Slave to the blog: war, aid, the stockmarket, KIC, turtles and fishes

February 3, 2012 5:30 AM

Making up for lost time, two slaves to the blog in one week!’s lede for 27 January, pretty much says it all: “North Korea warned the South of "full-scale war," but accepted food aid.”

The conventional wisdom is that South Korean financial markets and its economy more broadly are vulnerable to North Korean provocations.  As we argued in an earlier post, the asymmetry runs in the other direction: it is North Korea's thinner, more fragile markets that gyrate in reaction to such developments.  In the current issue of the SERI quarterly, Lim Soo-Ho systematically examines the response of South Korean financial markets to ten North Korean provocations. Result: markets usually recover within six trading sessions.

One of the more interesting aspects of North-South relations is the relative insulation of activities the Kaesong Industrial Complex from the vagaries of inter-Korean relations.  Last week Rosa Park at the Committee for Human Rights in North Korea passed along a Yonhap report indicating that despite diplomatic tensions, output at KIC was up more than 14 percent in 2011. More than 120 South Korean firms are active in the zone where nearly 50,000 North Koreans are now employed. We will do a more in depth examination of the political economy of thezone in a future post.

The mascot of the University of Maryland is the terrapin, and supporters of the school’s athletic teams have been known to taunt their opponents with the chant “Fear the Turtle.” Well, apparently terrapins can be added to the list Kim Jong-il’s barnyard favorites, along with goats, rabbits, and ostriches, whose production the Dear Leader promoted in one of his last field inspections before his death.  I wonder what Kim Jong-un’s favorites are.  Fear the turtle, indeed.

Lastly, well you know the old saw about giving a man a fish and teaching a man to fish. Well, one North Korean who apparently doesn’t need to be taught is the DPRK’s Ambassador to Germany, Ri Si Hong. When German police found him fishing in Berlin’s Havel River and asked for some identification and his fishing license, Ambassador reportedly responded “License? I don’t need no stinkin’ license!”

OK, I made up that last part.  But the North Korea does seem to have issues with "rules" and "fish."


John Delury

Marcus: looking forward to your in-depth look at Kaesong. Suppose it's a question of how "relative" the insulation is-- significant that Kaesong not shut down, but the growth rate in workforce for example was doubling until 2008, only added 10K in last 3 years-- WAY behind schedule. So I'd say it is still pretty sensitive to inter-Korean vagaries. A liberal admin & improved inter-Korean dynamic in 2013 could see major ramp-up. Curious to hear more of your analysis.

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