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Along the heavily militarized border between North Korea and South Korea sits Kaesong Industrial Zone, intended to be a method to increase cooperation between the two countries. Technically, Kaesong sits entirely within North Korea less than 5 miles from the border. Before its closure, it was seen as one of the only peaceful collaborations between North and South Korea. Kaesong is accessible from the South by train and by road through specialized checkpoints.
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At its height, Kaesong Industrial Zone employed more than 50,000 North Koreans
The main purpose of Kaesong Industrial Zone was to increase cooperation between the two countries through business and industry. South Korean companies were able to set up operations within the boundaries of Kaesong and hire North Korean workers for labor. This would benefit all parties involved:
- South Korean companies have access to cheaper North Korean labor that is already fluent in Korean
- North Korean workers have access to steady labor and wages that were generally higher than they received in their own country
- North Korean government gets access to foreign currency and trade
- South Korean government has an opportunity to build relations with the North in an effort to help reform their economy
At its height, Kaesong housed more than 120 companies, including Hyundai and other industrial and manufacturing groups, and hired more than 50,000 North Korean workers and 800 South Korean workers. It was reported that the economic activity in the zone generated $2 billion for North Korea.
In 2016, the Kaesong Industrial Zone was closed due to tensions between North & South Korea
North Korea tested nuclear weapons in early 2016, which prompted South Korea to halt all operations in Kaesong. Some in South Korea claimed that funds generated though operating the industrial zone were used to fund North Korea’s nuclear program. In response, the North Korean government expelled all South Koreans and seized all assets present in Kaesong. To this day, the industrial zone remains closed due to North Korea’s aggressive stance on their nuclear program and unwillingness to negotiate or partner.
Before 2016, Kaesong Industrial Zone was closed in 2013 due to rising tensions surrounding North Korea’s successful launch of a satellite into space.
Due to disputes between the countries, Inter-Korean Joint Liaison Office in Kaesong was destroyed by North Korea
In an effort to continue to improve diplomatic relations after 2016, the South Korean government built and paid for a $20 million building called the Inter-Korean Joint Liaison Office located in the still-closed Kaesong Industrial Zone. The building acted as a de facto embassy for South Korea. Several important meetings between the two nations happened at this office, including a discussion about a joint bid to host the 2032 Summer Olympics in both Koreas.
Despite the intent to improve diplomatic relations, the North Korean government dramatically destroyed the building in 2020 when it was closed due to COVID-19 due to escalating tensions between the two countries.
Additional links and sources
- Overview article from the BBC on Kaesong (link, published in 2016)
- Maps and data on employment and production within Kaesong (link)
- Article about potential future for the Kaesong Industrial Zone (link, published in 2022)
Have you heard of Kaesong or seen the DMZ?
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