 Multilateral Engagement in North Korea's Economic Rehabilitation and Possible Establishment of Trust FundsJong-Woon Lee and
Hyoungsoo Zang
No 12-2, Working Papers from Korea Institute for International Economic Policy Abstract: This paper explores multilateral engagement in North Korea's economic rehabilitation, with particular focus on the establishment of special Trust Funds. North Korea's economic recovery in the 2000s has been stagnant, the socialist regime seemingly lacking the capacity to resolve food shortages and economic problems. Moreover, due to the recurrence of the nuclear issue and subsequent imposition of tighter sanctions against Pyongyang, not only has the scale of foreign aid for North Korea deceased sharply, but the engagement of international donors in humanitarian assistance has also been greatly reduced. Thus, a feasible institutional instrument for the amelioration of the regional instability caused by North Korea's economic problems and nuclear standoff would be the establishment of a multilateral framework that would involve bilateral donors and international financial institutions. The setting up of special Trust Funds is a possible option for resource mobi-lization for and aid coordination in providing development assistance to North Korea. Given the potential benefits of such a mechanism, creating multi-donor Trust Funds (MDTFs) for North Korea as denuclearization in the Korean Peninsula progresses could help strengthen relations between Pyongyang and the international donor community. Moreover, the joint funding mechanism of the special Trust Fund would help to ease the political burden currently shouldered by South Korea and neighboring countries directly involved in providing development assistance to North Korea. This paper endeavors to articulate the establishment of MDTFs in the early stages of denuclearization, which would facilitate the dismantling (or abandoning) of North Korea's nuclear programs, as well as the construction of an international aid coordination mechanism. It also explores the potential roles that Trust Funds could play in resource mobilization and policy dialogue. The paper also considers areas of support and procedure in the operation of MDTFs for North Korea. By drawing attention to issues around the administrative structure of the MDTF, it proposes that international donors establish the ‘North Korea Development Assistance Group' (NKDAG) as the principal special Trust Fund governing body. The NKDAG could provide a forum for policy dialogue in the coordination of development assistance to North Korea. Effective fund-raisings, and the successful implementation and management of the Trust Funds would serve as an impetus for enhancing the roles the NKDAG would have to play in the coordination of providing development assistance to North Korea and for the country's economic recovery. This, in turn, would help to placate the donor community in respect of the transparency and effectiveness of its funding contributions, which could attract more foreign assistnance to Trust Fund activities. Keywords: North Korea; Aid Coordination; Development Assistance; Humanitarian Aid; Inter-Korean Cooperation; International Financial Institutions; Multi-donor Trust Funds (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepwp:2012_002 Access Statistics for this paper More papers in Working Papers from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.