It's actually debated whether the director was "kidnapped". Lots of people in Korea believe he went willingly.
His left-wing films had been banned in the South, and Kim Jong-il offered him superstardom, big budgets and creative control. North Korea was not as bad back then, relatively speaking. Its economy still enjoyed support from both China and the USSR and it could trade with the entire Eastern bloc. South Korea was also a dictatorial military regime at the time (didn't get democracy until 1980s), and lots of South Koreans and Koreans in Japan actually moved to the North in the 60s and 70s. Shin was also generously allowed to "escape" with his family at a film festival after he and Kim ran into creative differences.
On another note Pulgasari is an interesting film because it contains a coded criticism of the Kim regime at the end.