP KoreaInstituteforInternationalEconomicPolicyKOAFEC Korea–Africa Economic ConferenceKOSEF KoreaScienceandEngineeringFoundationKt kilotonLDCs leastdevelopedcountriesLNG liquefiednaturalgasMDGs Millennium Development GoalsMOU memorandumofunderstandingMt megatonNDC National Defence CommissionNEPAD New Partnership for Africa’s DevelopmentNGO non-governmental organisationNPT NuclearNon-ProliferationTreatyNRF NationalResearchFoundationODA officialdevelopmentassistanceODA overseasdevelopmentassistanceOECD OrganisationforEconomicCo-operationandDevelopmentONTA OfficeofNationalTaxAdministrationOPC OfficeofPlanningandCo-ordinationPCB printedcircuitboardsPGA poly-gamma-glutamatePKOs peace-keeping operationsPPP purchasingpowerparityROK Republic of KoreaRSA Republic of South AfricaSADC SouthernAfricanDevelopmentCommunityt tonUN UnitedNationsUNIDO UNIndustrialDevelopmentOrganisationUNWTOST-EP UnitedNationsWorldTradeOrganisationSustainable

Tourism-EliminatingPovertyWEP wiredequivalentprivacy

OCCASIONAL PAPER NO 61 5

Introduction – the rise of East AsiaAsia’srapidrise,ledinitiallybyJapanandtheso-called‘AsianTigers’,isnowbeingled

byarisingChina,withIndiaclosebehind.Thisprocessofrapidwealthcreationinthe

Eastisalteringtheglobalpoliticalandeconomiclandscape.Asia’sshareofworldgross

domesticproduct(GDP)(measuredinpurchasingpowerparity[PPP])nowsurpasses

thoseof theUnitedStatesand theEUcombined.At thesame time,Asia isnowthe

world’sfastestgrowingregion,accountingforalmost50percentofglobaleconomic

growthannually.By2025,Asiaislikelytobehometothreeoftheworld’sfivelargest

economies.1SouthKorea(RepublicofKorea–ROK)isoneoftheAsianTigers,andakey

Asianeconomywhich,frombeingoneofthepoorestcountriesintheworldin1950,has

becomethefourthlargestinAsiaandthe11thlargestglobally.2SouthKoreaiswidely

regardedasoneoftheworld’smostdynamicandsuccessfuleconomies,whichattimes

hasgrownfasterthananyotherpost-WorldWar2economy.3 The ROK’s transformation

fromaweakagrariansocietytoaprosperousandwealthydevelopedeconomyinless

than40yearsiswidelyknownasthe‘MiracleontheHanRiver’.4

Inaneraofglobalfinancialcrisisandshrinkingeconomies, ithasbecomemore

urgentandmoreimportantforSouthAfrica’sforeignpolicytofocusoninternational

engagementsthatproduceclearlydefinedcommercialadvantageinthenationalinter-

est.ThusSouthAfrica’spost-Mbekiforeignpolicyshouldconcentrateonaneconomic

strategicpragmatism,whichwouldrefocusforeignpolicyonassistingeconomicgrowth

andpovertyreductionathome,whilecraftingtheframeworkforSouthAfrica’slong

termeconomicprosperity.The‘Africanagenda’andacommitmenttotheAfricanRen-

aissanceshouldremaintheideologicalpolicydriver,butshouldbecomplementedby

asecondlevelofinternationalengagement,providingforanew,concentratedformof

economicdiplomacy.

Apragmaticengagementwiththeinternationalcommunity,basedonaneconomic

focus,wouldbeintendedtoboostSouthAfrica’stradeandinvestmentprofileandpro-

videneweconomicopportunity.GiventheriseofAsia,suchapolicywouldnaturally

haveastrong‘lookEast’component,butwouldnotbelimitedtoconstructiveengage-

ment with one particular region. To identify and promote comparative advantage,

SouthAfricashouldseekeconomicstrategicengagementwithallkeyglobalintegration

frameworksandfreetradeagreement(FTA)sub-systems.SouthAfricahasbeenslow

toengagetheEasteffectively,andtakeadvantageofthedynamismwhichtheAsian

TigersandChinaprovideinaneraofincreasedglobalisation.Anincreasedeffortto

understandbetterthepositivesynergiesofstrengthenedpoliticalandcommercialrela-

tionshipswithEastAsiaoffersarichagendafornewopportunity.Thisstudyattempts

toopenthewindowonKorea(bothSouthandNorth)alittlewidertoofferanincen-

tive for SouthAfrica’s increased engagement.5 It is hoped thatmore comprehensive

anddetailedstudieswillfollowinordertoprovideasolidintellectualfoundationfor

expandedengagement.

6 INSTITUTE FOR GLOBAL DIALOGUE

GARTH SHELTON

This paper focuses on four central themes in the evolving Korea–South Africa rela-

tionship.Firstly,SouthKorea’seconomicdevelopment,withanemphasisontheKorean

‘developmental state’, is examinedwithaview to identifyingprocesses andpolicies

whichcouldinformSouthAfrica’sowndevelopmentactivities.Secondly,NorthKorea’s

denuclearisation process is investigated and prospects for Korean unity discussed.

Thirdly,SouthKorea’sAfricanengagementisdiscussed,providingtheframeworkfor

ananalysisofKorea–SouthAfricarelations.Lastly,SouthKorea–SouthAfricarelations

areinvestigatedwithaviewtoidentifyingandencouragingpositivetrends.Itisargued

thattheROKprovidesanidealhigh-techpartnertoassistSouthAfricainitsowneco-

nomicdevelopment,andcouldfacilitateapositiveandconstructiveengagementwith

thewholeEastAsian region.A framework for building a strategicpartnershipwith

Koreaisproposedandtheprospectsforimprovedrelationsoutlined.

The Korean miracleAprocessofstateledindustrialisation,initiatedintheearly1960s,hasmadetheROK

oneoftheworld’sleadingexporters,andcreatedaprosperoussocietywithhighlevels

ofeconomicfreedom,oneofthehighest livingstandardsintheworld,andahigher

lifeexpectancythanthatoftheUnitedStates.SouthKoreaisoneoftheworld’sbiggest

exporters,and isanacknowledgedworld leader inelectronics,merchantshipbuild-

ing, automobiles, petrochemicals, and robotics. TheROK’s high-tech and innovative

economyhasproducedmorepatentsthanmostadvancedindustrialisednations.South

Koreaisnowtheworld’slargestshipbuilderandoneoftheworld’sbiggeststeelproduc-

ers.Itisamajorexporterofgoodsandservicesthroughouttheworldandranksasthe

UnitedStates’seventhlargesttradingpartner.ManyKoreancorporations,suchasSam-

sung,Hyundai-Kia,LGandSK,dominatekeysectorsoftheglobaleconomy.Samsung

itselfhasanannualturnoverlargerthantheGDPofArgentina.In2007,theHyundai

KiagroupproducedmoreautomobilesthanMercedes-BenzandBMWcombined,while

LGisnowoneofthelargesttechnologycorporationsintheworld.Despitetheglobal

financialcrisis,theROKretainssignificantforeignreservesandiswellpositionedto

maintainasignificanteconomicgrowthrate,withforecastssuggestingthatitwillbe

oneoftheworld’stopfiveeconomiesby2035.

Japan’sdefeatinWorldWar2endedJapanesecolonialruleinKoreaandopened

thewayfortheestablishmentofamodernstate.6IntermsofaUNarrangement,South

andNorthKoreaweredividedatthe38thparallel,withaUnitedStatesadministration

inthesouthandSovietcontrolinthenorth.ColdWaranimositypreventedaUnited

States–SovietagreementforunifyingKorea,leadingtotheestablishmentoftwosepa-

rategovernmentsin1948,witheachclaimingtobethelegitimateauthorityinboth

SouthandNorthKorea.KoreabecamethevictimofColdWarideologicaldifferences

whentheKoreanWareruptedon25June1950.But,asBruceCumingspointsout,‘the

Koreanwaritselfsolvednothingexcepttomakeanotherwaranimpossiblerouteto

KOREA AND SOUTH AFRICA


reunification’.7Moreover,thewarunderminedeconomicdevelopmentinboththesouth

andthenorth,andhasleftthecountrydividedeversince.8

SouthKorea’spoliticalevolutionsincetheKoreanWarhasbeencharacterisedby

variations among autocratic rule, democratic reform, and strongly democratic insti-

tutions. Nevertheless, South Korea has evolved into a vibrant and open democracy

withbroad freedoms for itspopulation.9 The impressive political evolution has been

accompaniedbyan‘economicmiracle’whichtransformedSouthKoreafromoneofthe

poorestcountriesintheworld,tooneofthewealthiest,inlessthan40years.The1988

SeoulOlympicsmarkedglobalrecognitionoftheROK’seconomicsuccess.BanKi-moon,

thecurrentsecretary-generaloftheUN,wasformerlySouthKorea’sforeignminister.

Hewasoriginallyacareerdiplomatinthatministry,havingservedinnumerouspost-

ingsrepresentingtheKoreangovernment.Hiselectiontothepositionoftheworld’stop

diplomatconfirmsSouthKorea’s internationalstatusandprestige.Secretary-General

BanbringstotheUNtheKoreantraditionsofcommitmentanddedication,servinghim

ingoodsteadtoleadtheorganisationthroughdifficulttimes.

Today,SouthKorea’spolitical andeconomic status inAsiaand theworld iswell

established,while culturally the ‘Koreanwave’hasbecomea regionalphenomenon.

The‘Koreanwave’referstothesignificantincreaseinSouthKoreancultureinAsiaand

aroundtheworldoverthepasttenyears.10KoreanTVprogrammesandmusicarenow

popularthroughoutAsia,especiallyinChinaandJapan.Morerecently,Koreancultural

exportshavebecomepopularinpartsofEuropeandtheAmericas.Today,SouthKorea

isoneoftheworld’stoptenculturalexporters,withKoreanTVdramassuchasAutumn

Fairy Tale, Winter Sonata,andJewel in the PalaceimmenselypopularthroughoutAsia.

Koreanmovies,music,andfoodhavealsogrowninpopularityalongwithSouthKorea’s

broadeningcommercialfootprint.Increasingly,the‘Koreanwave’isbecomingpartof

theROK’ssoftpowerasitexpandsitspoliticalandeconomicinfluenceglobally.

The Korean developmental stateA central feature of South Korea’s engagement with Africa is to promote the Korean

developmentmodel as a guide forAfrica’s economic development and industrialisa-

tion.11Inthemid-1950s,KoreafacedmanyofthesameproblemsAfricanowfaces,and

managedtocraftadevelopmentstrategywhichtransformedanagrariansocietyintoa

wealthyandhighlydevelopednation.12Moreover,giventheincreaseddebateinSouth

Africaon the issueof a ‘developmental state’, SouthKorea’s economic experience is

increasinglyrelevant.13SouthKoreaprovidesanexcellentmodelofstateintervention

topromoterapidandsustainedeconomicdevelopment.Whilenotallthefeaturesofthe

Koreandevelopmentmodelcan,orshould,berepeatedinotherdevelopingcountries,

Korea nevertheless provides a good framework for other states facing similar chal-

lenges.Korearespondedtomassiveunemploymentwithalabourintensivemanufactur-

ingprocessaimedatexportmarkets,ratherthandomesticconsumption.Althoughit


GARTH SHELTON

wasahighriskoptionatthetime,Koreawasabletoexploitglobalopportunitiesand

avoidthelimitationsofrelyingonthemuchsmallerlocalmarket.

The‘statist’approachescontendsthatKorea’seconomicsuccesswasbasedonadirect

andfocusedstateinterventionintheindustrialdevelopmentprocess.Althoughthisper-

spectiveremainscontested,itiswidelyacceptedthatgovernmentdirectedindustrialisa-

tionwasthekeytoKorea’seconomicmiracle.14Korea’sunusuallyrapidexportexpansion

overarelativelyshortperiodoftimewasachievedmainlybecauseoftheinterventionof

governmentthroughanumberoffiveyearplans,whichpromotedcertainindustriesto

developeffectiveexportprofiles.Althoughsimilarapproacheshavebeentriedinother

countries,theyhaveseldombeenaseffectiveasthecaseofKorea.Thegovernmentitself

actedasanentrepreneurtoencourageinvestmentinselectedeconomicsectors,while,at

thesametime,itprovidedfinancialsupporttoguaranteeprofitsuntilindustriesthem-

selveswerestableandprofitable.15Withoutthegovernment’seffectiveinterventionin

themarket,rapidindustrialisationinKoreawouldhavebeenimpossible.16

Theuseofindustrialpolicytopromoteeconomicgrowthfocusesonstimulatingthe

supplysideofindustrialactivitythroughstrengtheninginternationalcompetitiveness,

modernising industries,promoting thegrowthof industries thathaveacomparative

advantage,andcorrectionofmarketfailures.Thisisachievedthroughappropriateand

timelyresourceallocationbygovernment.17TheKoreangovernmentselectivelyinter-

venedtodirecttheallocationofresourcestoadvanceselectedindustrialprocesses.It

alsousedothertoolstoachieveapositiveoutcome,suchastaxesandsubsidies,credit

rationing, licensing procedures, and the establishment of public enterprises. At the

sametime,Koreaemphasisedanexport ledindustrialisationprocesswhichrequired

aglobaltradeperspective.WhileKoreaexperiencedanexceptionallyrapideconomic

growth,itisimportanttonotethattheoutcomeproducedarelativelyequitabledistri-

butionofwealth.IyanatulIslamandAnisChowdhurycontendthat:

The Korean government has been the most interventionist among the East Asian

NIEs [newly industrialising economies]. Bymeans of planning, direct or indirect

ownershipandcontrolofenterprisesandfinancialinstitutions,[and]controloffor-

eignexchange,thegovernmenthasplayedacrucialroleinadjustingthescaleofthe

marketandincentives,inpursuitofitsdesiredeconomicandsocialobjectives.The

successivefive-yearplanssince1962significantlyinfluencedtheprivatesectorand

changedthecourseandpaceofKorea’seconomicdevelopment.18

Inthelate1950s,observersdidnotexpectKoreatobecomeoneoftheworld’smost

dynamiceconomies.19SomeevensuggestedthatKoreawouldremainforeverdependent

onUnitedStatesaid.20SinceWorldWar2,theeconomyhadbeenlargelysustainedby

inflowsofforeignassistance,andgrowthhadbeendisappointing.AfterParkChungHee

tookcontrolofthegovernmentin1961,however,Korea’seconomicgrowthplanshifted

away from dependence on the local economy towards an export led approach. The

newpolicywasbasedonrecognitionofthepovertyofKorea’sresourcebase,andthe



diminishingreturnsofadomesticallyfocusedstrategy.In1960,theKoreaneconomy

wasbasedonminingandagriculture,withthemanufacturingsectorsupplyingsimple

consumerproducts.Exportsconstitutedlessthan3percentofgrossnationalproduct

(GNP),andconsistedmainlyofagriculturalproductssuchasseaweedandginseng.

The government’s institution of a strong export led approach, alongwith a sup-

portsystemandclearstrategicdirection,completely transformedKorea’sproductive

base, and created one of theworld’s fastest growing economies.21 From an agricul-

turebase,Koreamovedtowardsafocusonmanufacturingandexports,producingone

of themostrapidstructuraleconomictransformations inhumanhistory.Keyexport

industries established since 1960 include chemicals, electronics, automobiles, heavy

electricalequipmentandships.Today,exportsexceed50percentofGNP,withmanu-

facturedproductsmakingupmorethan90percent.ThecompositionofKorea’sexports

havechangedsignificantlysincethe1960s.Originally,exportsincludedsimpleplastic

items,textiles,andwoodproducts.AsKoreanmanufacturersmovedupthevaluechain,

exportsincludedsteelproducts,electronics,andships.Thereafter,Koreamovedinto

automobilesandcomputers.Exportperformance indicateda rapid transformationof

manufacturingprocessesasindustrialcapacitybecamemorecomplexanddiverse.By

the1980s,Koreahadbecomeoneoftheworld’smostcompetitivesuppliersofarange

ofmanufacturedproducts.

Industrial policyKorea’sindustrialpolicyemphasisedencouragingexportsandpromotinginfantindus-

tries.22Topromoteexports,thegovernmentestablishedafreetraderegime,eliminating

taxesforexportinputs,whiletheexchangeratewasmanagedtomaintainalignment

betweendomesticandinternationalpricesforcomparativelyadvantageousproduction.

Thegovernmentassured theavailabilityoffinancebyallowingexporters toborrow

extensively.Thebankingsystemwasconvertedtoprivateownershipinthe1980s,but

exportfinancingremainedinthehandsofthecentralbank,undergovernmentguid-

ance.Additionalincentivesintendedtopromoteexportsincludeddirecttaxreductions,

preferentialinterestrates,andprivilegedaccesstoimportlicences.Whilemarketforces

respondedwelltogovernmentincentives,asystemofexporttargetingwasestablished

to encourage corporateoutput.Contact betweengovernment andproducersbecame

close,withgovernmentdepartmentssettingexportquotasandrequiringappropriate

corporate performance.Monthly trade promotion, corporate strategy seminars, and

conferencesattendedbygovernmentandbusinessprovidedtheintellectualframework

foradvancingtheprocess.

Export targetswere set in consultationbetweengovernmentandbusiness,while

specificincentiveswerealsosimultaneouslynegotiatedtoachieveamutuallybenefi-

cialoutcome.23Government’sselectiveinterventionsencouragedsomeexportitemsat

particulartimes,eithertodevelopnewmarketsortoconsolidatemarketshare.24 The


GARTH SHELTON

growthofexportsovertimewasdirectlylinkedtothegovernment’sdirectinvolvement

intheallocationofinvestmentfinanceandthecarefulmanagementofincentives.

Korea’sexport focushasbeencomplementedbygovernment intervention topro-

moteinfantindustries,withastrategybasedonestablishing‘temporarymonopolies’.

Earlyexamplesincludedcement,fertilisers,andpetroleumrefiningintheearly1960s,

followedlaterbysteel,petrochemicals,shipbuilding,capitalgoods,and,morerecently,

electronicsandcomputers.Targetedindustriesreceivedpreferentialaccesstoshortand

longtermcredit,aswellasreductionsorexemptionsofdirectorindirecttaxes.Infant

industrieswerealsoaccorded‘absolute’protectionthroughexportcontrolsintendedto

ensureanadequatelevelofnon-exportsales,aswellasanappropriatereturnoninvest-

ment.Thisprocesswasadvancedthroughimportquotas,orrefusinganimportlicence

foraproductwhichcouldbeproducedlocally.Inaddition,governmentinsistedthat

infantindustriesexportagrowingproportionofproductionatglobalprices.25 Selective

exportsubsidieswereappliedtocreatethenecessaryincentive.

Todevelop industries, thegovernmenthasoften intervened to shape,or in some

instances create, appropriate corporate structures.Theoutcomeof this process pro-

ducedKorea’s chaebols, such asDaewoo,Hyundai, Samsung and a number of other

large corporate conglomerates,which became very efficient producers and effective

exporters.26 Market opportunities and entrepreneurial initiative gave birth to these

structures,butgovernmentinterventionensuredtheirsurvival,growth,andlongterm

success.Thechaebols ensuredtheimplementationofthegovernment’sexporttargets,

whiletheirsizeandcapitalformationenablethemtoadvancethegovernment’sgoalof

developingheavyindustry.27Intermsofautomobilemanufacturing,thegovernmenthas

intervenedonanumberofoccasionstoreorganisetheindustryandpromoteincreased

production,oranewmodelofdevelopment.Thishasbeenadvancedby facilitating

changesinforeignpartnershiparrangementsandreassigninglicences.

Three of the largest Korean chaebols areSamsung,Hyundai,andtheLGGroup.Sam-

sung is now South Korea’s largest chaebol, andthelargestconglomerateintheworld,

measuredbyrevenue.Thecompanyconsistsofanumberofinternationaloperations,

includingSamsungElectronics,thelargestelectronicsmanufacturerintheworld;Sam-

sungHeavyIndustries,thesecondbiggestshipbuilderintheworld;andSamsungEngi-

neeringandConstruction,amajorinternationalconstructioncompany.Samsungisthe

bestknownSouthKoreanbrand in theworld,havingovertakenSony (Japan)as the

world’sleadingelectronicsbrand.TheSamsungGroupnowhasanannualturnoverof

morethanUS$170billion,andaccountsforapproximately20percentofKorea’sexports.

TheHyundaiMotorCorporationisthebiggestautomakerinSouthKorea,andthe

fifthlargestintheworldintermsofunitssold.WithaheadofficeinSeoul,Hyundai

operatesthelargestautomobilemanufacturingplantintheworld,Ulsan,whichhasan

annualoutputof1,6millionunits.ChungJu-YungfoundedtheHyundaigroupin1947,

andestablishedHyundaiMotorCompanyin1967.Since1986,Hyundaihasbeensell-

ingcarsintheUnitedStates,andby1996ithadestablishedaglobalmarket.In2004,



salesreachedalmostUS$60billion,makingthecompanySouthKorea’ssecondlargest

corporation.Hyundaivehiclesaresoldinternationallyin180countriesthroughmore

than5000outlets.Closeto4millioncarsarenowbeingmanufacturedandsoldannu-

allybyHyundai,makingthecompanythefifthbiggestautomanufacturerintheworld.

TheLGGroup,specialisinginelectronics,mobilephones,andpetrochemicalprod-

ucts, isKorea’s third largestchaebol. Active in80countries, subsidiaries includeLG

Electronics,LGTelecom,ZenethElectronicsandLGChem.Thecompany(knownthen

asGoldstar)producedKorea’sfirsttransistorradioin1959andnumerousotherelec-

tronicproductsfollowed.Sincethe1960s,LGhasbecomefamousforproducingarange

ofproductswhicharemarketedinternationally.28

With a view to developing and shaping selected industries, the government has

exercisedcontroloverinflowsofforeigninvestmentandtechnology.Theevolutionof

theseindustrieshasalsobeenshapedbygovernmentregulation,throughlimitingthe

emergenceofcompetitors,andincentivestodeveloprelatedlinesofmanufacture.The

government has consistently promoted vertically integrated industrial development,

whilelocalcontentregulationshavedemandedanincreasingshareofinputfromlocal

supplychains.Topromotelocalsupplychaindevelopment,thegovernmenthasoften

nominatedalimitednumberofcompaniestosupplyparticularinputstolarger,export

drivenconcerns.Inanumberofcases,privateagentswerenotreliedontoadvancekey

elementsofKorea’sindustrialisationprocess.Intheareasoffertilisers,petrochemicals,

andrefinedpetroleumproducts,theKoreangovernmentestablishedpublicenterprises

toensuresuccess.Atthesametime,publicenterpriseswerealsoexpectedtobeinter-

nationally competitive.Theyhavebeenmanagedasprofit-seekingentitiesandhave

addedsignificantlytogovernmentrevenues.Someunsuccessful,butimportant,sector

companieshavebeentransferredtopublicownershipthroughdebtrepaymentguaran-

teestoensuretheirlongtermsurvival.

Korea’seconomicpolicieshavebeenspecificallydesignedandintendedtopromote

acomprehensiveindustrialisationprocess.Thebroadobjectiveshavebeentobuilda

comparative advantage in targeted industries, and exploit a comparative advantage

ininternationallycompetitiveindustrialsectors.Governmentsubsidiesandincentives

wereprovidedinagenerallyfreemarketenvironment,wherepricesandlabourcost

reflectedsupplyanddemand. Importprotectionprovidedasignificant factor inpro-

motinginternationallycompetitiveindustries,whileKorea’seconomicpolicyandplan-

ningasawholeprovidedthenecessaryframeworkandsystemofincentivestoensure

successinglobalmarkets.29Governmentinterventionsweresupportedbyfreemarket

institutions,whichprovidedflexibilityinresourceallocation.Moreover,anumberof

very profitable large corporations emergedwithout government planning, or assist-

ance.Thefreemarketprovidedthenecessaryanddynamicfoundationforthesuccessof

governmentaltargetedinterventions.Korea’spoliciesensuredthatbusinessescouldbe

certainthattheirexporteffortswouldberewarded.Theclearandmeasurableoutcome

ofKorea’seconomicpolicyhasbeenamassiveincreaseinglobalexportsovertime,and


GARTH SHELTON

significantwealthcreationfortheKoreansocietyasawhole.

LarryWestphal’s insightful studyofKorea’s industrialpolicyoffers the following

fivesuggestionsforotherdevelopingeconomies:

• governmentinterventionmustbedrivenbythegoalofachievinginternationalcom-

petitivenessthroughefficientproduction;

• informationforbuildingandjudgingcomparativeadvantagemustcomefromall

appropriatesources;

• strategiesmustbealtered,orfine-tuned,toreflectchangingcircumstancesornew

information;

• onlyasmallnumberofindustriesshouldbetargetedatanyparticulartime,inorder

toensureappropriategovernmentalsupport;and

• government intervention should not constrain the activities of well established

industries,butshouldratherfocusonthecreationofnewindustries.

Westphalemphasises that theKoreanmodelpresupposesa totalcommitmentof the

politicalleadershiptoensuringindustrialisation,exportfocus,andeconomicdevelop-

ment.Withoutpoliticalcommitment,theeconomicmodelisunlikelytobearfruit.30

Korea’s success factorsEzraVogel’sbroaderlistofKoreaneconomicsuccessfactorsincludesthefollowing:

• unity–theethnicandculturalunityoftheKoreanpeoplehasunderpinnedeco-

nomiccommunityandcommitment;31

• adisciplinedandmotivatedworkforce–thishasbeencomplementedbyastrong

nationalconsciousnessandanintensenationalvitality;

• knowledgeofotherindustrialisationprocesses–Koreanshaveadeepunderstand-

ingoftheindustrialisationprocess,especiallyitsdevelopmentinJapan;

• efficientagriculture–landreformleadingtoincreasedproductionunderpinnedthe

industrialisationprocess;

• entrepreneurs–embodiedinthechaebol,Koreahasdevelopedastronganddynamic

entrepreneurialspirit;and

• thesmallbusinesssector–dynamicsmallbusinessesandmanufacturershavecom-

plementedthelargerandmoreinternationallyfocusedKoreancorporations.

Vogelconcludesbyarguingthat,inthecaseofSouthKorea,‘nonationhastriedharder

andcomesofarsoquickly,fromhandicraftstoheavyindustry,frompovertytopros-

perity,frominexperiencedleaderstomodernplanners,managersandengineers’.32

Koreaachieveditseconomicsuccessthroughastrongpartnershipbetweengovern-

mentandprivateenterprise. In thisprocess, theKoreangovernmentactedassenior

partnerbyselectingtheappropriatedevelopmentstrategyandprovidingtherequired

financialresources,alongwithdecisiveleadershipandcommitment.Thegovernment



displayedstrongandeffectiveleadership,supportedbyacentralisedandhierarchical

bureaucracy.Aloyal,punctual,andhard-workingpopulationwithastrongrespectfor

authorityprovidedthenecessaryinputforapositiveoutcome.Thegovernmentacted

as a catalyst to unleash the entrepreneurial spirit of Korea’s business elite, pushing

economicgrowth tonewheights. Political leaderswere able to inspire commitment

andhardworktowardsabetterlifeforsocietyasawhole.Thegovernment’scarefully

plannedandsequenceddevelopmentstrategies,implementedthroughaclosealliance

withbigbusiness,providedthebaseforeconomicsuccess.Anumberofcomprehensive

fiveyearplansandaglobalperspectiveontradeandinvestmentmotivatedthemanu-

facturingsectortoimproveoutputandmoveintoglobalmarkets.

During Korea’s rapid industrialisation period, fiscal policy included a relatively

smallpublicsector,maintenanceofabalancedbudget,lowtaxes,theextensiveuseof

taxincentivesforinvestments,arelianceonindirecttaxes,significantpublicsavings,

lowspendingonsocialservices,andsignificantfinancialsupportforindustrialdevelop-

ment.Importantly,aseconomicgrowthaccelerated,domesticsavingsincreased,pro-

vidingasolidfoundationforfuturecommercialexpansion.Taxpolicywasdesignedto

mobiliseresourcesinsupportofthepublicsector,whileatthesametimefacilitating

ongoing investment in theprivate sector.TheOfficeofNationalTaxAdministration

(ONTA)notonlyimprovedtaxcollection,butbecameakeyinstrumentformonitoring

business performance, and directing business towards the objectives of government

planning.Exportersandheavyindustriesbenefitedextensivelyfromtaxincentives.33

TheKoreangovernmentprovidedpolicydirectionandincentivesforrapidindustri-

alisation,throughitsowncommitmenttotheprocess.Atthesametime,asKwangChoi

andYoungSaeLeepointout:

Foralltheincentivestobecorrect,fortheadministrativearrangementsguarantee-

ingaccesstothoseincentivestobeefficient,andfortheinstitutionalmechanisms

foradjustingthoseincentivestobeeffective,therehadtobeastrongpoliticalcom-

mitmenttodevelopanablebureaucracy.ThiswaspreciselythecaseinKorea.34

TheKoreanWaranditsresultingpovertyimpactedsignificantlyontheKoreanpeople,

whosoughtanimprovementintheirstandardofliving.Consequently,Koreaadopteda

‘growthfirst’approachasitsguidingprinciple.Thisinturntranslatedintotheeffective

mobilisationoftheKoreanpeopleintoadedicatedandfocusedworkforce.Thepolitical

leadersapproachedeconomicproblemsfromanon-ideologicalstandpoint,emphasising

insteadapragmaticapproach,aimedatachievingspecificandclearlydefinedresults.

Tofacilitateeffectivelongtermplanning,KoreaestablishedtheEconomicPlanning

Board(EPB),whichwasresponsiblefordevelopingpoliciestoguideoveralleconomic

development.TheministeroftheEPBhasalsoservedasdeputyprimeministerwith

authorityoverbothplanningandbudgeting, thusensuring thatplanswereactually

implemented.TheOfficeofPlanningandCo-ordination(OPC),undertheprimeminis-

ter,wasresponsibleformonitoringtheimplementationofpolicyandtheperformance


GARTH SHELTON

ofimplementingorganisations.Inputsintoeconomicpolicy-makingcomefromallgov-

ernmentdepartments,organisedbusiness,andprivateexperts,buttheactualdecision-

making corehasbeena small groupofhigh level governmentofficials.Policies are

discussedattheEconomicMinister’sConsultationMeeting,and,periodically,specialad

hoccommitteesareestablishedtoaddressspecificissues.Thepresidentchairsvarious

meetingsthatcontributetoeconomicpolicyformation,suchastheMonthlyEconomic

ReviewMeeting,theTradeExpansionMeeting,andtheQuarterlyScienceandTechnol-

ogyPromotionMeeting.Theseareattendedbyseniorpolicy-makers,businessleaders

and specialists, thus providing an effectivemechanism for information sharing, co-

ordination,andeffectivepolicyimplementation.

Since1945,allKoreangovernmentshavestressedtheneedtomaintainaneconomy

withinwhichtheprivatesectorplayedacentralrole.Economicpolicyprovidedacom-

prehensiveframeworkforeconomicgrowth,whilethefreemarketproducedtheneces-

saryoutputs.Governmentplansprovideddirectionandincentives,withmembersofthe

privatesectorrespondinginaccordancewiththeirowncapacityandfreewill.Inthis

context,entrepreneurshipwasakeyfactorenablingbusinessleaderstotakeadvantage

of government-created opportunities. Excessive governmental intervention at times

provedtobeproblematic,tendingtoconfirmthatgovernmentplanningisnosubstitute

formarketforces.Atthesametime,socialandpoliticalstabilitywasacriticalfactor

inunderpinningeconomicdevelopment.Highlyeducatedanddedicatedcivilservants

providedthedevelopmentplans,butwerenotinanypositiontoguidebusinessleaders

indaytodayactivitiesanddecision-making.Thecombinationofeffectiveplanningand

entrepreneurship servedas the formula forKorea’seconomic success.Export targets

andpoliciesweresetbythegovernment,butbusinessleaderswerepartoftheproc-

ess,andwhereplanswerenotworking,thegovernment–businessalliancecouldmake

the necessary policy adjustments, or changes. Thus, in effect, a broad collaborative

effortbetweengovernmentandbusiness,basedonacommoncommitmenttoeconomic

growth,formedthefoundationofKorea’seconomicmiracle.

Innovation, education, and managementBesidesthecriticalroleofgovernmentinterventioninplanninganddirectingKorean

industrialisation,threeothercentralcontributoryfactorsdeservespecialmention:tech-

nologicalinnovation,education,andcorporatemanagement.Attheearlystageofindus-

trialisation,Koreancompaniesobtainedtechnologythroughinformalchannels.Reverse

engineeringofimportedproductsformedanimportantpartoftechnicaldevelopment,

whilecompaniesreliedontheabsorptioncapacityoftheirstafftoacquirenewtechnol-

ogy.However,theexportemphasisofindustrialpolicyforcedcompaniestobecomemore

competitivethroughtechnicaldevelopment.Consequently,Koreancompaniesinvested

heavily in research and development (R&D), providing the foundation for long term

competitiveadvantageandconstantinnovation.35Inordertosurvive,exportoriented



companieswererequiredtoinnovatethroughtechnology,orfacegrowinginternational

competition.In2007,thePresident’sOfficeidentifiedKorea’s‘Top10newtechnologies’,

whichareintendedtoformthefoundationforfutureeconomicgrowth.Newtechnolo-

giesincluded:largeLNGcarriers;six-cylinderdieselengine;microprojector;Kt-1Ungbi

trainingaircraft;advancedairconditioners;buffingtechnology;PCBproductiontech-

nologies;nextgenerationplastermaterials;molecularPGAandearthretentionsystems.

(Seetable1fortheglobalrankingoftheROK’selectronicsexports.)36

Table 1: ROK electronics industry’s export items

(Unit: million dollars)

2006

Ranking Electronics product Export amount

1 Integrated circuit 34 386

2 Wireless communication equipment 30 889

3 Flat display 14 522

4 Video/audio equipment 6 322

5 Computer ephemerals (input-output device) 5 717

6 Rotary equipment for home use 4 406

7 Passive and apparatus parts 3 872

8 Computer ephemerals (memory device) 2 297

9 Dry battery and storage cell 1 638

10 Semiconductor device 1 516

11 Electron tube 1 357

12 Wired communication equipment 997

13 Illuminating equipment 867

14 Heater/electric heater 743

15 Computer body 376

Source: Korea International Trade Association

The absorption anddevelopment of new technologieswouldnothavebeenpossible

withoutahighlyeducatedworkforce.TWKangnotesthatoneofKorea’skeysuccess

factors has been ‘low-cost labour combinedwith theConfucian emphasis on educa-

tion....Acountrywithoutnaturalresourceshadtoutilizeitshumanresourcestoits

maximumcapacity–thiscombinationallowedittodoso.’37 The Confucian emphasis

oneducationtranslatesintoahighlycompetitivesystem,withinwhichonlythebest

studentsaresuccessful.38Acentralisedadministrationregulatestheeducationprocess,

emphasisingmathematics, science, and technology. SouthKoreawas thefirst coun-


GARTH SHELTON

try in theworld to provide high-speed internet access to every school. Entrance to

prestigiousuniversities is a focus of dedication and self-sacrifice, butwhen success-

ful,translatesintoimportantcareerprospects.Collegeentrancerequiresparticipating

inahighlycompetitiveexamprocesswhichcanopenthewaytoprosperity;apoor

resultwillmeanalowerpayingjobwithlittleprospectofeconomicadvancement.At

thesametime,RobertElegantpointsoutthatthe‘Confuciantraditionofequalityof

opportunity,joinedwithinherentegalitarianism,enabledKoreatomakeuseoftalent

whereveritappeared’.39

ThemanagementandcorporatephilosophyofKoreancompaniescontributessignifi-

cantlytooverallpositiveeconomicperformance.Allmajorcompanieshaveasahoon,

whichisaphrase,orslogan,thatpromotesthecompanies’mostimportantvalues.At

LG,forexample,thewordinhwa(harmony)iskeytoitsmanagementphilosophy.Dae-

woopromotes‘creativity,challenge,andsacrifice’,whileSamsungencourages‘respect

fortheindividual,pursuitoftechnology,andempowerment’.UnitedStatescompanies

tendtolinkcorporatevaluestocustomerservice,innovation,andproductquality,but

Korean corporate culture emphasises attitudes and behaviours that are expected of

employeestowardseachother,thecompany,andsocietyasawhole.Hyundaicorpora-

tion’s sahoon is intendedtoreflectthe ‘Hyundaispirit’andconsistsofthefollowing:

‘Createwisdom,Unyieldingwill, Indomitabledriving force’.Thesewords reflect the

founder’sbeliefthatalmostanythingcanbeaccomplishedifpeoplesettheirmindsto

it.Thecompanyhandbookcontainsrulesandrequirements,companyhistory,andcor-

poratephilosophy.Allemployeesareexpectedtobefullycommittedtoadvancingthe

company’svisionasoutlinedbyseniormanagement.TheHyundaicorporatephiloso-

physuggeststhatbuildingacompanyandbuildinganationareinterdependent.Com-

mitmenttothecorporationandpatriotismthusgohandinhand.Acommonfeatureof

thecorporateculturethroughoutKoreaisatotaldedicationtowork,groupharmony,

andawillingnesstoacceptanychallengethecorporationdeemsnecessary.40

North Korea – economic stagnationIncontrasttoSouthKorea,theeconomicperformanceofNorthKorea,ortheDemocratic

People’sRepublicofKorea(DPRK),overthepast30yearshasbeenexceptionallypoor.

Aneconomic systemcharacterisedbystateownershipofproduction, self-sufficiency

( juche),centralisedeconomicplanning,andanemphasisonmilitarydevelopmenthas

underminedtheeconomicpotentialoftheDPRKandpreventedarepeatofthemiracle

witnessedintheROK.Thecommitmenttoself-sufficiencyhasweakenedeconomicper-

formance,leadingtowidespreadshortages.Duringthe1990s,economicinefficiencies,

alongwithhighmilitaryexpenditures(approximately20percentofGDP)andpoor

weatherconditions,ledtonegativegrowthandinsufficientfoodproduction.41 The gov-

ernmenthasintroducedsomereformsintendedtostimulateproduction,butwithlim-



itedimpact,andfoodproductionremainsamajorproblem.42Internationalsanctions,

imposedinresponsetoNorthKorea’swithdrawalfromtheNuclearProliferationTreaty

(NPT),haveworsenedanalreadydifficultsituation.

TheDPRK’sGDPpercapitaisestimatedatUS$1800(PPP),comparedtothatofthe

ROKatUS$22000(PPP),resultingintwocompletelydifferenteconomicprofilesonthe

Koreanpeninsula.Negativegrowthratesandarefusaltoparticipateinglobalisation

hasunderminedeconomicdevelopmentfortheDPRK,withlittleprospectforrecovery

intheshortterm.43Sincethemid-1990s,thefocusofthenorthhasbeenonacquiringan

effectivedeterrentcapacity,intendedtoensurelongtermregimesurvival.44Significant

economicreform,basedontheChinesemodel,orasurrenderofnuclearmissilecapac-

itywoulddirectly threaten theviabilityof the regime.YongSooPark suggests that

‘NorthKorea’suniquemonolithicsystemofpoliticalcontrolandpolicymakingwith

individualpowerconcentrationisthebiggestbarriertoeconomicreform’.45Pyongyang

haslaunchedacampaigntotransformtheDPRKintoa‘great,prosperousandpowerful

country’(kngsong taeguk)by2012,anambitioustask,andlargelyunachievablewithout

theliftingofinternationalsanctionsandNorthKorea’sfullintegrationintotheglobal

economicsystem.

The Six-Party Talks and denuclearisationQuestionsrelatingtothehealthofNorthKoreanleaderKimJongIlhaveraisedcon-

cerns about North Korea’s ongoing denuclearisation process, as well as stability on

theKoreanPeninsulaasawhole.Kim’ssuddendeathcouldundermineinternational

effortstoterminateNorthKorea’snuclearweaponsprogramme,andproduceanunsta-

blegovernmentintheDPRK.SinceApril2003,BeijinghashostedtheSix-PartyTalks

(UnitedStates,China,Japan,Russia,andSouthandNorthKorea)inanefforttoreturn

North Korea to the NPT’s safeguards framework. The early phases of the Six-Party

TalksshowedlittleflexibilityonthepartofeitherWashingtonorPyongyang,withslow

progresstowardsanoutcome.46Giventhecomplexityoffindingacompromiseamong

sixcompetingnationalinterests,inaprocessthatincludesupto120diplomats,nego-

tiators,andtheirsupportteamsintheroomatanyonetime,theSix-PartyTalkshave

provedtobeacumbersomeconflictmanagementtool(seetable2,outliningdiffering

objectives). Rather, direct bilateral interaction between Pyongyang andWashington

wouldbeasimplerandmostlikelymoresuccessfulprocess.

On19September2005,thepartiesagreedtoaprocesswhichwouldfinallyrealise

thedenuclearisationoftheKoreanPeninsula.However,advancingimplementationof

theagreementwasunderminedbydifferencesbetweentheUnitedStatesandNorth

Koreaovertheexactquantityofweaponsgradematerialproduced.Furtherdisagree-

ment related to the insistenceof theUnitedStates thatPyongyangmake significant

progress ondisarmament before receiving concessions. Topress home its point, the


GARTH SHELTON

United States forced the Banco Delta Asia Bank, inMacao, to freeze North Korea’s

accounts.

NorthKorearespondedwithmissiletestsandthenanuclearweaponstestinOcto-

ber2006,strengtheningitsnegotiatingpositionwithashowofforce.47

Table 2: Major priorities and bargaining chips, by country, in the Six-Party Talks with North Korea

Country Priority Bargaining chips

United States Complete, verifiable, and irrevocable scrapping of nuclear weapons: non-proliferation; human rights; peace treaty

Guarantee security and regime; economic aid; normalised diplomatic and trade relations

North Korea Guarantee security and regime; establish diplomatic relations with the United States and Japan; reunification with South Korea on own terms; peace treaty

Scrap nuclear weapons and missiles; reduce tensions along the de-militarised zone (DMZ)

South Korea Set framework for peaceful resolution and prosperity on the peninsula; reunification; access to North Korean labour and markets, non-nuclear Korean peninsula; human rights; peace treaty

Economic support; energy; business investment

Japan Scrap nuclear weapons programme and missiles; resolve abductions of Japanese citizens

Normalised diplomatic relations; economic support

China Non-nuclear Korean peninsula; non-proliferation; continued influence on peninsula; weakening United States alliances with Japan and South Korea; peace treaty

Economic support; alliance support

Russia Scrap North Korean nuclear weapons; non-proliferation; promote stability in North East Asia

Buffer diplomacy; energy assistance; business investment

Source: Adapted from: The Seoul Economic Daily, 22 August 2003, cited in Hong Soon-Jick, North Korean nuclear crisis: prospects and policy directions, East Asian Review 15(3), Autumn 2003, 31.

Followingthenucleartest,theUNSecurityCouncilpassedResolution1718,obliging

allUNmemberstoparticipateinarangeofrobustsanctionsagainstNorthKorea.The

confirmednuclearstatusofNorthKoreaencouragedWashingtontointensifyitsbilat-

eralandmultilateralnegotiationswithPyongyang.On13February2007,theSix-Party

Talksproducedanagreementcoveringmaterialaidasarewardfordenuclearisation,

aswellastheprospectoffulldiplomaticrelationsbetweentheUnitedStatesandNorth

Korea.Thediplomatictooltobeemployedwasdescribedas‘actionforaction’,whereby

Pyongyangwouldberewardedafterspecificmilestonesalongtheroadtodenucleari-

sationwerereached.Thesequencingof thisprocedure,andthediffering interpreta-

tions ofwhat constituted fulfilment of an agreed action, have clouded the process,

butprogresshasbeenmade.Afurthercomplicationtotheeffectivefunctioningofthe

Six-PartyprocessisalingeringtensionbetweenSouthKoreaandJapanoverJapan’s

claim to theDokdo islands.Japanperiodicallyclaimssovereigntyoverwhat it calls

theTakashimaislands,buthasnostatusininternationallaw.48Differencesprovoked

byJapan’sclaimshaveunderminedrelationswiththeROK,andimpactnegativelyon

boththeSix-PartyTalksandregionalco-operation.49Chinahaslongbeenconsidered



thekeytoresolvingtheNorthKoreanissue,givenitscloseeconomicrelationshipwith

Pyongyang.However,NorthKorea’snuclearandmissileteststendtoconfirmthesug-

gestionthatChina’sinfluenceislimited.Atthesametime,Beijingretainsastronglink

withPyongyangtopromoteitsownlongterminterestsontheKoreanpeninsula.50

SomeobservershavesuggestedthatNorthKoreadependsonitsnuclearweapons

capabilityforregimesurvival,andlongtermdenuclearisationisthusimpossible.Oth-

ers point out thatUnited States hostility, especially former PresidentGeorge Bush’s

characterisationofNorthKoreaaspartofthe ‘axisofevil’, liesattheheartofwhat

NorthKorea sees as a nuclear deterrent against any possibleUnited Statesmilitary

action.Washington’sbellicosityhasforcedPyongyangtointensifyitsmilitaryprepara-

tionstodiscourageapre-emptivestrike.51 Nuclear weapons are the DPRK’s principle

diplomaticbargainingchip,deterrentcapacity,andsourceofdomesticinfluenceand

power.NuclearweaponsunderpintheNorthKoreanregime,andempoweritinboth

domesticandinternationalaffairs.Withoutnuclearweapons,theDPRKwouldattract

littleattention,norwoulditbeabletodefenditselffromexternalhostility.

NorthKorean leadershave stressed thedesire toavoid the fateof Iraqandhave

pointedoutthatnuclearweaponscouldnotbeabandonedaslongasWashingtontalked

of‘regimechange’.ThusthequickestwaytoadenuclearisedNorthKoreawouldbefor

theUnitedStatestosignatreatyfinallyendingtheKoreanWar,followedbydiplomatic

recognition, the liftingof sanctions,and fulleconomic integrationof theDPRK into

theglobalcommunity.WithoutWashington’shostilityandthethreatofanattackfrom

UnitedStatesmilitaryforcespermanentlybasedinSouthKorea,Pyongyangwouldhave

littlereason,orincentive,tomaintainacostlynucleardeterrent.

InMay2008,Pyongyangprovidedmorethan18000pagesofdocumentsrelatingto

itsplutoniumenrichmentprogrammeasasteptowardsfulfillingitsnegotiatedunder-

takings.Washington respondedwith an announcement that itwould provideNorth

Korea with 500 000 tons of food aid. However, competition betweenWashington’s

hawks and dovesweakened formerUnited States chief negotiator ChristopherHill’s

ability to provide promised concessions and accelerate the bargaining process. The

initialUnitedStatesacceptanceofNorthKorea’splutoniumenrichmentsubmissionwas

questionedbythehawks,whosoughtadditionalinformationontheDPRK’sallegedsale

ofnucleartechnologytoSyria.Moreover,adisputeovertheexactquantityofweapons

gradeplutoniumproducedinNorthKoreabecameastumblingblock.Consequently,the

UnitedStatesdelayedinremovingNorthKoreafromitslistofstatesponsorsofterror-

ism,theagreedrewardforPyongyang’ssubmission.

LastAugust,NorthKorearespondedtoWashington’sdelaybyinitiatingaprocess

torestartitsYongbyonnuclearreactor,whichhadbeenshutdownon27June2008.

However,theUnitedStatesrespondedquicklyandagreedtoremovePyongyangfrom

its terror list, thus opening theway for theDPRK to access InternationalMonetary

Fund(IMF)andWorldBankloans.RemovalfromtheUnitedStateslistofstatesponsors

ofterrorismconstitutesamajorbreakthroughfortheDPRKatthenegotiatingtable,


GARTH SHELTON

and offers Pyongyang new opportunities for constructive international engagement.

However,theDPRK’sdecisiontoannouncean‘all-outconfrontationalposture’against

SouthKorea,andthetestingofalong-rangemissileon5April,hasplacedanewobsta-

cleinthewayofaproductivenegotiationprocess.52 North Korea’s suggestion that its

missilelaunchwasinfactanattempttoplaceasatelliteinorbitwaslargelyirrelevant,

giventhatsuccessattheSix-PartyTalksrequiresthatNorthKoreafreezemissiletesting

andsticktopastagreementsandundertakings.TheObamaadministrationhasmade

it clear that theDPRKmustendmissile testing,and fulfilpromises todismantle its

nuclearweapons,beforeanynormalisationofdiplomatictiescanbediscussed.Without

anormalisationofrelationswiththeUnitedStates,UNsanctionswillnotbelifted,and

theDPRKwillremainexcludedfromtheworldeconomy.

The question of verificationSomeprogresshasbeenmadeinadvancingNorthKorea’sdenuclearisation,butacom-

pletelyverifiableterminationofPyongyang’snuclearprogrammeisstillalongwayoff.

TheprocessofverificationisstronglycontestedbyNorthKorea,especiallythescope,

timing,andextentofinspectionprocedures.Unannounced,on-siteinspectionsarecon-

sideredathreattotheDPRK’ssovereignty,andremainanathematotheDPRKauthori-

ties.Pyongyanghassoughtaverificationregimewhichcoversonlyissuesincludedin

itswrittendeclarations,andisattemptingtoavoidintrusiveinspections.TheUnited

States ispushingforacomprehensive inspectionprocess, intendedtouncoverNorth

Korea’s alleged,butunannounced,uraniumenrichment system.There remainmany

unansweredquestionsontheroadtoNorthKorea’sfulldenuclearisation.

UnitedStatesestimatessuggestthatPyongyanghasmanufactured40to60kilograms

ofweaponsgradeplutonium,enoughtobuildup to tennuclearweapons,butNorth

Koreaisofferingconfirmationofmaterialforapproximatelyfiveweapons.Astockpile

of an additionalfivenuclearweaponswouldprovide apowerful long termmilitary

deterrentforNorthKorea.Inaddition,theUnitedStateshasallegedthatPyongyang

has operated parallel plutonium and uranium enrichment processes, but Six-Party

Talkshaveonly includedplutoniumenrichment.Thesuspecteduraniumenrichment

andstoragefacilitiesremainoutsidethenegotiations,andwillremaintherewithouta

robustverificationregime.NorthKorea’snegotiatingstrategythusappearstobebased

on sacrificing its plutonium-producingYongbyon complex,while retaininganuclear

weaponsstockpileandacapacitytocontinueproducinguranium-basedweaponsgrade

material.53SolvingtheNorthKoreannuclearissuewouldthusrequireadequatesecu-

rityassurancesforPyongyang.54ProfessorKimSung-hanhassuggestedthattheDPRK’s

denuclearisationshouldbepursuedwiththelongtermaimofestablishingaregional

‘peaceregime’whichwouldprovidePyongyangwiththenecessarysecurityassurance

topursuedenuclearisation (see table3).Observershave concluded thata successful



verificationofNorthKorea’sdenuclearisationprocesswouldrequirean‘unprecedented

levelofco-operation‘withtheauthoritiesinPyongyang.55

Table 3: Four-stage approach to denuclearisation and peace regime

Six-Party TalksUS–North Korea relations

US–South Korea relations Peace forum

1st stage:Shutdown

Formation of peace forum

Security guarantee Resumption of food and fertiliser aid

Agreement on method of discussing a peace regime

2nd stage:Declaration of all nuclear facilities

Discussion of large-scale economic and energy aid

Removal of North Korea from the list of state sponsors of terrorism

Reopening of high-level inter-Korean talks

Debate on parties to peace pact and its contents

3rd stage:Verification

Large scale economic and energy aid

Lifting of economic sanctions against North Korea

Inter-Korean summit talks

Agreement on contents of peace pact

4th stage:Disablement (completion of nuclear dismantlement)

Endorsement of peace agreement; conversion to Nuclear Energy Agency security system

Normalisation of US–North Korea relations

Conclusion of peace agreement

US and China guarantee inter-Korean peace pact

Source: Kim Sung-han, Achieving nuclear disarmament, Korea Focus, Spring, 2007.

SouthKorea’sPresidentLeeMyung-bakhasbeencriticalofthepreviousROKadmin-

istration’sso-called‘sunshinepolicy’towardsNorthKorea,whichhasimplieduncon-

ditionalaid.The‘sunshine’approachwasbasedontheassumptionthatthroughtrade,

aid,anddialogue,NorthKorea’sleaderswouldopentheireconomy,andgraduallyinte-

gratewiththeglobalsystemandwithSouthKorea.However,theapproachappeared

tohavelittlepositiveimpactontheDPRK,asPyongyangproceededtostrengthenits

militarycapacity,expanditsmissilestockpile,andtestnuclearweapons.NorthKorea’s

economyremaineddepressed,withnopovertyreliefforthegeneralpopulation.

Thus,insteadofsunshine,PresidentLeehasproposedapolicyof‘Denuclearisation,

opennessand3000’,whichoffersNorthKoreasignificant incentivestoterminateall

nuclearprogrammes,withfullverification,andbuilditseconomy.Theproposalenvis-

agescomprehensiveROKassistancetotheNorthoveratenyearperiod,intendedto

liftpercapitaincomeintheDPRKtoUS$3000ayear.56 The success of the programme

woulddependonthesouth’sabilitytomobilisethenorth’shumancapital,andrepeat

itsowneconomicmiracleonasmallerscale.

Thekeyelementsofthesouth’sproposal include:establishinganexportoriented

industrial structure;major educationalprogrammes, intended tomobilise theNorth

Koreanpeople;theestablishmentofaUS$40billionco-operationfundtofinanceeco-

nomicdevelopment;co-operationinthefieldsofenergy,transport,andcommunications


GARTH SHELTON

toupgradetheDPRK’sexistingsystems;andtheprovisionofwelfareaidtoimprovethe

qualityoflife.Thekeytounlockingtheplanforeconomicgrowthandprosperityisfor

theDPRKtofulfilcompletelythe19September2005,Six-PartyTalksagreement,which

committedPyongyangtoaverifiableterminationofitsnuclearweaponsprogramme.57

TherebuildingofNorthKorea’seconomyoveratenyearperiodwouldmakeunifica-

tionarealisticandaffordableoption.ThusNorthKoreahas theoptionofamassive

rewardfordenuclearisation,basedonanachievablevision.Theinternationalcommu-

nity,SouthAfricaincluded,shouldgivefullsupporttoPresidentLee’splanforrebuild-

ing theDPRK’s economy. It offers a comprehensive long term solution to advancing

Koreanco-operationandbuildingstabilityinNorthEastAsia.Denuclearisationwithout

rebuildingtheDPRK’seconomyofferslittleincentivetoPyongyang,butLee’sapproach

offersbothaguaranteeofsecurity,anda‘businessmodel’forKoreanprosperityinboth

NorthandSouthKorea.SouthAfrica’slongtermforeignpolicyplanningshouldinclude

adialoguewiththeROKonhowSouthAfricacouldcontributepositivelytothevision

foreconomicreconstructioninNorthKorea.Throughthis,SouthAfricacancontribute

topromotingincreasedpeaceandstabilityinEastAsia,andadvanceacomprehensive

securityframeworkfortheregion.Thiswouldcreateneweconomicopportunities,and

newprospectsforSouthAfricancommercialengagement,whichwouldadvanceSouth

Africa’snationalinterests.

Kim Jong Il’s successor?KimJongIl’speriodicabsencefrompublicengagementsoverthepastfewmonthshas

forcedthedenuclearisationdebatetoincludethequestionsofsuccessionandregime

stability.BeijingandWashingtonhavebegundiscussionsonpossiblejointactiontosta-

biliseNorthKoreaintheeventofapoliticalmeltdown.Thereisacommoninterestin

preventingsocialcollapse,butdivergentnationalinterestsremain,withBeijingseeking

thelongterminclusionofaunitedKoreaintoChina’snortheasteconomicdevelopment

zone,whiletheUnitedStatesseekstomaintainforwardmilitarybasesontheAsian

mainlandinadividedKorea.ConcernrelatingtoKim’shealthhasbeencomplicated

by thenorth’s launchofa long rangeTaepodong-2 intercontinentalballisticmissile,

designedtostriketargetsonthewestcoastofcontinentalUnitedStates.Whiledenu-

clearisationtalkswereinprogress,theDPRKacceleratedeffortstoperfectlongrange

missilesystemscapableofdeliveringnuclearwarheads.

Latein2007,BeijingsenseddeteriorationinKimJongIl’smedicalcondition,and

ithassincebeenadmonishingWashingtontoplanforadestabilisingandunpredict-

ablesuccessionstruggleinPyongyang.GiventhatKimhasnotnamedasuccessor,and

histhreesonsaretooyoungandappearunpreparedforleadership,apowerstruggle

amongKim’sfamilymembersandthearmedforces,possiblycomplicatedbycompeti-

tionbetweenconservativeandreformfactionswithinthemilitary, isonthecards.58



Thecontenders forpower includeKimJong-il’s threesons,KimJong-nam(37),Kim

Jong-chol(27),andKimJong-un*(25).

Theirlackofpreparationforleadershipandminimalexperiencecountagainstthem,

buttheirfamilyconnectionsprovideasourceofsignificantinfluence.NoneofKim’s

sons has been groomed for leadership in the sameway hewas prepared under his

father,KimIlSung.

Leadingcontendersinthearmedforcesinclude:JoMyong-rok,KimJongIl’ssecond

incommandofthemilitary;HyonChol-hae,afrequentcompanionofKim;RiMyong-

Su,alsoacloseassociateofKim;andOKuk-ryol,who isknownasKim’s ‘eyesand

ears’withinthearmedforces.WithintheNorthKoreanWorker’sParty,contendersfor

powerinclude:KimYong-nam,nominallythecountry’sheadofstate;andChangSong-

taek,thehusbandofKimJongIl’ssisterandacloseconfidantofKim.Othercontenders

includethreeseniorpartymembers:KimIl-chol,ChoeThae-bok,andJonPyong-ho.59

GiventhenatureoftheopaqueNorthKoreanpoliticalsystem,itisimpossibletopre-

dictaccuratelytheoutcomeoftheexpectedpowerstruggle,butthreelikelyscenarios

presentthemselves.60

Thefirst scenario, ‘muddling through’, suggests that a post-Kim regimewill be

acollectiveleadershipbasedontheexistingjuche (self-reliance)ideology,whichwill

continuetoengageinhighriskdiplomacytoextractconcessionsthroughtheSix-Party

Talks process, in the interests of regime survival. Therewill be no succession to a

‘supreme leader’ (sooryong); ratherpowerwillbevested jointly in themilitaryand

partyleadership,whilepolicywillbeformulatedbyconsensus.Littledeviationfrom

theexistingpoliticalandsecuritypoliciesisexpectedinthisscenario.61

Thesecondscenario,theso-called‘regime collapse’or‘powervacuum’scenario,

predictsthedisintegrationofNorthKoreaafterKim’sdeath.Thisscenariosuggeststhat

aciviluprisingwillpreventasuccessorfromexercisingeffectivecontroloversociety,

and building a new authoritarian structure. Although there are increasing signs of

socialdiscontentasaconsequenceoffoodandenergyshortages,thegeneralpopulation

appearsunpreparedandunmotivatedtolaunchanationaluprising.

Thethirdscenario,‘systems change’,suggestsamilitarytakeoverafterKim’sdeath,

followedbyeconomicreformsandopeningtotheworld,basedontheChinesemodel.62

Therearedivisionswithin theNationalDefenceCommission(NDC),acommitteeof

tenmilitaryleaders,inwhichtherealpoweroftheregimeresides.Someseniormili-

taryfavouracontinuationofexistingpolicies,butthemajorityarebelievedtofavour

gradual,controlledeconomicreform,whichwouldopenNorthKoreatotheworldand

induceeconomicgrowth.63 There is a growing consensus among foreign observers that

NorthKorea’slongtermprosperitydependsonaneconomicreformprocessthatwill

strengthenindustrialcapacity,foodproduction,andpovertyreduction.64

Foreignobservers aremost concernedabout thepossibilityof a regimecollapse,

whichcouldmeanalossofcontrolovernuclearweaponsandrelatedmaterials.

* NominatedassuccessortoKimJongIlaswegotoprint.


GARTH SHELTON

Kim’semphasisonthe‘militaryfirstpolicy’(intermsofresourceallocation)suggests

thathisruleisbasedontheacquiescenceofthemilitary,andevenifhehashealthprob-

lems,supportofthemilitarywillensurehiscontinuedauthority.65 Without a clear suc-

cessor,ascrambleforpowerappearsinevitablefollowingKim’sdeath.However,based

onmyowninterviewsandobservationsinNorthKoreaduringSeptemberlastyear,as

wellastherecordoftheDPRK’seffectivesocialcontrolsystem,meltdown,orsystems

collapse,nowseemsunlikely.Rather,a‘muddlingthrough’periodforanotherfewyears,

followedbyanacceleratedeconomicreformprogramme,isthemostlikelyoutcome.

UnpredictabilityanduncertaintywillincreaseovertimeasKimJongIlagesandhis

healthbecomesamoredependentvariable:henceanincreasedneedfordialogueand

interactionwithNorthKorea’sleaderstoencourageandfacilitateapeacefultransition.

WheretheSixPartiesareunabletomaintainasecurecommunicationchannel,neutral

butinterestedcountrieslikeSouthAfricacouldplayacriticalroleintimesofcrisis,or

extremeuncertainty.Whatevertheoutcomeofapowertransition,internationalactors

should help promote a smooth transition of powerwhile seeking to limit cause for

instability,orcrisis.

Korean unification?South andNorth Korea are expected to travel a long road of economic integration

beforepoliticalunitycanberealised.66ManyROKscholarsciteGermanreunification

astheblueprintforKorea.However,therisingpotentialfinancialcostofaunification

processhasledtoamorecautiousapproachfrompro-unificationscholars.EastGerma-

ny’seconomicconditionwasfarbetterin1989thanNorthKorea’sisin2009,andWest

Germany’scapacitytointegrateEastGermanywasgreaterthanSouthKorea’spresent

ability.Moreover,theGermanunificationprocesswasbackedbystrongpopularsup-

portfrombothwestandeast,alongwithsignificanteconomicbackingfromtheUnited

StatesandglobaleconomicinstitutionssuchastheIMFandtheWorldBank.Korean

unificationthroughavoluntaryprocess,theso-called‘softlandingapproach’,wouldbe

basedonamoregradualprocess,asopposedtotheGerman‘bigbangapproach’.

SignificantlyupliftingtheNorthKoreaneconomywouldbeaprioritybeforeanyuni-

ficationstrategycouldbeattempted.Withoutastable,growing,andvibranteconomy

inthenorth,thecostsofunificationforthesouthwouldbeexcessive.NorthKorea’s

GDPisestimatedatUS$25,6billion,comparedtoaroundUS$900billionforthesouth.

ThecostsofupgradingNorthKorea’spost-unificationinfrastructure,includingroads,

railways,ports,andtelecommunications,wouldbesignificant.MeetingNorthKorea’s

internationaldebtobligationswouldbeanothermajorhurdleforthesouth,beforethe

process of social integration could begin in earnest. The difficulties experienced by

GermanyarelikelytoberepeatedinKoreawiththeintegrationofasocialistcondi-

tionedworkforceintoanincentivebasedfreemarketsystem.Disparitiesinskillsand



workingconditionswouldalsoposemajorchallenges.(Seetable4foranoverviewof

south–northdifferences).

Table 4: South and North Korea data, 2006

SOUTH NORTH

Population (million people) 48,3 23,8

Economic growth rate (%) 5,0 -1,1

GNI ($100million) 8 873 256

GNI per capita ($) 18 372 1 108

Exports ($100 million) 3 254,6 9,5

Imports ($100 million) 3 093,8 20,5

Coal production (million tons) 2,8 24,68

Power (100 million Kwh) 3 812 225

Rice production (million tons) 4,68 1,89

Fisheries (million tons) 3,03 0,92

Car production (10 000 units) 384,0 0,44

Steel production (million tons) 48,43 1,18

Cement production (million tons) 49,21 6,16

Railway length (km) 3 392 5 235

Road length (km) 102 061 25 544

Source: Bank of Korea

Until themid-1970s,when theNorthKoreaneconomywas showingpositive results,

unificationwasafeasibleoptionforPyongyang.Atthattime,thenorthdevelopeda

comprehensive framework forunification,which, inmost scenarios,wouldhave fol-

lowedavictorybytheDPRKonthebattlefield.67ThenorthenvisionedaunitedKorea

basedona juche-socialistideology,linkedtotheSovietbloc,underitscontrol.How-

ever,bythe1980s,thesouth’seconomicsuccessandeffectivemilitarydeterrentpolicy

(backedbytheUnitedStates)madeunificationunderthenorth’scontrolunattractive

tocitizensofthesouth.Asthenorth’sjuche producedslowerandslowergrowth,the

south’seconomicperformanceaccelerated,completely transformingthe inter-Korean

economicbalanceofpower.Over time, theagingNorthKoreanmilitaryequipment,

withoutrenewalfromthecollapsedSovietUnionorareluctantChina,hasmadevictory

onthebattlefieldforthenorthanever-diminishingpossibility.68Amassiveanddeci-

siveeconomicvictoryforthesouth,andastalemateforbothonanypotentialmilitary

battlefield,precludesthepossibilityofunificationunderPyongyang’stutelage.Rather,

unificationwilldependonthesouth’sabilitytosponsortheprocess,withoutundermin-


GARTH SHELTON

ingitsowneconomicprosperity.Thecurrentglobalfinancialcrisis,andSouthKorea’s

struggle tomaintainglobalmarket share inhigh-techexports,pushesanypotential

unificationprocessfurtherintothefuture.

Itisnowclearthatthecatalystfornationalunificationmustdependonthewillof

theKoreanpeople.Alackofinformationandindependentconsiderationundermines

publicopinioninthenorth,whilethesouth’smainconcerniseconomic.Thehighcosts

ofasuccessfulunificationprocesswouldplaceanexcessiveburdenonthetaxpayersof

thesouth.Overthelongerterm,theinevitabledecayoftheDPRK’smilitarycapacity

andeconomicvitalitywouldmakeunificationamoreattractiveoptionforthenorth.69

Inthesouth,anagingpopulationhaspointedtothegrowingneedforamoreyouth-

ful labour force to reinforce future economic growth. Thus themobilisation of the

north’shumanpotentialbecomesmoreattractive.Aprocessofcontrolledlabourmigra-

tion from north to south could be the key to initiating the unification process and

strengtheningbotheconomies.Thegeneralperceptioninthesouthisthatunification

cannotberushed,butshouldratherfollowaneconomictransformationinthenorth,

makingintegrationlesscostly.ThelongtermfuturesuggestsaunitedKorea,withpolit-

icalandeconomicinstitutionslargelymirroringthoseofthesouth,but,asmanyKore-

anslament,‘unificationisinevitable,butnotimminent’.Untilunification,thechallenge

forbothsouthandnorthistoavoidamajorconfrontationwhichwouldthreatenthe

survivalofKoreanculture,history,andcivilisation.

South Korea, the world and AfricaSouthKoreaispreparingtoexpanditglobaldiplomacytostrengthenitsinternational

standing and promote increased exports world-wide. President Lee Myung-bak has

declaredhisdeterminationtoundertakeglobalshuttle-diplomacytopromoteKorea’s

economicandpoliticalinterests(seeappendix).PresidentLeehasoutlinedathoughtful,

convincing,andcomprehensiveplantoguidethenextphaseofSouthKorea’seconomic

and political development. The focus is on further stimulating the ROK’s economic

developmenttostrengthenKorea’sroleintheworld,andenhanceitsinternationalsta-

tus.Akeypriorityistobringabouta‘completeresolution’oftheNorthKoreannuclear

issueandcreatea‘newpeacestructure’ontheKoreanPeninsula.70PresidentLeehas

committed theROK to strengthening theSix-PartyTalks framework to facilitate the

DPRK’sdenuclearisation,andthecraftingofaregionalsecurityframeworkthatwill

ensurelastingpeaceandstabilityinEastAsia.

PresidentLee’s innovativeandcreative incentive for theDPRK’sdenuclearisation

promisestotransformtheKoreanPeninsulaintoanewhubofeconomicdevelopment

andprosperity.Asarewardfordismantlingnuclearweapons,theROKispreparedto

strengthenthenorth’seconomyandupliftsignificantlythepercapitaincomeofNorth

Koreancitizens.Forthefirsttimeintenyears,acomprehensive,realistic,andpractical



solutiontotheNorthKoreanproblemhasbeenarticulated.Theinternationalcommu-

nityshouldoffersupporttoPresidentLee’sboldinitiative,andstandreadytoassistin

thecomprehensivedevelopmentofNorthKorea’seconomy.Throughadisbandmentof

itsnuclearprogramme,theDPRKhasanopportunitynotonlytoguaranteeitsownlong

termsecurity,butalsotostrengthensignificantlyitseconomyandeconomicwell-being.

IntheAsiancontext,PresidentLeehasoutlinedadynamicplantostrengthenSouth

Korea’salliancesandeconomicpartnerships.ArevitalisedROK–UnitedStatesalliance,

alongwithexpandedlinkswithChinaandJapan,formsthefoundationofSouthKorea’s

strategytostabiliseEastAsiaandboosteconomicgrowth.Newcommerciallinkswith

membersof theAssociationof SouthEastAsianNations (ASEAN)andotherPacific

nationsarealsoonthecards,withtheaimofbroadeningSeoul’stradeandinvestment

activities.Globally,theemphasisisonpragmaticeconomicdiplomacy,whichincludes

finalisationoftheROK-UnitedStatesFTA,aswellasacceleratedFTAnegotiationand

agreementwithanumberofkeyeconomies.Alongwiththeobjectiveofstrengthening

theROK’seconomyandglobaleconomic footprint,PresidentLeehascommitted the

ROKtostepupitscontributiontoimplementingtheKyotoProtocol,promotinghuman

rights,andcombatingglobalpovertyanddisease,whileincreasingoverseasdevelop-

mentassistance(ODA)tothedevelopingregionsoftheworld.

Duringhisfirstyearinoffice,PresidentLeehasmadegoodprogressinadvancing

theROK’sglobaldiplomacy.LeehasvisitedtheUnitedStates,Japan,China,andRussia

tocraftnewco-operativeframeworks.HehasledSouthKoreathroughtheworstofthe

globalfinancialcrisis,andispositioningitforfuturegrowthandprosperity.TheROK

isincreasinglyplayingakeyroleinadvancingglobaleconomicdevelopment,andwill

hosttheG20meetingin2010.PresidentLeeisplanninganextensiveprogrammeof

globaldiplomacytopromoteKorea’sinternationalroleandbuildnewcommercialrela-

tions.Thefocusfor2009isonEurope,CentralAsia,andSouthEastAsia,whileAfrica

andLatinAmericaaregrowinginimportance.71

Korea’sforeignministryistostepupeffortstopromoteFTAswithkeytradepartners

andnewemergingeconomies.FTApartnersontheagendafor2009includeAustralia,

Peru,NewZealand,Turkey, andColumbia. In thepost-Asianfinancial crisis period,

FTAshavebecomeakeyinstrumentforKoreatobuilditsglobaltradeandinvestment

profile.AsaconsequenceofgrowingconfidenceinnegotiatingandimplementingFTAs,

theROK’sFTApolicyhasbecomemoreproactiveandwideranging.Moreover,difficul-

tiesinadvancingthemultilateraltradeagendahaveincreasedtheimportanceofFTAs.

AllstatesseekingtogrowtheireconomiesnowseeFTAsasthekeytounlockingnew

markets andopportunities.72 Korea is seeking to forge comprehensive relations with

keyeconomiestofacilitateincreasedtrade,whichwillunderpinthenextphaseofits

economicgrowth.73AccessingcriticalrawmaterialsbeforeChina’sgianteconomylocks

downglobalsupplyistheurgentdriverforFTAexpansionandAfricanengagement.

Koreahasalsoidentifiedtheso-called‘10next-generationgrowthengines’,whichare

intendedtoboostproductionandexports.74


GARTH SHELTON

PresidentLeehasemphasisedthattheROKis‘emergingasaresponsible,leading

nation,helpingcreateanewinternationalorder’.75Formanyyears, theROK’sdiplo-

macyhasfocusedonthekeyregionalpowers–theUnitedStates,Japan,China,and

Russia;andwhileKoreahasstrengthenedrelationswithallunderPresidentLee,anew,

moreexpansivediplomaticagendaisevolving.PresidentLeeparticipatedinthefirst

China–Korea–Japan summit in December 2008, and has been active in strengthen-

ingeconomicandpoliticallinkswithinEastAsia.AgrandvisiontolinkSouthKorea

throughthenorthtothemajoroilandnaturalgasreservesofSiberiaismovingforward.

OtherprioritiesincludestrengtheningtheROK’slinkswithCentralAsiaandSouthEast

Asia.Giventhatexportsconstituteover40percentoftheROK’sGDP,increasedglobal

engagementandtradeagreementsareanurgentpriorityforSeoul.76 Short term FTA

prioritiesarewiththeUnitedStates,theEU,China,andIndia.ThenextphaseofFTA

negotiationswillfocusontheemergingeconomies,includingSouthAfrica.

FollowingtheAsianfinancialcrisis inthe late1990s,Koreareassesseditsstrate-

giesforgeo-economicmanagementandlongtermgrowth.TheROKbegantodevelop

a broader global vision and a longer term strategy intended to ensure growth and

prosperity.77ThebroadervisionbroughtAfricatoKorea’sattention, leadingtointer-

estinadistantcontinent.In2006,formerROKPresidentRohMoo-hynvisitedAfrica,

openinganewchapterinKorea–Africarelations.Roh’smissionwastoinitiateengage-

mentwith an emerging continent,whichwas beginning to drawAsian attention to

itsgrowingmarketsandrawmaterialwealth.SouthKoreaalsoregisteredtheneedto

jointheworld’sindustrialisedeconomiesinpromotingandassistingAfrica’seconomic

development.Consequently,RohpromisedtotripleKorea’sODAtoAfrica,fromUS$30

milliontoUS$100million.Inaddition,PresidentRohoutlinedanassistancepackage

forAfricaconsistingofthefollowingfourelements:technicaltraininginKoreafor1

000Africans;amajorincreaseinhealthassistancetoAfrica;astep-upinhelpingAfrica

developfoodsecurityprogrammes;andassistancetoAfricainthefieldofinformation

andcommunicationstechnology(ICT).

SouthKoreathussoughttobroadenitsdiplomaticinitiativesinAfrica,anddevelop

anewrelationshipwiththecontinent.GivenSouthKorea’ssize,itsengagementwould

naturallybeunabletomirrorthatofJapan,orChina’sAfricanfootprint,butitsoughtto

promoteahighimpactinteractionbasedonKorea’seconomicandtechnicalstrengths.

AswithJapanandChina,thefoundationofKorea’scommercialengagementwiththe

African continent is to access commodities, in exchange for technology andmanu-

facturedproducts(seetables5and6).Atthesametime,theKoreangovernmenthas

encourageditsprivatecompaniestocreatemutuallybeneficialbusinessmodelsintheir

commercialengagementwithAfrica.Moreover,Seoulislookingforconstructivelong

termrelationswithAfrica,throughwhichbothcanshareexpertiseandbenefitfrom

commercialinteraction.Asarecentlydevelopingcountry,havingindustrialisedovera

relativelyshortspaceoftime,SouthKoreahasmuchtoofferAfricabywayofdevel-

opment know-how and technical achievement. Korean construction companieswith



significantexperienceintheMiddleEasthavebeenencouragedtomoveintoAfrica,

andseeknewopportunities.AsforeignministerofSouthKorea,BanKi-moonprovided

impetustothecountry’sAfricaninitiativewithvisitstoAlgeria,Tanzania,Kenya,and

Libyain2005,andtoGhanaandtheCongoayearlater.In2006,theROK’sprimemin-

istervisitedSenegalandSouthAfrica.

Table 5: Main export items – Korea to Africa, 2005

Amount(US$m) % Growth

Ships and parts 3 653 58,9 0,9

Automobile 548 8,8 61

Petro-chemicals 393 6,3 14

Communication devices 326 5,3 91,8

Construction/mining equipment 65 1,0 78,9

*MTI 3 standards. Source: kit.net

Table 6: Main import items – Korea from Africa, 2005

Amount(US$m) % Growth

Crude oil 1 287 43,7 0,9

Copper 359 12,2 88,6

Gold & silver 149 5,1 -42,2

Food items 44 1,5 26,4

Iron ore 74 2,5 91,7

MTI 3Source: kit.net

TheROK’snewAfricadiplomacywasboostedin2006withthevisitofPresidentRoh

Moo-hyntoEgypt,Nigeria,andAlgeria, thefirstofficialvisit toAfricabyaKorean

presidentfor24years.78Thecentralobjectiveofthevisitwastostrengtheneconomic

co-operation,particularlyinthefieldofenergy.ThevisitresultedinaKorea–Nigeria

dealtodevelopoff-shoreoilfields;aKorea–Egyptagreementtostrengthenco-operation

ininformationtechnology(IT),energy,andresources;andaKorea–Algeriaagreement

todevelopcommercialrelations.WhileinAfrica,RohstressedKorea’scommitmentto

assistinginthefullintegrationofAfricaintotheglobaleconomyforcommonprosper-

ity,andheundertooktosupportAfrica’sefforts toachievetheMillenniumDevelop-

mentGoals(MDGs).ForKorea,thelongtermobjectivewasthedevelopmentofAfrican


GARTH SHELTON

marketsthroughtrade,aid,andassistance.Whereinvestmentconditionsareattractive,

Koreancompanieshaveundertakentoinvestigateoptions.

DuringRoh’svisittoEgypt,thecentralthemeof‘energyfortechnology’emerged

as the guiding principle for Korea’s interactionwithAfrica awhole.79 Africa’s com-

parativeadvantageinoilreservesandrawmaterialsprovidesanincentiveforKoreato

investandprovideadvancedtechnologyinreturn.KoreaagreedtoprovideEgyptwith

anultra-speedinternet,mobilecommunications,digitalmultimediabroadcasting,and

wirelessbroadbandinternet.KoreanICTwouldbemobilisedtotransformEgyptinto

thetelecommunicationshubfortheMiddleEastandNorthAfrica.Inexchange,Korean

companiesaretoexpandinvolvementinEgypt’soilindustry,aswellasconstructair-

portsandpetrochemicalfacilities.

InNigeria,PresidentsRohandOlusegunObasanjoconcludedadealprovidingfor

jointdevelopmentofoffshoreoilfields.TheagreementwillprovideKoreawithmore

than1 billion barrels of oil oncedeepwater exploration is complete. Thedealwas

basedona‘productsharingcontract’,whichalloweda60percentshareforKoreaof

theidentifiedoilfield,inexchangeforKoreandeepwaterdrillingtechnology.Partof

thearrangementincludedtheconstructionofa2,5millionkilowattpowerstationby

aKoreanconsortium.KoreaalsoprovidedNigeriawithUS$1,7millioningrantaidto

buildavocational training centreandassistwithhealth issues.Theoilprojectwas

expected toprovidea foundation for increasedKorean investment inNigeria,anda

strengtheningofKorea–Nigeriarelations.PresidentRoh’svisitalsoincludedabusiness

forumatwhichbothsidesagreedtodiscusswaystostrengthentradeandinvestment.

PresidentRoh’sfinalstopinAfricawasAlgeria,whereheheldtalkswithPresident

AbdelazizBouteflikawithaviewtobuildingimprovedrelations.Algeria’sattraction

includedoilreservesof9,2billionbarrels(the14thlargestintheworld),andtheworld’s

seventh largest reservesofnaturalgas.Koreanconstructioncompanieswere invited

toparticipateinAlgeria’splannedUS$60billioninfrastructuredevelopmentandcon-

structionprogramme.Koreancompanieswerealso invited tocontribute toAlgeria’s

privatisationprogramme,intendedtorestructuremorethan800publicenterprises.80

The Korea–Africa ForumAtthefirstKorea–AfricaForum,heldinSeoulon8November2006,presidentsfrom

fiveAfricancountries –Congo,Nigeria,Ghana,Tanzania, andBenin–participated,

alongwithministersfrom25Africancountries.TheforumsignalledKorea’sintention

tobroadenanddeepen itsengagementwithAfrica.Atadinner towelcomeAfrican

gueststoSeoul,PresidentRohoutlinedKorea’sAfricaninitiativeasfollows:

KoreaplanstoincreaseitsODAtoAfricaanddoitspartinassistingAfricainavari-

etyofareas,includingmedicalandhealthcaresystembuilding,humanresources



development,ITsharingaswellastradeandinvestmentpromotion.Inparticular,

wewillactivelyhelpAfricabuilditsinformationinfrastructureandtrainitsperson-

nelasameansofboostingAfrica’scapacityfordevelopment.Wearealsofullycom-

mittedtohelpingAfricaachievetheUNMillenniumDevelopmentgoals(MDGs).

RohconcludedbyexpressinghishopethatKoreaandAfricawould‘beabletoenjoya

mutuallybeneficialpartnershiponthesolidbasisoffriendship’.81

Korea’sforumfollowedasimilarformattothatofEastAsianrivalsJapanandChina,

andconfirmedKorea’sinterestinjoiningthenewcompetitionformarketsandresources

inAfrica.CommentatorshavecharacterisedKorea’snewAfricaninterestasaformof

‘pragmaticdiplomacy’,throughwhichKoreaseeksopportunityonanunfamiliarconti-

nent.AsinthecasesofbothJapanand,especially,China,thepolicydriversareaccess

tooilandresourcestofeedthegrowingKoreaneconomy.BanKi-moonhassuggested

that‘co-operationbetweenKoreaandAfricaisveryimportantinthatithasboundless

potentialities’.82

Africa’sresourcesprovidethecomparativeadvantageinengagingwithKorea,while

Korea is able toprovide technologyandmanufacturedproducts toAfricanmarkets.

GiventhesizeofKorea’seconomyincomparisonto thatofJapanandChina,aid to

Africawillremainsmall,but, ifcarefullytargeted,couldbehighlyeffective.Unlike

thoseofJapanandChina,Korea’sAfricastrategywouldhavetoremainselectiveand

specific,withanichemarketapproach,ratherthanacontinent-wideengagement.Nev-

ertheless,Koreahas thecapacity tobecomeakeyexternalplayeron thecontinent,

abletocontributetoAfrica’seconomicdevelopment,whileboostingitsownprospects.

AlthoughSouthAfricaisKorea’sbiggestAfricantradepartner,Korea’sinteractionwith

NigeriaoffersthemodelforKorea–Africarelations.FormerPresidentObasanjovisited

Koreasixtimes,providingthefoundationforapositivehigh-leveldialoguewhichpro-

videdthefoundationforaproductiveKorea–Nigeriarelationship.83

TheKorea–AfricaForumproducedtheSeoulDeclarationofNovember2006,which

was intended to lay the foundation for a ‘framework of friendship, partnership and

co-operationbetweenKoreaandAfricancountries’(seeappendix).Specifically,Korea

offered its support for objectives of the New Partnership for Africa’s Development

(NEPAD) and theMDGs. Seoul thus sought to align itselfwith theAfrican agenda,

andhelptopromotegoodgovernanceandeconomicdevelopmentontheAfricancon-

tinent.Korea also identified a number of key areas of potential co-operationwhich

couldunderpinexpandedco-operation.ItsrapidindustrialisationprocessoffersAfrica

amodel for its own economic development and prosperity. Rural development and

humanresourcecapacitybuildingwerealsoidentifiedasareasforexpandedco-oper-

ation.Korea’sobviousstrengthinICToffersnumerousopportunitiesforco-operation

withAfricancountries.

TheKorea–AfricaEconomicConference(KOAFEC)providesasecretariatandpro-

gramme through which financing for development projects in Africa can be chan-


GARTH SHELTON

nelled.84FinancingisprovidedthroughtheKoreaImport–ExportBankandtheAfrica

DevelopmentBank.TheprocessproducednineODAagreements,totallingmorethan

US$750million,concludedbetweenKoreaandanumberofAfricancountries.85

Korea’s ODA is small in comparison to the overall size of its economy. Despite

increases inODAallocationsover thepast fewyears,Korea’sODAtogrossnational

income(GNI)isstillfarbelowtheaverageformembercountriesoftheOrganisationfor

EconomicCooperationandDevelopment/DevelopmentAssistanceCommittee(OECD/

DAC).Thereisthussignificantroomforimprovementinthequantityofaidprovided

byKorea.Atthesametime,KoreanODAallocationsareclosetoUS$800million,and

couldhaveasignificantimpactifappliedappropriately.Thefine-tuningofKorea’sODA

policycouldhaveaverypositiveimpactonmanyprojectsandprogrammesinAfrica.

Koreaispresentlydevelopingacomprehensivenon-governmentalorganisation(NGO)

supportprogramme,whichisincreasinglymakingapositivecontributiontosocialand

politicalstabilityindevelopingcountries.In2008,Koreasupported35NGOsinAfrica,

andwasactivein61projectsin19countries(seeRegionalSupport2008below.)Atthe

sametime,thereisaneedforAfricanleadersandinstitutionstoengageKoreamore

energeticallyonthisissue,andencourageSeoultostepupODAallocationsinAfrica.86

South Africa–South Korea Total Trade Imports & Exports

0 3 000 000 6 000 000 9 000 000 12 000 000 15 000 000200520042003200220012000199919981997199619951994

South African Trade Statistics



SA's Main export to Korea

0% 5% 10% 15% 20% 25% 30%Aluminium plates, sheets and trips

Flat-rolled products of iron or non-alloy steelFlat-rolled products of stainless steel

Aluminium waste and scrapCane or beet sugar and chemically pure sucrose

Flat-rolled products of iron or non-alloy steelCopper waste and scrap

Platinum: unwrought or semi-manufacturedUnwrought aluminium

OthersFerro-alloys


SA's Main Imports from Korea

0% 5% 10% 15% 20% 25% 30% 35%Data processing machines

Parts and accessories (excluding covers, etc)

Self propelled bulldozers

Refrigerators, freezers

Motor Cars

Others


Trade: RSA and South Korea (2004–2006) – (R'000)

R-6 000 000

R-4 000 000

R-2 000 000

R0

R2 000 000

R4 000 000

R6 000 000

R8 000 000

R10 000 000

R12 000 000

200620052004

Compiled by Economic Affairs and Regional Organizations


GARTH SHELTON

TheKorea–AfricaForumcommittedKoreaandtheAfricanparticipantstoa‘longterm

andmutually beneficial relationship’ intended to promote trade and investment. In

addition,participantscommittedthemselvestoincreasedconsultationandabroader

interactiontoimproveunderstandingandmutualsupportininternationalaffairs.The

forumwasfollowedbymeetingsinSouthAfricain2007andMoroccoin2008.Korea

hassoughttoestablishanongoingdialoguewithAfricatoidentifyareasofcommon

interest and concern. KOAFEC has also conducted a number of follow-upmeetings,

withafocusonfundingprojectsinAfrica.AtthemostrecentmeetinginSeoulduring

Octoberlastyear,26Africancountriesparticipated.ThenextKOAFECministeriallevel

meetingisplannedfor2010.

TheKOAFECmeetingin2008producedanactionplanidentifyingfocusareasfor

Korea–Africaco-operation.KoreaidentifiedconstructioninAfricaandresourcedevel-

opmentaspriorityareaswhereKoreancompanieshavetheexpertise,experience,and

capacity toengageAfricaeffectively.Korea’s strength in ICToffersAfricanumerous

opportunities for upgrading communications capacity. Related to this, Korea is able

toofferadvancedtechnicaltrainingatinstitutionsinKorea(seetable7,summarising

Korea’s initiativesonengagingAfrica).Koreahasalsoemphasised itswillingness to

shareknowledgewithAfricaonagriculturalandruraldevelopment,aswellasKorea’s

overall, very successful, economic development programme. In keepingwith recent

trendsintheinternationalarena,Koreahasadvocatedco-operationinenvironmental

protectionthrougha‘greengrowthpartnership’.

TheKoreanInstituteforInternationalEconomicPolicy(KIEP)hasprovidedguid-

anceforKorea’seconomicengagementwithAfrica.Itsanalysisoffersinsightsintothe

drivers for Korea–Africa policy and the prospects for long term co-operation. KIEP

has identifiedAfricaasahugeopportunity in termsof resourcesand futuremarket

development.Africa’sresourcebaseisidentifiedasfollows:oil,9,5percentofglobal

reserves;naturalgas,8percent;uranium,20percent;bauxite,32percent;gold,40

percent;phosphaterock,42percent;diamonds,60percent;manganese,80percent;

andgold,88percent.GivenKorea’sgrowthprojectionsandgrowingneedforrawmate-

rials,itcannotaffordtoignoreAfrica.Inaddition,stronggrowthinAfricainrecent

years,alongwithpositiveeconomicandpoliticalreform,isopeningAfricanmarkets

andcreatingincreasedpotentialforexternalinvolvement.

KIEPhasnotedthatincreasedinvolvementinAfricabytheUnitedStates,theEU,

Japan,andChinaiscreatingnewopportunityforotherplayers.AsAfrica’stransport

networksimprove,newavenuesforco-operationareemerging.Thesignificantaidpro-

grammesprovidedbytheUnitedStates,theEUandJapanwillstrengthenmarketforces

acrossthecontinentandfacilitateastrongerconsumerdriveinAfrica.KIEPhaspre-

dictedincreasedgrowthforAfrica,diverseeconomicdevelopment,and,withcontinued

politicalreform,significantprospectsforcommercialengagementwithKoreancorpo-

rations.However,intheshortterm,lowGDPpercapitaratiosinAfricawillundermine

consumer spending, requiring continued international development assistance and



aidpackages.Africa’scomparativeadvantagewillremainitswealthofcommodities,

which,ifaccessible,offerforeigninvestorssignificantprospects.87

KIEP analysis indicates that (moderately priced) Korean products are capturing

increasedmarketshareasthatof(high-priced)Japaneseproductshasdecreased.China

(withlower-pricedmanufacturedproducts)hasseenitsmarketsharegrowsignificantly

inrecentyears.Increasingly,Koreawillbeforcedtocompetewith

Table 7: Korean initiative for African development

Item Main contents

ODA – Threefold increase of ODA ($10 million) in three years– Focus on the countries with good governance

Development experience – Invite 1 000 students from Africa in three years– Send volunteers and experts to Africa

Medical support – Send medical staff, hospitals– Provide medical equipment, vaccines

Human resource development support – Develop schools and ICT infrastructures.– Vocational training centre

Agri and fishery – Agricultural technology transfer and support of agricultural infrastructure– Fishery and marine products technology support

Information technology – IT training centre– e-government

Korea-Africa Forum – Korea–Africa Forum among private sector, government and academic sector– Regular conference

Co-operation with multinational agencies WEP, UN Industrial Development Organisation (UNIDO), AFDB

Trade promotion No tariff, no quota for least developed countries (LDCs)

Source: Kim Ji-Hong, unpublished conference paper, KDI, 2006

ChinatowinmarketshareintheemergingeconomiesofAfrica.IntermsofKorea’s

foreigndirect investment (FDI), close to35percent is located inAsia,andclose to

20percentinNorthAmerica.Africareceiveslessthan3percentofKorea’sFDI,with

thefollowingcountriesthemaintargets:Algeria(19,2percent),Libya(13,7percent),

Sudan(12,9percent),Nigeria(12,6percent),Egypt(12,4percent),SouthAfrica(10,3

percent),andMorocco(5percent).Therestisspreadinsmallamountsacrossthecon-

tinent.AstheKoreanglobalinvestmentprofilegrows,Africawillbecomeincreasingly

important.Moreover,unlikeJapaneseinvestors,Koreancompaniesarewillingtotake

onthechallengeofhighriskinvestmentinAfrica.

In termsofKorea’sODA,Africaaccounts for less than10percentof theoverall

budget.Almost80percentofKorea’sODAgoestoAsia,butovertimeAfrica’simpor-

tanceisexpectedtoincreaseasrelationsimproveandtradeincreases.Overall,KIEP’s

prognosisforAfricaispositive.Givengoodgrowthinrecentyearsandincreasedliber-


GARTH SHELTON

alisationofAfricaneconomies,AfricaincreasinglyoffersnewopportunityforKorean

investors.KIEPisseekingspecificopportunitytoprovidesupportforKorea–Africarela-

tions,andtoprovidea frameworkforenhancedinteraction.ForKIEPresearchers,a

keytoimprovedrelationswouldbeenhancedscholarlyexchangestobuildtheintellec-

tualfoundationforstrengthenedrelations.Basedonasoundco-operativeframework,

andsupportedbythenecessarystate-to-stateagreements,KIEPforeseesasignificant

growthinKorea–Africarelationsintheyearsahead.88

Korea and South AfricaInJuly1995,PresidentNelsonMandelavisitedtheROKonamissiontoenhanceSouth

Africa’srelationswithKoreaandconsolidatediplomaticlinksinEastAsia.Threeyears

laterThaboMbeki, thenSouthAfrica’sDeputyPresident,visitedSeoul toexplorenew

opportunitiesforengagement.Arangeofofficialinteractionshavesincecontinued,culmi-

natinginformerDeputyPresidentPhumzileMlambo-Ngcuka’svisitinMay2007.InJune

lastyear,SouthAfrica’slabourministervisitedKoreatoinvestigatevocationaltraining

programmes.Korea–SouthAfricapolicyconsultativemeetings(PCMs)havebeenheldin

2004,2005,and2008toadvancerelationsandidentifynewareasofco-operation.

KIEPhas identified SouthAfrica as a keyAfricanpartner forKorea, basedon a

numberoffactors.TheseincludethesizeandsophisticationofSouthAfrica’seconomy,

which theycharacteriseas follows:SouthAfrica’seconomymakesupapproximately

25percentofAfrica’sGDP;SouthAfrica’sGDPisthreetimesthatofNigeria;South

Africa’sGDPpercapitaisestimatedatUS$10000(PPP);SouthAfricaconsumes20per

centofthecontinent’simports;anditproduces80percentofthecontinent’sautomo-

biles,50percentofitselectricity,and40percentofitsindustrialoutputandmineral

production.LongtermeconomicforecastingforSouthAfricasuggeststhatitseconomy

hasverysignificantgrowthpotential,and isamong11economiesexpectedtoshow

considerablepotentialoverthenextfewyears.(Theothertenkeyemergingeconomies

areidentifiedas:Turkey,Iran,Egypt,Indonesia,Philippines,Vietnam,Pakistan,Bang-

ladesh,Algeria,andNigeria.)Moreover,SouthAfrica’ssignificantreservesofkeyraw

materialsmakeitanobviouseconomyofinterestforallindustrialisednations.89

AccordingtoSouthAfrica’sDepartmentofForeignAffairs(DFA)assessments,there

ispotentialforthefollowingintheSouthKoreamarket:agro-processedgoods,wine,

automotiveparts,jewellery,artsandcrafts,pharmaceuticals,franchising,andchemi-

cals.Giventhedynamismof theKoreaneconomy,andthedisposable incomeof the

averageKoreancitizen,thereisclearlyvastpotentialforimprovedmarketpenetration.

Since2004,KoreaandSouthAfricahavebeenworking together to implementa

scienceand technologyagreement. InJune2005, thefirstKorea–SouthAfricaJoint

CommitteeonScience andTechnologywasheld inSeoul.The committee agreed to

establishanetworkingprogrammetoexpandinteractionbetweenKoreanandSouth

African scientists. Joint funding fornewprojects in the followingfieldswas agreed



on: nano-technology, biotechnology, space science, astronomical research, hydrogen

economy,fuelcells,andnuclearscience.Relatedtothisagreement,theKoreaScience

andEngineeringFoundation(KOSEF)andSouthAfrica’sNationalResearchFoundation

(NRF)agreedtoallocatefundstoadvanceco-operation.

InOctober2007,itwasreportedthattwoKoreanpowercompanies(KoreaSouthEast

PowerCorporationandKoreaWesternPower)hadsignedcontractsfor1,25milliontonnes

ofSouthAfricancoal.ThesupplyofcoalforelectricitygenerationinKoreahaslongbeen

afeatureofSouthAfrica–Korearelations,butnewsupplychallengershaveemergedin

China.SouthAfricansuppliersarethusrequiredtocontaincoststocompeteeffectively

intheongoingsupplyofcoal.RawmaterialproducersinSouthAfricahavecomparative

advantagesinotherareas,specificallymarketscarcity,whichgivesopportunity.Ineffect,

thenewinterestfromdevelopingAsianeconomies(particularlyChina)inSouthAfricais

directlyrelatedtoSouthAfrica’sshareofcriticalrawmaterials(seetable8).

Table 8: South Africa’s mineral reserves, 2006

Commodity Unit Reserves % Worldranking

Alumino-silicates Mt 51 37,4 1

Antimony Kt 250 6,4 4

Chrome ore Mt 5500 72,4 1

Coal Mt 33814 3,7 7

Copper Mt 13 2,0 14

Fluorspar Mt 80 16,4 2

Gold t 36000 40,7 1

Iron ore Mt 1500 0,9 11

Lead Kt 3000 2,1 7

Manganese ore Mt 4400 80,0 1

Phosphate rock Mt 2500 5,0 4

Platinum-group metals t 70000 87,8 2

Silver Kt 10 – –

Titanium minerals Mt 244 27,8 2

Uranium Kt 298 1,6 4

Vanadium Kt 12000 44,0 1

Vermiculite Mt 10 40,0 2

Zinc Mt 15 3,3

Zirconium minerals Mt 14 17,4 2

Mt=megaton, Kt=kiloton, t=tonSource: Minerals Bureau


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Table 9: Korea’s FDI to South Africa

Thousand US$ 2003 2004 2005 2006 2007 2008 Total

FDI 196 123 26 697 5 983 29 397 21 942 168 845

Source: Korea Exim Bank

Table 10: Principal Korean investors in South Africa

Name Number Thousand US$

Samsung Electronics (Samsung) 6 48 857

LG Electronics (LG) 4 42 407

Innoland Property 1 20 305

Daewoo Motors 4 18 255

Malesela Taihan Electronic Cable 2 14 100

Poschrome 2 10 050

Sinna Manufacturing 4 2 845

SJM Flex 3 2 249

Daewoo AMIC 2 2 327

ONSE Telecom 7 1 500

Ceragem 3 1 810

SOURCE: Korea Exim Bank

Astables9and10indicate,KoreaninvestmentinSouthAfricahasgrown,andthereis

potentialforafurtherincrease.AnimprovedinvestmentenvironmentinSouthAfrica

wouldopenthewayfornewKoreaninterestsandinvestment.

In2007,SouthAfrica’sDeputyPresidentPhumzileMlambo-Ngcukapaidavisitto

Koreaseekingtobroadenandstrengthenbilateralrelations.Sheappealedforincreased,

butmorebalanced,trade,andencouragedKoreatobecomemoredirectlyinvolvedin

SouthAfrica’sskillsenhancementprogrammes.GivenKorea’shighleveloftechnical

training,itisanidealpartnerforSouthAfricainthisarea.DeputyPresidentMlambo-

Ncgukaidentifiedmineralsbeneficiationasanareaofpotentialfutureco-operation,

throughwhichKoreacouldapplyitstechnologytojobcreationinSouthAfrica,while

benefiting from increased importation of keyminerals. She also appealed formore

Korean investment inSouthAfrica, increased tourism,more ICT involvement,anda

greateruseofSouthAfricaasthe‘gatewaytoAfrica’.Giventhegoodprogressmadeon

bilateralinteraction(seelistofagreementsbelow),KoreaandSouthAfricahavelaida

solidfoundationforbuildingalongtermstrategicpartnership.

InSeptemberlastyear,theSouthKoreangovernmentagreedtoprovideUS$1million

to establish an InformationCommunications TechnologyCo-operationCentre (ITCC)



inSouthAfrica.KoreaandSouthAfricahavesignedamemorandumofunderstanding

(MOU)toformaliseathree-yearpartnershipagreementonthisproject.Thecentreis

intendedtofacilitatee-skillstrainingandhelptoimplemente-governmentandrelated

researchprojects.ItisalsointendedtopromoteinformationexchangesinthefieldofICT.

The4thKorea–SouthAfricaPolicyConsultativeMeetingwasheldinSeoulinDecember

lastyear.Itwasagreedthatbilateralco-operationistobeenhancedwithafocusonthe

energysector.ThusEskomandKorea’sstate-runelectricitysupplyagency,KEPCO,are

toexpanddiscussionswithaviewtocloserco-operation.Noteswereexchangedonthe

energy,minerals,andelectricitysectors.ItwasalsoagreedthatanFTAfeasibilitystudy

willbeundertakentoidentifytheadvantagesofaKorea–SouthAfricaFTA.Theissue

ofdirectflightsistobefast-tracked,whilelegalagreements,avisawaiverprogramme,

andtheexpansionofcultureandsportsexchangesaretobediscussedfurther.Korea

discussedplansforthesecondKorea–Africaforum,seekingSouthAfrica’sfullparticipa-

tionandsupportforthisevent.IntermsofICTco-operation,therewassomediscussion

onKoreanparticipationinatrafficcontrolcentreinJohannesburg.

Korea–South Africa bilateral agreements

Signed agreements

Agreement on co-operation in the field of science and technology (February 2004)

Agreement on 30 days visa waiver (April 1998)

Agreement on air service between and beyond their respective boundaries (July 1995)

Agreement on the promotion and protection of investment (July 1995)

Agreement on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxable income (July 1995)

Signed arrangements

MOU between the NRF and KOSEF (June 2005)

Arrangement for the implementation of the project for the upgrading of the SA national technical testing centre between the respective ministries of labour (Indlela project) (August 2002)General agreement on scientific and technological co-operation between CSIR and Korea Institute of Science and Technology (28 August 1998)Arrangement for trade and industrial co-operation between the Ministry of Trade and Industry of the RSA and the Ministry of Trade, Industry and Energy of the Republic of Korea (October 1997)Agreement on small and medium enterprise co-operation between Ntsika Enterprise Promotion Agency of South Africa and the Small and Medium Industry Promotion Co-operation of Korea (October 1997)MOU on small, medium and macro enterprises (July 1995)

Protocol on the establishment of diplomatic relations (December 1992)

Treaty of mutual legal assistance in criminal matters (2008)

Treaty on extradition (2008)


GARTH SHELTON

Korea–South Africa bilateral agreements (contiued)

Pending agreements/arrangements

MOU on defence

Cultural agreement

MOU in the field of sport and recreation

MOU on co-operation in the fields of energy and mineral resources

Arrangement on nuclear safety regulations

Agreement on co-operation in the field of peaceful use of nuclear energy

MOU for co-operation in the field of employment

Crafting a strategic partnershipThus,sincePresidentMandela’svisittoSouthKoreain1995,relationshaveshowngood

progressandasolidfoundationforco-operationhasbeenlaid.However,frombothsides,

muchmorecouldbedonetobuildabroaderandmoremutuallyrewardingrelationship.

ThefollowingaresuggestionsforSouthKoreatoenhanceitsAfrican/SouthAfrican

footprint.

• Currentlythereareonly18Koreandiplomaticmissionsin53Africancountries.A

broaderrepresentationwouldfacilitateamoreeffectiveKoreanengagementwith

thecontinent.90

• Korea shouldworkmore closelywith theAU indesigning and implementing its

Africaprogrammes.

• InteractionwithAfricanregionaleconomiccommunities(RECs)wouldofferKorea

anewdimensionforICTengagement,andwouldhelpsupportandpromoteAfrican

regionalintegration.

• IncreasedinteractionwithNGOsandmultinationalagenciesinAfricacouldenhance

Korea’sengagementwithAfrica.

• MoreactiveandproductivesecretariatsforboththeKorea–AfricaForumandKOA-

FECwouldbeusefulindrivingtheKorea–Africaagenda.

• ArefocusingandexpansionofKorea’sODAtoAfrica,alongwithgreatertranspar-

encyonprojectoutcomes,wouldbeapositivedevelopment.

• More regular high-level visits by Korean officials to Africa would be helpful in

attractingpositivemediaattentionandbuildingacloserco-operativerelationship.

• KoreandiplomaticmissionsshouldincreaseassistancetoKoreancompaniesseek-

ingtradewith,orinvestmentin,Africa.Giventhechallengesofdoingbusinessin

Africa,Koreancompaniesneedextensivesupport.

• WithinKorea,aprofessionalresearchinstitutefocusingonAfricanstudieswould

be helpful in building knowledge on Africa, and assisting both business and

policy-makers.



• Koreangovernment,business,andthemediashouldincreaseeffortstoinformthe

KoreanpeopleaboutKoreandiplomacyinAfrica,andAfricaingeneral,withaview

tobuildinginterestandsupportforexpandedKorea–Africarelations.

ThefollowingaresuggestionsforSouthAfricatodeveloparewardingstrategicpartner-

shipwithKorea.

• FullhighlevelparticipationinfutureKorea–AfricaForumandKOAFECmeetings

wouldhelpbuildKorea–AfricarelationsandKorea–SouthAfricarelations.

• SouthAfricashouldtaketheleadinpartneringwithKoreaforthesecondKorea–

AfricaForum.ItcouldplayakeyroleinhelpingKoreacraftanappropriateagenda

tomaximisebenefitsforbothsides.

• TheROKprovidestheidealaccesspointfortheentireEastAsianregion(includ-

ing China). Korea is rapidly becoming the logistics hub for the region, enabling

extra-regionalcountriestoaccessavastconsumermarket.(Theexpectedfuturerail

linksfromthesouth,throughthenorth,toRussiaandChina,andacrossRussiato

Europe,willopennewmarketopportunitiesandgrowthprospects.)91

• SouthAfricaandKoreacouldincreasepeace-keepingco-operation–Koreaispres-

ently involved in expanding its capacity to engage in peace-keeping operations

(PKOs),withaviewtofacilitatingrapiddeploymenttotroubledareasworldwide.

Rapid response PKO forces are to be increased to 2 000 by 2012. (Korea is the

world’s10thlargestdonortotheUN.)92

• SouthAfricashouldstepupeffortstoaccessKoreanglobalmarketleadersbyaccess-

ingKoreanmadeproductsandadvancedtechnologies.Therearenow120Korean

madeproductswhichareglobalmarketleaders.Koreaisalsoatthecuttingedgeof

arangeofnewtechnologieswhichcouldenhanceproductivecapacitiesandefficien-

ciesintheSouthAfricaneconomy.93Forexample,interactionwithKorea’sOsong

bio-technologyclustercouldbesupportiveofresearchinitiativesinSouthAfrica.94

• SouthKoreais ideallyplacedtoassistSouthAfrica inskillsenhancement.South

Africashouldstepupco-operationinthiscontext.

• Minerals beneficiation is another area of importance. South Korea’s technology

couldplayaleadingroleinaddingvalueandcreatingjobsinSouthAfrica.Increased

dialogueonthisissuewouldbehelpful.

• SouthAfricashouldseekKorea’sinvolvementina‘bigproject’,suchaspowersta-

tions, major construction, ship-building or a regional ICT network. This would

significantlyboostrelations,andopenthewayforacceleratedpositivegrowthin

Korea–SouthAfricarelations.95

• TheconclusionofaKorea–SouthAfricaFTAwouldopenthewayfornew,mutually

beneficialtradeandinvestmentopportunities.AnFTAwouldcreatethelegalframe-

workforastrategicpartnership,andwouldbeastrongencouragementforKorean

investorstoentertheSouthAfricanmarket.TherecentlyconcludedKorea–ChileFTA

hasopenedanarrayofunexpectedneweconomicopportunitiesforbothparticipants.96


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• SouthAfricashouldencouragethedevelopmentofacomprehensiveICTnetworkfor

thewholeSouthernAfricanDevelopmentCommunity(SADC)region.Koreawould

beanidealpartnerinthisprocess.

• Increasedbusinessexchanges,seminars,andworkshopstoidentifynewtradeand

investmentoptionswouldbehelpfulincreatingnewopportunitiesandco-operative

networks.

Asuggestedplanforexpandedandstrengthenedco-operationisoutlinedbelow.Key

featuresincludebringingthe‘Koreanwave’toSouthAfrica,whichwouldcreategreater

interest inandawarenessofKoreaamongordinarySouthAfricans.Moreover,akey

factorwouldbedirectairlinkstofacilitateincreasedexchangesandnewopportunities

forconstructivedialogue.Thesuggestedplanemphasisesgrowinggrassrootssupport

aswellastop-downinitiation.

Suggested plan for enhanced Korea–South Africa relations

1. Cultural exchange Bring the ‘Korean wave’ to South Africa.Increase cultural and sports events.Increase media coverage and public awareness of Korea in South Africa.

2. Academic exchange Step up academic and student exchanges.Hold seminars/conferences.Encourage debate and publication on Korean–South African issues.

3. Establish direct air links Increase business-to-business contact.Consolidate South Africa as the bridge to Africa.Consolidate Korea (Inchon) as the bridge to East Asia.Hold regular business seminars/events.Increase high level official exchanges.Boost tourism.

4. Official working level Increase working level contact with a view to promoting broader interaction.Conclude FTA feasibility study.

5. Set up business forum Increase business-to-business networkingPromote two-way trade and investment.

6. Regular bilateral meetings Conduct regular high level exchanges.Build a constructive strategic partnership.

Conclusion – partners in developmentGivenitsurgentneedtocombatpovertyandunemployment,SouthAfrica’spost-Mbeki

foreignpolicyrequiresurgentadjustmenttowardsprioritisingandadvancingnational

economicinterests.Tothisend,apragmaticandstrengthenedstrategicintegrationwith

thefastgrowingeconomiesoftheEastAsianregion,especiallySouthKorea,wouldbe

amajoradvantage.SouthKoreawouldbeanidealhi-techpartnerinmeetingSouth

Africa’schallengetogrowitseconomy,createjobs,andstrengthenparticipationinthe



globalisationprocess.SouthAfricashouldstepupdialogueandknowledgeexchangeon

developmentissueswithKorea,tobuildamoreconstructivedevelopmentpartnership.

IdealandmutuallybeneficialROK–SouthAfricapartnershipscouldincludethose

suggestedbelow.

● Skills enhancement programmes

TheROKisaworldleaderintechnicaleducationandcanassistSouthAfricainthis

area.(Morethan30000foreignstudentsnowstudyintheROKeveryyear,while

morethan150000Koreansstudyabroad.)

● Minerals beneficiation

TheROKwouldbeanidealpartnerinaddingtechnicalknow-howtoSouthAfrica’s

richmineralwealth.Thiswouldbeamutuallyrewardingprocess.(Korea’sresearch

spendingratiotoGDPranksfifthintheworld.)

● Job creation

SouthKoreahasvastexperienceinpovertyreliefandjobcreation.Koreanfinanced

manufacturing plants in South Africa, to supply the continent, provide massive

opportunity.

● Expand technology co-operation

Buildonexistingagreementstoenhancemutuallybeneficialtechnicalco-operation.

Forexample,theROKhasconcludeddetailedtechnologyco-operationagreements

withanumberofcountries.(Koreaaimstobecomeagloballeaderintechnology

andscienceby2012.)97

● IT networking

Korea’s obvious strength in the IT industry offers prospects for a new SADC, or

continent-wide,communicationsnetwork.98

● FTA

ASouthKorea–SouthAfricanFTAwouldopenupavastrangeofnewcommercial

possibilities. For example, the recently concludedROK–AustraliaFTA study fore-

castssignificantgainsforbothcountriesthroughincreasedtrade.(Forecastspredict

a40percentincreaseintwo-waytrade)Moreover,aROK-SouthAfricanFTAwould

unlockpotentialforco-operationinotherrelatedareas,andlaythefoundationfor

apositiveandconstructivelongtermbilateralrelationship.


GARTH SHELTON

● Innovation-led development

IncreasedcommercialdialoguewiththeROKwouldopenthewayforstrengthened

engagementandtheeffectiveapplicationofSouthKorea’sinnovation-leddevelop-

ment process, a conceptwhichwould be helpful in strengthening SouthAfrica’s

responsetoglobalisation.

● South African investment office in Korea

OpeningadedicatedinvestmentofficeinSeoulwouldadvanceKoreaninvestment

inSouthAfrica.Forexample,Francehasestablishedan‘InvestinFranceagency’in

KoreatoboostKoreanFDI.(TheROK’sUSdollarreservesareamongthehighestin

theworld.)99

● Invest in the ROK

InvestKoreapointsout theadvantagesof investing inKoreaas follows: talented

human resources, one of the world’s largest economies, excellent profitability,

advanced IT environment, strategic location, top creativity in innovation, state-

of-the-artinfrastructure,world-classmultinationalcompanies,stronggovernment

support,andastimulatinglifestyle.100

● Develop an active ROK–South African chamber of commerce (South Korea has 94 trade organisations in 51 countries).

AdirectJohannesburg–Inchonflightisanurgentpriorityinbuildingamoremutually

beneficial relationship.101 Thiswould facilitate increased exchange andmore oppor-

tunityfordialogue.102BuildingastrategiclinkwithInchonwouldalsoimproveSouth

Africa’saccesstothewholeEastAsianregion,layingthefoundationforastrongcon-

nectionwithoneofthefastestgrowingregionsintheworld.Theearlyconclusionofan

FTAwithKoreashouldbeprioritised,asthiswouldprovidethecatalystforaccelerated

interaction,withenormousbenefits forSouthAfrica.Moreover,SouthAfricashould

movetolinkwithkeyFTAzones,soonerratherthanlater,toavoidbeingleftbehind

whenthenextphaseofglobalgrowthbegins.Forasuccessfulandrewardingoutcome,

theKorea–SouthAfricarelationshipshouldbemanagedatthehighestlevel,withregu-

larhighlevelexchangescreatingthedriverforpositiveinteraction.


Endnotes

1 IMF,Finance & Development,June2006.2 ‘Korea’ is theEnglishversionofKoryo,akingdomestablishedon theKoreanpeninsula inAD

918.Koreawas subjected tonumerousChinese invasions andextendedperiodsofoccupation.Inthe13thcenturyKoreabecameasatellitestateofChina,followingwhichitadoptedalargelyChinesepoliticalsystemandaConfucianistsocialorder.Givenitsgeographiclocation,KoreahaslongbeenatthecentreofpoliticalcontestationforpowerinEastAsia.China,Russia,andJapanhave,atvarioustimes,soughttoexercisefullcontroloftheKoreanpeninsula.FollowingJapan’svictoriesintheSino-JapaneseWar(1894–1895)andtheRusso-JapaneseWar(1904–1905),KoreabecameaprotectorateofJapan,andlater,in1910,JapanannexedKorea,endingChinesecontrol.Japan’s colonial rulewas repressive and exploitative, but laid the foundation forKorea’s laterindustrialisation. SeeArthur Cotterell,East Asia, from Chinese Predominance to the Rise of the Pacific Rim, PartIII, NewYork:OxfordUniversityPress,1993,189–323.

3 KOgoura,Korea:past,presentandfuture,Korea, January2009.4 TheHanRiverrunsthroughSeoul,theROK’scapitalcity,thecentreofeconomicdevelopment,

andhometoalmost25percentofKorea’spopulation.5 Inthelate1990s,theEastAsiaAnalyticalUnitoftheAustralianDepartmentofForeignAffairs

andTradeconductedtwomajorstudies(Korea – Implications for Australia and Australia and North East Asia),whichformedthefoundationfornewpolicyoptions,whichhavesinceledtoamajorexpansionofAustralian–Koreanrelations.Thestudiesspecificallyidentifiedoptionsforexpand-ingengagement,andproposedanewframeworkforincreasedtradeandinvestment.

6 SeeKi-balkLee,A New History of Korea,Seoul:Ilchokak,1984,chapter16.7 BCumings,Korea’s Place in the Sun,NewYork:Norton,1997,457.Cumingsarguesthatanother

Koreanwarwouldbe‘catastrophic’forbothsides,andwouldhavenorationalobjective.8 ForacomprehensiveaccountoftheKoreanWar,seeMHastings,The Korean War,London:Pan

Books,1987.9 SeeANaham,Introduction to Korean History and Culture, Seoul:Hollym,1998,chapter12.10 The‘Koreanwave’isalsoknownasHallyu – fromtheKoreanwordreferringtothisprocess.11 SeeShinWon-yong,TheroleofthestateinKoreaneconomicdevelopment:implicationsforAfri-

cancountries,Korea–AfricaInstitute,YoungsanUniversity,Korea,2007.12 ChunSeung-Hun,Spiritualmodernisationandruraldevelopment–applicabilityofKorea’sdevel-

opmenttoAfrica,unpublishedconferencepaper,2007.DrChunsuggeststhefollowingforaccel-erating agricultural development in Africa: farmersmust be encouraged to be self-motivated;farmersmusthavesufficient land;competitionamongfarmerspromotesproduction;and ‘farmleaders’areimportantinmotivatingworkersandincreasingoutput.

13 See,forexample,CMachethe,Developmentalstate:meaning,relevanceandimplicationsforruraldevelopmentinSouthAfrica;BTurok,WhatisdistinctiveaboutSA’sdevelopmentalstate;andNMagketla,Developmentalstate:conceptsandstructures,allinNew Agenda28,2007,13–54.

14 Neoclassicaleconomistscontendthatthemarket,andnotthegovernment,playedthekeyroleinKorea’seconomicdevelopment.Freemarketadvocatesremainscepticalabouttheclaimthatagovernmentcanbemoreeffectivethanthemarketinpromotingdevelopment.Insupportofthisview,theWorldBanksuggestedthatKorea’ssuccessfuldevelopmentwasdirectlyrelatedtofreemarketprinciplesandmotivatedbyanumberofkeyfactors,including:theefficientallocationofinputs,aneutralincentivepolicyprogramme,internationalcompetition,competitivemarkets,astablemacroeconomicenvironment,andahighinvestmentineducationandhealth.The‘statist’view contends that Korea’s economic developmentwas ‘government pushed’.World Bank,The East Asian Miracle, Economic Growth and Public Policy, NewYork:OxfordUniversityPress,1993.See, forexample,DanielPinkston,TheevolutionofSouthKorea’srural institutions: thepoliti-caleconomyofexportpromotionandmarketprotection,Journal of East Asian Studies7,2007,


61–92;AliceHAmsden,Asia’s Next Giant: South Korea and late industrialization, Oxford:OxfordUniversityPress,1989;RWade,Governing the Market: economic theory and the role of government in East Asian industrialisation, Princeton:PrincetonUniversityPress,1990;LJonesandISakog,Government, Business and Entrepreneurship in Economic Development: the Korean case, Cambridge,MA:HarvardUniversityPress, 1980;RLuedde-Neurath, Import Controls and Export-Orientated Development: a reassessment of the South Korea case, Boulder,CO:WestviewPress,1986;MPorter,The Competitive Advantage of Nations, NewYork:TheFreePress,1990;SSmith,Industrial Policy in Developing Countries: reconsidering the real source of export-led growth,Washington:EconomicPolicyInstitute,1991.

15 YoonHeocontendsthattheKoreangovernmentplayeda‘pivotalrole’inKorea’seconomicdevel-opment.SeeYoonHeo,DevelopmentstrategyinKoreare-examined:aninterventionistperspec-tive,The Social Science Journal 38,2001,217–31.

16 TheWorldBankarguedthatKoreawassuccessfulindevelopinga‘market-friendlyview’,whichallowedeffectivegovernment interventionwhileat the same timepromoting,andnot stifling,entrepreneurship.Thus,inKorea’scase,theWorldBankadmittedthatthedevelopmentprocessdidnotfullyconformtotheneoclassicalmodel,whichpostulatesthatgovernmentshouldperformonlyfourfunctionstopromotegrowth:investinpeople;provideacompetitiveclimate;keeptheeconomyopen to international trade;andmaintaina stablemacroeconomy.Further than this,governmentsarelikelytodomoreharmthangood,accordingtotheWorldBank.SeeWorldBank,The East Asian Miracle.SeealsoDavidLim,ExplainingthegrowthperformancesofAsiandevelop-ingeconomies,Economic Development and Cultural Change42(4),1994,829–44.

17 Francoetaldefinedindustrialpolicyas‘thesumofanation’seffortstoguideandshapebusinessactivitiestofostereconomicgrowth.Thus,itsconcernsarewiththelongtermstructuralintegrityandgrowthofacountry’s industrialbase.’Thecentralcomponentsofindustrialpolicyincludeindustrial targeting,upgrading industrial structure,and industrialorganisationalpolicy.SeeSFranco,AEguren,andDBaughman,Korea’s Experience with the Development of Trade and Industry: Lessons for Latin America, DDIPolicySeminarReport, WashingtonDC:WorldBank,1988.

18 IyanatulIslamandAnisChowdhury,Asia-Pacific Economies, London:Routledge,1997,167.Taiwanalsomadeextensiveuseofgovernmentinterventiontosupportindustrialisationprocesses.

19 DEkbladh,Howtobuildanation,Wilson Quarterly,Winter2004.20 SeeWilliamMcCord,The Dawn of the Pacific Century,London:TransactionPublishers,1993,35–6.21 SeeEdwardChen,Hyper-growth in Asian Economies,NewYork:Holmes&Meier,1989,chapter6.22 SeeChoongSoonKim,The Culture of Korean Industry, ArizonaPress,Tucson,1992,chapter7.23 Oftenexporttargetswereinfactexceeded.24 AccordingtoStephenSmith,exportincentivesinKoreaincludedawiderangeoftools,suchas:

periodicdevaluation;preferentialaccess to imports required forproduction; tariffexemptions;taxbreaks;domesticindirecttax;lowerdirecttax;accelerateddepreciation;importentitlement;monopoly rights; subsidised interest rates; preferential credit; reducedpublic utility taxes andtransportrates;exportinsuranceandguarantees;freetradezones, industrialparksandexportzones;publicenterprises;exportsalespromotion;technologyupgrading;andspecificexporttar-gets.SeeStephenSmith,Industrial Policy in Developing Countries: reconsidering the real sources of export-led growth,WashingtonDC:EconomicPolicyInstitute,1991.

25 SeeSejongInstitute,Korea’s Economic Diplomacy: survival as a trading nation, Seoul,1995.26 Achaebol isauniquelyKoreanorganisationalstructure.Thetermchaebol means‘fortunecluster’

or‘fortunegrouping’,andinpracticetranslatesintoafamily-ledbusinessconglomeratemadeupofmanydiversifiedcompanies.Therearenowmorethan50chaebols inKorea.Thetenlargestare:Hyundai,Samsung,LG,Daewoo,SK,Ssangyong,Kia,Hanjin,Lotte,andHanwha.Thebasiccharacteristics of a chaebol includefamilyownershipandcontroloverthecorporatemanagementstructure;astrongentrepreneurialspirit,whichdrivescorporationscontinuallytoseeknewbusi-ness opportunities; paternalistic leadership; centralised planning; and close co-operationwithgovernment.Thesizeofthechaebols hasallowedthemtheabilitytodiversifyintobothrelated

ENDNOTES


andunrelatedindustries.ForadetailedoverviewofKorea’schaebolsystem,seeAmsden,Asia’s Next Giant. See alsoKaeChung andChong LeeHak,Korean Managerial Dynamics, NewYork:Praeger,1989.

27 Foranoverviewoftheroleofthechaebols indevelopingKorea’seconomy,seeJoseCamposandHiltonRoot,The Key to the Asian Miracle,BrookingsInstitute,Washington,2004,63–70.

28 Seewww.lg.co.kr/korean/about/overview.jsp.29 Policy towards non-targeted industries in the non-exporting sector has generally amounted to

benignneglect.30 LarryWestphal, Industrial policy in an export-propelled economy: lessons fromSouthKorea’s

experience,Journal of Economic Perspectives4(3),1990,56–8.SeealsoPaikNak-chung,HowtothinkabouttheParkChungHeeera,Korea Focus, May–June2005;HanYoung-woo,HistoryoftheRepublicofKorea:areviewofcausesandeffects,Korea Focus 16(3),2008.

31 SeeSuzanneHan,Notes on things Korean, Seoul:Hollym,2005.32 EzraVogel,The Four Little Dragons: the spread of industrialisation in East Asia, Cambridge,MA:

HarvardUniversityPress,1991,chapter3.33 TherearenumerousstudiesonhowKoreancompaniesbenefitedfromtaxincentives.34 KwangChoiandYoungSaeLee,TheroleoftheKoreangovernmentinindustrialisation,inChung

LeeandIppeiYamazawa,The Economic Development of Japan and Korea, Praeger,NewYork,1990,65.

35 SeeSungchulChung,Excelsior:theKoreaninnovationstory,Global Innovation,Fall2007.36 RoJi-woong,Korea’stop10newtechnologies,Korea Review,Seoul,February2008.37 TWKang, Is Korea the Next Japan, London:MacMillan,1989.Kang’s listofsuccess factors for

Koreaneconomicdevelopment includes the following:highly skilled,but lowcost labour; big-businessorientation;limitedpopulationgrowth;andafocusontechnologicalinnovation.

38 SeeGilbertRozman,The East Asian Region: Confucian heritage and its modern adaptation, Princ-eton:PrincetonUniversityPress,1991,chapter2.Intermsoftheneo-Confucianvisionofamoralorder, itwasargued thatmancouldbeperfected.Education,basedonaneo-Confucianmoralcurriculum,wasthemeansthroughwhichperfectioncouldbeattained.

39 RobertElegant,1990,Pacific Destiny,NewYork:HeadlineBooks,1990,99.40 Hyundai’scorevaluesincludethefollowing:‘Looktothefutureandinitiatechange;Practiceopti-

misticandpositivethinking;Showinitiativeandacceptresponsibilityforyouractions;Continu-ouslyimprovethroughself-development;Strivetobediligentandfrugal;Endeavourtobehonestandcourteous;Valuemutualtrustandco-operation;Provideworld-classservicetoourcustomers;PreservetheenvironmentandServeournationandSociety.’ThecentralfeatureofHyundai’scor-poratecultureisacompletepreoccupationwithhardwork,dedicationtothecompany,andlonghours.ThecommitmenttohardworkisbasedonastrongConfucianvaluesystemwhichperme-atesKoreansociety.Atthesametime,thecommitmenttoworkisexpressedcollectivelyinsteadofindividuallyasintheWest,thusconstitutingapowerfulelementincorporatesuccess.SeeRichardSteers,Made in Korea: Chung Ju Yung and the rise of Hyundai, NewYork:Routledge,1999,210–8.

41 Theso-called‘militaryfirst’policyhascreatedarelativelystrongmilitarycapacityintheDPRK,buthasfrustratedoveralldevelopment.SeeChinHui-gwan,TenyearsofKimJong-ilrule:assess-mentsandprospects,Korea Focus15(4),2007,110–8.

42 Obstacles to successful economic reform include: international sanctions linked to theDPRK’swithdrawalfromtheNPT;politicalsensitivityoverownership;lackofentrepreneurship;isolationfromtheglobaleconomy;andpoorcommunicationwithregionalstatesandtheglobalcommunitygenerally.SeeLeeDong-hwi,ReformandopeningNorthKorea’seconomy:evaluationandpros-pects,Korea Focus15(2),2007.

43 DNantoandEChanlett-Avery,The North Korean Economy: leverage and policy analysis,CRSReportforCongress,WashingtonDC,2008.

44 SeeMO’Hanlon andMMochizuki,Crisis on the Korean Peninsula,WashingtonDC:BrookingsInstitute,2003.O’HanlonandMochizukisuggest that theDPRK’smainstrategy is tokeep the

ENDNOTES


south‘hostage’toamajormilitaryattack,whileittriestonegotiateconcessionsfromtheUnitedStates.NuclearweaponsstrengthenPyongyang’sabilitytodetertheUnitedStatesandenhanceitshostagestrategy.

45 YongSooPark,ThepoliticaleconomyofeconomicreforminNorthKorea,Issues and Studies44(4),December2008.

46 ForadetailedaccountofNorthKorea’snuclearprogramme,seeJWitetal,2004.Going Critical: the first North Korean nuclear crisis, WashingtonDC:BrookingsInstitute,2004.TheauthorsadmitthatthekeytodenuclearisationofNorthKorearemainsunclear.Amixtureofsticksandcarrotsoveranextendedperiodoftimehasproducedonlyminimalresults,despitethehardshipsufferedbytheKoreanpeople.Perhapsthelimitedperceivedtimeframeisinsufficientforafinaloutcome.Amuchlongernegotiatingperiod,measuredindecades,ratherthanyears,maybemoreappro-priate.SeealsoLANiksch,NorthKorea’snuclearweaponsprogramme,IssuebriefforCongress, WashingtonDC:CongressionalResearchService,2003.

47 TheDPRKhassufficientknowledgeandcapacity,andthewill,tocontinueitsnuclearweaponsdevelopmentprogrammefortheforeseeablefuture.ThisgivesPyongyangapowerfulretaliatorycapacityandsignificantlyincreasestherisksforanymilitaryengagement.Interview,KimTae-woo,Vice-President,KoreaInstituteforDefenceAnalyses,Seoul,3September2008.

48 SeeDokdoResearchInstitute,Dokdo is Korean territory,Seoul,2008.SeealsoSNaito,2008.Ter-ritorial Issue Between Japan and Korea: case of Takeshima/Dokto,Tokyo:Sinkansya,2009.

49 YonapNewAgency,Japan’sclaimsonDokdodisproved,Korea Focus17(1),2009,10.50 SeeYonghoKimandMyungChulKim,ChinaintheNorthKoreanquagmire:rethinkingChinese

influenceonNorthKorea,Issues and Studies44(3),2008.51 NorthKorea’sactionshavelargelybeenareactiontotheBushadministration’shardeningofits

approach.Pyongyanghasfelttheneedtostrengthenitsdeterrentcapacity.Interview,ProfKimTaehyun,InternationalStudies,Chung-AngUniversity,Seoul,3September2008.

52 YunDuk-min,Pyongyang’sbrinkmanshipnolongereffective,Korea Focus,Spring,2009.53 InterviewProfHyunIn-Taek,Director,InternationalRelationsInstitute,KoreaUniversity,Seoul,

2September2008.GiventhedifficultyinconvincingtheDPRKtogiveupitsweapons,manyROKscholarsareadvocatingacompromisepositionwhichallowsfortheDPRK’sintegrationintotheglobalcommunitywithouttotalverification.

54 GChang,Nuclear Showdown: North Korea takes on the world,NewYork:RandomHouse,2006.GordonChangconvincinglyarguesthatnoonehasthe‘rightformula’totalkNorthKoreaoutofitsnuclearweapons.

55 LVSigal,Effortsforanuclear-freeNorthKoreaarebearingfruit, Global Asia3(2),2008,53–7.DespitethedifficultiesinconvincingPyongyangtogiveupitsnuclearweapons,Sigalcounselsagainstamoreconfrontationalapproach,whichhebelieveswouldbecounterproductive.

56 PresentlyNorthKorea’spercapitaGDPisestimatedatUS$500.57 YoonDuk-min,Initiativefor‘Denuclearisation,Opennessand3000’:tasksandprospects,Korea

Focus, Summer2008.AndreiLankovcontendsthattheDPRKwillnotacceptPresidentLee’splan,asthiswouldrequiregivingupallnuclearweaponsandterminatingitssocialist- juche system,whichwouldunderminetheauthorityandlegitimacyofthegovernment.AccordingtoLankov,NorthKoreacannotgiveupisnuclearweapons,asthesearethefoundationoftheregime’spowerandlongevity.RatherthanacceptingLee’soffer,hepredictsthatthenorthwillcontinuetotryleveragingisnuclearandmissilecapacitywhilesurvivingdaytodayeconomically.Onlyamajorleadershipchangewouldofferthepossibilityofanewdirectionforthenorth.SeeALankov,2008,Koreasnoteye-to-eyeonvision3000,Policy Forum Online,

58 Itwasannouncedon2June2009,asthispaperwasbeingpreparedforpublication,thatKimJong-Ilhadnamedhisyoungestson,KimJong-un,ashissuccessor.

ENDNOTES


59 SeeBBranford,Who will succeed North Korea’s Kim Jong Il?, BBCNews, ,accessed26January2009.

60 For a detailed debate on the variousKorean scenarios see:Nautilus Institute, 2005,A Korean Krakatoa? Scenarios for the peaceful resolution of the North Koran nuclear crisis, www.nautilus.org.

61 InformedobserversintheROKconsiderthe‘muddlingthrough’optionasthemostlikely.Giventheeffectivecontroloftherulingelite,andtheircontinuedinterestin‘muddlingthrough’ratherthanadoptingahighriskreformpath,thisappearstobethemostlikelyoption.InterviewSuhJaeJean,President,KoreaInstituteforNationalUnification,Seoul,1September2008.

62 PaulFrenchhassuggestedthatdissatisfactionamongthemilitaryiswidespread,butsuppressed.Continued shortagesanddeprivation impactnegativelyonmilitarymorale,while themilitaryleadershipcontemplatesafuturewhichwillproducegreatereconomicgrowthandanimprovedstandardofliving.SeePFrench,North Korea: the paranoid peninsula,NewYork:Palgrave,2005,chapter12.

63 AsignificantnumberofseniormilitarypersonnelintheDPRKareconsideredtofavouracontrol-led,China-styleeconomicreformprogramme.Thiswouldrevitalisetheeconomy,whiletherulingelite,withmilitarybacking,retainfullcontrol.InterviewYeoIn-kon,Director,KoreaInstituteforNationalUnification,Seoul,1September2008.

64 See Chung-inMoon,Understanding Regime Dynamics in North Korea, Seoul: Yonsei University,2000.

65 JunBong-geun,ScenariosforpowerchangeinNorthKorea,Korea Focus16(4),2008.66 SeeMichaelDobbs-Higginson,Asia Pacific: its role in the New World Disorder, London:Mandarin,

1993,272.67 SeeRGrinker,Korea and its Futures, NewYork:StMartin’sPress,2000.SeealsoSang-WooRhee,

Security and Unification of Korea, Seoul: SogangUniversityPress, 1982. Sang-Wooargues thatNorthKorea’sbestoptionwasunificationthroughinitiationofarevolutionarywarthatwouldunderminethegovernmentofthesouth,leadingtostatecollapse.

68 ThereisnowawidespreadfeelinginSouthKoreathattheROKcandefenditself,andnolongerhasanyneedforamilitaryalliancewiththeUnitedStates.SouthKorea’sindustrialcapacityandeconomicwealthissufficienttoproduceaneffectivedeterrent.Atthesametime,NorthKorea’soverallmilitary capacity has been in decline for a significant period of time, andwithout aneconomicrevivalisunlikelytoimprovesignificantly.SeeLeeSook-Jong,The Transformation of South Korean Politics: implications for United States–Korean relations,WashingtonDC:BrookingsInstitute,2004.

69 Givena rapidlydecliningeconomy,whether theDPRKcanmaintainaneffective conventionalwar-fightingabilityisincreasinglyinquestion.Alackofadequateequipmentmaintenanceandcombatplatformupgradingsuggests thatover time the regionalbalanceofpower (outside therealmofanuclearweaponsexchange)willshiftdecisivelyinfavouroftheROK,withorwithouttheUnitedStatesalliance.InterviewProfLeeGeun,SeoulNationalUniversity,1September2008.

70 LeeMyung-bak,Messagetotheworld,Korea Policy Review,February2008.71 Korea,AfirstfullyearforpresidentLee,March2009.72 SeeLeeSeungjooandKooMinGyo,SouthKorea’smulti-trackFTAstrategy:movingfromreactive

topro-active,2006,http://www.allacademic.com.73 Inthiscontext,KoreaisprimarilyseekingincreasedinteractionwithBrazil,Russia,India,and

China.AgoodrelationshipwiththesekeyeconomiesiscrucialforKorea’slongertermgrowth.SeeMishraS,Korea Policy Review, April2007.

74 Theseare:digitalTV/broadcasting;LCDdisplays;intelligentrobots;futureautos;nextgenerationsemiconductors;nextgenerationmobilecommunicators;intelligent-modelhomenetworking;dig-italcontent/SWsolutions;nextgenerationbatteries;andbio-medicines.UndertheencouragementanddirectionoftheKoreangovernment,thesetechnologiesareexpectedtoprovidethefounda-

ENDNOTES


ENDNOTES

tionforfuturegrowthintheROK.SeeChoiYong-jae,Governmentlaunchesprojectnextgenera-tiongrowthengines,Korea Policy Review, April2007.

75 QuotedinKoHye-ryun,Korea, February2009.76 ITsolutionsformacentralelementintheROK’sexportdrive.Recentsuccessfulexportsinclude:

Kazakstan– ITpostal servicesystem;Azerbaijan– intelligent transport system;Mongolia– ITsystem;Indonesia–nationalcrimeinformationcentre;China–automatedfarecollectionsystem;India–automatedfarecollectionsystem.

77 MoonChung-inandKimTaehwanprovideagoodoverviewof theROK’s reactions andpolicyadjustments following theAsianfinancial crisis. SeeMoonChung-inandKimTaehwan,SouthKorea’sinternationalrelations:challengestodevelopmentalrealism?,inSamuelKi,The Interna-tional Relations of Northeast Asia,London:Rowman,2004.

78 In1982,ROKPresidentChunDoo-hwanvisitedAfricatoenhanceKorea’sdiplomaticeffortandmakenewfriendsonthecontinent.

79 China’s central theme in interactionwithAfrica focuseson ‘resources for construction’,whereAfricaprovidesoilandrawmaterialsinexchangeforChineseroadandrailwayconstruction.

80 BanKi-moon,ThepresentandfutureofKorea’sdiplomaticpolicytowardsAfrica,Korea Policy Review, April2006.

81 President Roh Moo-hyun, 8 November 2006. Quoted in Dynamic-Korea.com, at http:www..dynamic-korea.com, accessed4October2007.

82 QuotedinMy Africa,Africa:Koreaseeksbetterties,at.83 ChungYeon-uk,NobraggingforKorea’sAfricaninitiative,Korea Focus, Spring2006.84 KOAFECengagesinanumberofactivitiesdesignedtopromoteKorea–Africaco-operation.Regu-

larconsultativemeetingsdrivetheprocess.SeeKOAFEChomepage,http://www.koafec.org/en/about/k.

85 Korea’sODAisdispensedthroughtheKoreaInternationalCo-operationAgency(KOICA)whichisessentiallyacentralisedorganisationdesignedtoimplementandmonitorKorea’sinternationalassistance programmes. KOICA’s programmes focus on: human resource development; povertyeradication;promotionofmarketeconomiesandfreetrade;capacitybuildingandadministrativedevelopment;assistinginprotectingtheenvironment;andassistingwomenindevelopment.SeeKOICAhomepage,http://www.labfrontier.com/koica.

86 SeeParkHeung-soon,StatusofKorea’sforeignaidandtasksahead,Korea Focus, Spring2007.Parkadvocatesagreaterco-ordinationofKorea’sODA;increasedcontributionstocomeinlinewithOECDaverages;moregrantsandfewerloans;anewaidstrategy;moreaidtoNGOs;longtermassistanceprogrammesinselectedcountries;andincreasedpopularsupportforODA.

87 InterviewwithWookChae,President,KIEP,Seoul,30August2008.88 InterviewwithParkBokyeong,KIEP,Seoul,30August2008.89 ParkYoungHo,PerspectivesonKorea–Africaeconomicco-operation, KIEPunpublishedconfer-

encepaper,Seoul,2007.90 SeeLeeHan-gyu,AnewinfrastructureforKorea’sAfricadiplomacy,Korea Focus, Winter2006.91 KimKyung-suk, Turning theKorean peninsula into a northeast Asia logistic hub,Korea Focus

15(2),2007.SealsoChangYoung-Tae,Korea’sstrategicplantobeanortheastAsianlogisticshub,Korea Observer34(30),2003,437–60.

92 SeeJeoongHyeon-ji,Korean Policy Review, February2008.93 SeeRoJi-won,Korea’stop10newtechnologies,Korea Policy Review,February2008.94 LeeJi-yoon,Korea Policy Review,April2008,26–7.95 InterviewAmbassadorKimHan-soo,ROKAmbassadorinSouthAfrica,19March2009.96 Ibid.SeealsoAmbassadorAdolfoCarafi,ChileanAmbassadorinSeoul,interviewinThe Korean

Post 21(8),2008.97 SeeKorea Policy Review,Koreaaimstobetopscience,techpowerhouseby2012,December2007.98 SeeKimDong-soo,CommandandcontrolofKorea’smainindustries,Business Korea, September

2008.


ENDNOTES

99 AsDrSakongIl,chairmanofSouthKorea’sNationalCompetitivenessCouncil,pointsout:‘Inthisageofglobalisationunlessyouattract foreign investment,youcannotreallywin in theglobalstakes.’QuotedinInvest Korea Journal26(2),Theeconomicpresidency,2008.

100 InvestKorea,MinistryofCommerce,IndustryandEnergy,athttp://www.mocie.go.kr.101 In2007,theGlobal TravellermagazineselectedInchonasthebestairportintheworld.102 TheprestigiousmagazineAir Transport WorldhasnamedKorea’sAsianaAirlinesas2009Airline

oftheYear.


APPENDICES

Appendix A: Seoul Declaration November 2006

1. We,theparticipantsofthe‘The1stKorea–AfricaForum’heldinSeoulon7to9

November2006,acknowledgethattheforumlaidthefoundationforaframeworkof

friendship,partnershipandcooperationbetweenKoreaandtheAfricancountries.

2. WerecognizethattheAfricancountries,equippedwiththepotentialforfullgrowth

anddevelopment,anddynamicKoreaneedtobolsterinter-regionalcooperationas

awaytorespondtothefast-changingglobalenvironment,includingtheincreasing

interdependenceofnationsinthisrapidlyglobalizingworld.

3. Having inmind the importanceof solidarity as a fundamental value to interna-

tionalrelations inthe21stcentury,wereaffirmthe importanceof implementing

theMillenniumDevelopmentGoals (MDGs)adopted in2000andcallonall the

developmentpartnerstoactivelycontributetotheeffortsoftheAfricancountries

inachievingtheirgoals.

4. In thiscontext,wehighlyappreciate ‘Korea’s Initiative forAfrica’sDevelopment’

declaredbyPresidentRohMoo-hyunduringhisvisittoAfricancountriesinMarch

2006andtheKoreanGovernment’sannouncementtoincreaseitsaidbudgetinclud-

ingthetriplingofOfficialDevelopmentAssistanceforAfricancountriesby2008.

5. We welcome the Korean government’s commitment to assist the African coun-

tries in human resource development by inviting 1,000 trainees within the

following three years and share its development experience with Africa.

AppendixWealsowelcometheKoreanGovernment’scommitmenttoprovidefull

supportfortheAfricancountriesinpursuingobjectivesoftheNewPartnershipfor

Africa’sDevelopment(NEPAD)suchaspovertyreduction,andinaddressingprob-

lemsinkeypriorityareasincludingwater,agriculture,health,education,science

andtechnologyICT,andgoodgovernance.

6. WealsorecognizethatcollaborativeprogramsshouldproceedfromAfrica’sown

initiativeforitsdevelopment,alongwithcooperationofinternationalpartnerssuch

asKorea.

7. Weacknowledgetheneedtoestablishlong-termandmutually-beneficialrelation-

shipbypromotingtradeandinvestmentbetweenKoreaandAfrica.

8. WealsoacknowledgethattheKorea–AfricaForumwillnotonlyestablishaclose

economicpartnershipbutalsoplayavitalroleinpromotingmutualunderstand-

ingamongpeoplefromvariousculturesandreaffirmourcommitmenttofostering

closertiesintheareasofmutualinterest.


APPENDICES

9. WeagreethattheKorea–Africaforumshouldbeheldregularlytoserveasamecha-

nismforsubstantivecooperation.

Seoul, Republic of Korea

November8,2006

Appendix B: Korea’s initiative for Africa’s development

ThegovernmentandthepeopleoftheRepublicofKorea,

Withavisionthatworldpeaceandcommonprosperityofthe21stcenturyshouldbe

realizedtogetherwiththeAfricancountries,

Seekingtoachievethisobjectivebygreatlyexpandingcooperationinthehumani-

tarianfield,suchaspovertyreductionaswellasassistance foreconomicandsocial

developmentofAfrica,

DesiringtoplayafullpartintheinternationalendeavourtoachievetheU.N.Mil-

lenniumDevelopmentGoals,

Willtakeaninitiativeforcooperationandsupportinvariousfieldsasfollows:

1. By the year 2008, Korea will triple the overall amount of development assist-

ance to Africa.

• Tothisend,Koreawillsubstantiallyincreasethebudgetforgrantaidandwill

givepriority tocountriespractisinggoodgovernance in theallocationof the

increasedaid.

• Inaddition,Koreawill strive to secure innovative resources fordevelopment

basedonbroadpublicsupportonthisissue.

2. Korea will increase opportunities to share with the African nations its own

experiences in overcoming poverty and underdevelopment within a short

period of time.

• Overthenextthreeyears,KoreaplanstoinviteatotalofonethousandAfri-

canpeopletoreceivetraininginKoreainordertohelpbolsterAfrica’shuman

resourcesdevelopment.

• KoreawillalsosharplyincreasethenumberofvolunteersdispatchedtoAfrica

tocarryoutregionaldevelopmentactivities.

• KoreawillassistAfricannationsinestablishingtheirowndevelopmentplans.

Aspartofthiseffort,KoreawillorganizeworkshopsontheKoreaneconomy

anddevelopment-relatedtopics.Inaddition,Koreanexpertswillbedispatched

toAfrica.


APPENDICES

3. Korea will expand programs to reduce the child mortality rate, improve mater-

nal health, and eradicate disease including HIV/AIDS, malaria and tuberculo-

sis in Africa.

• Tothisend,moremedicalteamswillbedispatchedtoAfrica.Alsoprojectssuch

ashospitalconstructionandmedicalequipment improvementwillbecarried

outtosupportthedevelopmentofAfrica’sbasicpublichealthinfrastructure.

• To help eradicate disease spreading in underdeveloped countries, especially

thoseendemicsintheAfricanregion,Koreawillsupportvaccinedevelopment

programsincludingthosebytheInternationalVaccineInstitute(IVI).

4. Korea will contribute to the development of human resources in Africa by

extending support for Africa’s basic and vocational education.

• Effortstoimprovebasicandinformation-orientededucationofAfricanpeople

willbemadethroughprovidingschoolsaswellasconstructinginformationand

communicationtechnology(ICT)infrastructureforschools.

• In addition, Korea will support vocational training by setting up vocational

trainingcentresandprovidingtrainingprogramsforAfricaninstructors.

5. Korea will expand its assistance in the agricultural and fishery fields, in an

effort to relieve Africa’s food shortage and to promote the primary industry.

• KoreawillcooperatewiththeNewPartnershipforAfrica’sDevelopment(NEPAD)

andsupportits‘ComprehensiveAfricaAgricultureDevelopmentProgram’.

• KoreawillstrivetoimproveAfrica’sagriculturalproductivityaswellasitsrural

incomebysharingKorea’sagriculturaltechnologyaswellasassistingthecon-

structionofruralinfrastructure.

• Koreawill support the sustainable use and development of fishery resources

throughtechnicalassistanceinfisheryandacqua-culture.

6. By sharing Korea’s cutting-edge ICT with African nations, Korea will contrib-

ute toward bridging the Digital Divide in Africa.

• KoreawillexpandtheinvitationoftraineesandthedispatchofKoreavolun-

teersintheICTsector.

• KoreawillalsoprovideotherassistancesuchasinconstructionofITtraining

centresandsupportinge-governmentprojects.

7. ‘Korea-Africa Forum,’ a consultative body of government officials, academic

scholars and civilians, will be established and developed to serve as a regular

consultation channel between Korea and Africa.

• Inaddition,a‘Korea–AfricaEconomicCooperationForum’willbeheldtopro-

motetheeconomiccooperationbetweenKoreaandAfricainvariousways.


APPENDICES

8. Through cooperation with relevant international organizations, Korea will

work toward improving the expertise and efficiency in the activities for Afri-

can development.

• Jointprojectswill bepursuedwith internationalorganizations suchasWFP,

UNIDOandUNWTOST-EP.

• KoreawillincreasepartnershipwiththeAfricanDevelopmentBank(AfDB).

9. To improve the trade capacity of African nations, Korea will expand trade

with the investment in Africa.

• Marketaccesswillbeexpandedforproductsofduty-freeandquota-freeimports

fromtheleastdevelopedcountries(LDCs).

• KoreawillextendsupportforAfricannationstoimprovetheirtradecapacity

byincreasingcontributionstotheIntegratedFramework(IF)forLDCsandby

expandingitsowntrainingprogramsonWTOtraderulesandregulations.

• Exchangeamongbusinesspeoplewillbeencouragedthroughvariousprograms,

suchasthedispatchofmissionstopromotetradeandinvestment.

10.This initiative will be pursued with an emphasis on strengthening Africa’s

ownership over its development.

• Tothisend,KoreawillconductjointprojectswithAfricanregionalorganiza-

tionssuchas theAUandNEPADwithaviewtosupportingAfrica’sself-help

effortsfordevelopment.

Appendix C: Together we shall open a road to advancement

AddressbyPresidentLeeMyung-bakatthe17thInauguralCeremony(extract)

TheRepublicofKoreawill takeamorepositivestancewithagreatervisionand

carryoutglobaldiplomacyunderwhichweactivelycooperatewiththeinternational

community.

Transcendingthedifferencesinrace,religion,andwealth,Koreawillbefriendall

nations and peoples. Respecting the universal principles of democracy and market

economy,wewilltakepartintheglobalmovementforpeaceanddevelopment.

Wewillworktodevelopandfurtherstrengthentraditionalfriendlyrelationswith

theUnitedStatesintoafuture-orientedpartnership.Basedonthedeepmutualtrust

thatexistsbetweenthetwopeoples,wewillalsostrengthenourstrategicalliancewith

theUnitedStates.

WewillattachimportancetoourpolicytowardsAsia.Inparticular,wewillseek

peaceandmutualprosperitywithourcloseneighbours, includingJapan,Chinaand

Russiaandpromotefurtherexchangeandcooperationwiththem.

Inordertoensurethatoureconomicenginerunssmoothly,wewillworktoacquire


APPENDICES

asafeandstablesupplyofresourcesandenergy.Moreover,weshalltaketheleadin

environment-friendlyinternationalcooperation.

Asbefittingoureconomicsizeanddiplomaticcapacity,ourdiplomacywillcontrib-

utetopromotingandprotectinguniversalvalues.

KoreawillactivelyparticipateinUNpeace-keepingoperationsaswellasenlargeits

officialdevelopmentassistance(ODA).

Byemphasisingtheimportanceofculturaldiplomacy,wewillworktoallowKorea

tocommunicatemoreopenlyandeasilywiththeinternationalcommunity.Ourtradi-

tionalculture,whencoupledtogetherwithourtechnologicalprowess,willnodoubt

transmittotheworldanimageofamoreattractiveKorea.

UnificationofthetwoKorea’sisthelong-cherisheddesireofthe70millionKorean

people.Inter-Koreanrelationsmustbecomemoreproductivethantheyarenow.Our

attitudewillbepragmatic,notideological.ThecoretaskistohelpallKoreanslivehap-

pilyandtopreparethefoundationforunification.

AsalreadystipulatedinmyInitiativeforDenuclearisationandOpeningupNorth

KoreatoachieveUS$3,000inPerCapitaIncome,onceNorthKoreaabandonsitsnuclear

programandchoosesthepathtoopenness,wecanexpecttoseeanewhorizonininter-

Koreancooperation.

Alongwiththeinternationalcommunity,wewillprovideassistancesothatwecan

raisethepercapitaincomeofNorthKoreatoUS$3,000within10years.That,Ibelieve,

willbothbenefitourbrethrenintheNorthaswellasbethewaytoadvanceunification.

Together,theleadersofthetwoKorea’s,mustcontemplatewhattheycandotomake

thelivesofall70millionKoreanshappyandhoweachsidecanrespecteachotherand

openthedoortounification.Ifitistodiscusstheseissues,thenIbelievethetwolead-

ersshouldmeetwhenevernecessaryandtalkopenly,withanopenmind.Indeed,the

opportunityisopen.

C M Y CM MY CY CMY K

institute for global dialogueinstitute for global dialogue

IGD House, Thornhill Office ParkBekker Street, Vorna ValleyMidrand, South Africa

PO Box 32571, Braamfontein 2017Johannesburg, South Africa

Tel +2711 315 1299Fax +2711 315 2149

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