Foreign Direct Investment In North Korea’s Kaesong Industrial Park

For many people North Korea evokes the comic image of the lonely playboy Kim Jong-il in Trey Parker & Matt Stone’s Team America World Police (2004).  I found a more complex sociopolitical reality in 2006 whilst researching a Masters mini-thesis which dealt in part with North Korea’s covert nuclear weapons program.  A week after handing the mini-thesis in Disinformation’s video producer Nimrod Erez sent me links to stark photos of daily life in North Korea’s capital Pyonyang (folio 1, folio 2 & discussion board): deserted highways, military monuments to past battles and derilect residential towers.

Kim Jong-il’s nuclear ambitions were a significant barrier to foreign direct investment (FDI) in North Korea notably under South Korea’s Sunshine Policy to achieve geostrategic stability in the Korean Peninsula.  Jong-il’s nuclear rollback “opens the way” to Hyundai Asan‘s FDI investment in the Kaesong Industrial Park (YouTube promotional video).  South Korea’s small and medium enterprises (SMEs) spearhead the FDI initiative which creates an emerging market, provides knowledge transfer, and hedges against country and currency risks.  South Korea’s government further offsets the SME’s country and operational risks with “low-interest loans and insurance.”  The SME’s engagement strategy also benefits emerging market watchers such as the blog North Korean Economic Watch.

If the FDI initiative fails then North Korea officials can always turn Kaesong Industrial Park into a subsidiary of the Erich von Daniken theme park in Interlaken, Switzerland.