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Negotiating a Korean Settlement: The Role of Sanctions
Stephan Haggard 한국학술연구원 2016 Korea Observer Vol.47 No.4
Ahandful of sanctions advocates believe that they can “work” either by forcing unilateral policy changes on the part of North Korea or even forcing regime change. Yet most proponents of sanctions under-stand that they play a more complex role in denuclearization: that they grant leverage precisely by the promise to lift them in return for a negotiated quid-pro-quo. This source of leverage is true of secondary sanctions as well, although with the complication that market actors ultimately need to change their behavior if sanctions relief is to have effect.
The Microeconomics of North–South Korean Cross-border Integration
Stephan Haggard,Marcus Noland 한국국제경제학회 2012 International Economic Journal Vol.26 No.3
Economic integration between North and South Korea occurs through three modalities: traditional arm's-length trade and investment, processing on commission (POC) trade, and operations within the Kaesong Industrial Complex (KIC). In order, these three modalities are characterized by decreasing exposure of South Korean firms to North Korean policy and infrastructure. Through a survey of 200 South Korean firms operating in North Korea we find that these modalities of exchange matter greatly in terms of implied risk. For example, firms operating in the KIC are able to transact on significantly looser financial terms than those outside it. We find that direct and indirect South Korean public policy interventions influence these different modalities of exchange and thus impact entry, profitability, and sustainability of South Korean business activities in the North. In effect, the South Korean government has substituted relatively strong South Korean institutions for the relatively weak Northern ones in the KIC, thus socializing risk. As a result, the level and type of cross-border integration observed in the survey is very much a product of South Korean public policy.