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This study extends theoretically the expected utility model for trade-conflict to the model for economic aid-conflict if a target country donates economic aid to an actor country, and analyses empirically how economic aid from South Korea to North Korea affects to the political conflict between South and North Korea. The model for economic aid-conflict shows theoretically that if a target country offers economic aid to the actor country, the actor will decrease the amount of conflict towards the target country. However, the results of empirical analysis show that South Korea’s economic aid to North Korea does not affect the conflict or cooperative relations between South and North Korea. But the empirical analysis using the original data of commercial trade during the period 1998.3∼2008.2 shows that commercial trade between South and North Korea affects to the conflict between two Korea: increasing of commercial trade between two Korea reduce conflict between South and North Korea.


This study extends theoretically the expected utility model for trade-conflict to the model for economic aid-conflict if a target country donates economic aid to an actor country, and analyses empirically how economic aid from South Korea to North Korea affects to the political conflict between South and North Korea. The model for economic aid-conflict shows theoretically that if a target country offers economic aid to the actor country, the actor will decrease the amount of conflict towards the target country. However, the results of empirical analysis show that South Korea’s economic aid to North Korea does not affect the conflict or cooperative relations between South and North Korea. But the empirical analysis using the original data of commercial trade during the period 1998.3∼2008.2 shows that commercial trade between South and North Korea affects to the conflict between two Korea: increasing of commercial trade between two Korea reduce conflict between South and North Korea.