Enhancing inter-korean economic cooperation through international cluster: Implications for the Kaesong industrial complex

Abstract

In spite of the high potential of economic cooperation between the two Koreas, political tensions and international sanctions have discouraged the sustainability of economic outcomes. To overcome these political challenges, this article introduces two frameworks of international cluster and global value chains (GVCs) for developing effective and sustainable economic exchanges. These frameworks are applied to the case of the Kaesong Industrial Complex (KIC) and analysis of the reasons for its failure is provided. This article then suggests two strategic solutions for the KIC: minimizing the role of North Korea to a few GVC activities, and encouraging more foreign companies’ investment. Unlike preceding studies that overemphasize the political challenges in inter-Korean economic relationships, we emphasize that an effective approach through internationalization can not only contribute to sustainable economic development but also ease political tensions.