Concerning the peace of the Korean Peninsula, one can easily recognize one fact: that making peace is too difficult, while returning to aggressive confrontation is relatively easy. The peace process took more than 3 decades, from the Joint Declaration of July 4th, 1972, to the Inter-Korean Basic Agreement of 1991, to the Joint Declaration made after the North-South summit talk on June 15th, 2000. However, it took only a few months for the situation to deteriorate severely with the breakdown of the agreement of the six-party talks, thanks to the Cheonan sinking and the Yeonpeong Island shelling. Why is making peace so hard and returning to confrontation so easy?

The first reason is that peace is not institutionalized to a sufficient extent. The low level of institutionalized peace is the fundamental reason. The second reason is the small scale of exchanges and low density of communications, which support and encourage peaceful relationships. Even if peace is institutionalized well, it will never become consolidated if it lacks the necessary supporting social power. Top-down peace given by higher authority is weak if society does not need and support it. Socio-economic exchanges are one of the most important factors. However, there are no personal exchanges between North and South Korea except for temporary meetings, and no economic relationship exists except for industrial activities within the Kaesong industrial complex.

This research will examine two issues related to the peace of the Korean Peninsula. First, how has peace been institutionalized since the Korean War, and how has it been changed? How can we understand the nature and dynamics of peace in Korea as an institution? Second, how have economic interests influenced the institutionalization and maintenance of peace in Korea? Did economic exchange and interest have a positive or negative impact on the peace-making process?

To address these questions, I will first elaborate the theoretical tools I will use to analyze peace as an institution, and will then provide a theoretical framework by reviewing previous research on the relationship between economic interdependence and war/peace.