Financial Benefits for Pyongyang
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In 2004, the Hyundai Research Institute estimated that North Korea could receive $9.55 billion in economic gains over the course of nine years if the KIC were to be developed fully and operated successfully. This would include $4.6 billion in foreign currency earnings with $700 million derived directly from the operation of the KIC, $2.5 billion from sales of raw materials and other industrial products, and $1.4 billion from corporate taxes.41 Considering that in international trade in goods in 2005, North Korea exported $1.8 billion and imported $3.6 billion, the estimated total gains of $9.55 billion over nine years associated with the Kaesong Industrial Complex would be quite significant (provided it progresses according to plan). …Long-Term Geopolitical and Economic Issues
… At a somewhat wider set of interests, the KIC provides a channel for rapprochement between the DPRK and South Korea. Kaesong developed partly from South Korea’s sunshine policy of economic engagement with the North. It can be viewed as a confidence-building measure between two countries whose hostility toward each other has lingered since the 1950-52 Korean War. As has been the case with the extensive economic interchange between China and Taiwan,55 the KIC may provide a bridge for communication and a catalyst for cultural interaction, and it can create stakeholders in each other’s economies with a shared interest in stability, liberalization, and increased communication across the DMZ.
… According to the Economist Intelligence Unit, the decrepit North Korean economy has “three crying needs: deeper market reforms, greater openness, and above all, massive investment to modernize decrepit plant and infrastructure.”57 The KIC potentially addresses all three of these needs to a limited extent. ...
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For South Korea, not only does Kaesong provide entry into the decrepit DPRK economy, but it is a key factor in building up and reforming the economy in the North with an eye toward eventual reunification. Beijing’s strategy before the return of Hong Kong in 1997 has been instructive to Seoul. A major reason that many of the first economic reforms in China occurred in nearby Guangdong Province, particularly just across the border from Hong Kong in Shenzhen city, was that Beijing tried to stem pressures to immigrate to Hong Kong by raising the standard of living and industrial development in the region abutting the returning territory. This strategy has been so successful that some immigration, particularly of Hong Kong retirees, has been going from Hong Kong to Guangdong Province and not the other way around. Likewise, Beijing has broadened ties with Taiwan through allowing cross-strait investments, travel, business visas, communication, and other business-based activities. In some sectors, particularly in the manufacture of computers and other electronic products, Taiwan and the east coast of China have become one integrated economy. Kaesong arguably could begin a similar process with North Korea. ...
So I think both Koreas
