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Policy Brief 14-12

Going Beyond Economic Engagement: Why South Korea Should Press the North on Labor Standards and Practices

by Marcus Noland, Peterson Institute for International Economics

April 2014


In recent years, South Korea has been a major investor in North Korea, and South Korean firms have employed more than 50,000 North Korean workers. The hope has been to use economic engagement to lessen the North's direct state control over the economy and to encourage greater internal opening. This transformational vision however rests on unexamined assumptions about the impact of employment on North Korean behavior. New results from a groundbreaking survey of South Korean employers indicate that the North Korean government has limited its citizens' exposure both to South Koreans and to market-oriented economic practices. South Korean investment in North Korea may benefit the firms and workers involved, but evidence of broader spillovers is lacking. A South Korean campaign organized around workers' rights would complement economic engagement to increase the positive spillovers from South Korean employers in the North.

Data disclosure: The data underlying this analysis are available here [xlsx].

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RELATED LINKS

Book: Witness to Transformation: Refugee Insights into North Korea January 2011

Peterson Perspective: North Korea's Immunity to Outside Pressure: Part I December 12, 2012

Policy Brief 10-1: The Winter of Their Discontent: Pyongyang Attacks the Market January 2010

Working Paper 10-2: Economic Crime and Punishment in North Korea March 2010

Paper: FTAs and the Future of US-Korean Trade Relations November 2009

Paper: Implementing the KORUS FTA: Key Challenges and Policy Proposals February 2008

Policy Brief 08-6: North Korea on the Precipice of Famine May 2008

Policy Brief 07-7: The Korea-US Free Trade Agreement: A Summary Assessment August 2007

Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement June 2006

Working Paper 07-7: North Korea’s External Economic Relations August 2007

Book: Avoiding the Apocalypse: The Future of the Two Koreas June 2000

Book: Free Trade Between Korea and the United States? April 2001

Working Paper 08-4: Migration Experiences of North Korean Refugees: Survey Evidence from China March 2008