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Reform from Below: Behavioral and Institutional Change in North Korea

Wednesday, September 30th, 2009

Peterson Institute Working Paper (Sept 2009)
Stephan Haggard and Marcus Noland

Abstract: The state is often conceptualized as playing an enabling role in a country’s economic development—providing public goods, such as the legal protection of property rights, while the political economy of reform is conceived in terms of bargaining over policy among elites or special interest groups. We document a case that turns this perspective on its head: efficiency-enhancing institutional and behavioral changes arising not out of a conscious, top-down program of reform, but rather as unintended (and in some respects, unwanted) by-products of state failure. Responses from a survey of North Korean refugees demonstrate that the North Korean economy marketized in response to state failure with the onset of famine in the 1990s, and subsequent reforms and retrenchments appear to have had remarkably little impact on some significant share of the population. There is strong evidence of powerful social changes, including increasing inequality, corruption, and changed attitudes about the most effective pathways to higher social status and income. These assessments appear to be remarkably uniform across demographic groups. While the survey sample marginally overweights demographic groups with less favorable assessments of the regime, even counterfactually recalibrating the sample to match the underlying resident population suggests widespread dissatisfaction with the North Korean regime.

JEL Codes: P2, P3, F22
Keywords: failed states, transition, reform, North Korea, refugees

Posted in 2002 Economic reforms, General markets (FMR: Farmers Market), Peterson Institute, Political economy | 2 Comments »

DPRK banks’ role strenghtened to increase security of personal holdings

Friday, September 4th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-9-4-1
9/4/2009

The latest issue of the Kim Il Sung University newspaper (2009, no. 2, April) acknowledged the international society’s sanctions against North Korea, and in a bid to encourage a self-determinant resolution to the country’s economic problems, the paper called for “the utmost circulation of dormant cash,” emphasizing the role of the bank.

The paper stressed that strengthening the role of the bank was a crucial part of ensuring the country’s socialist system continued to operate. It also stated that elevating the position of the bank and circulating currency were essential elements of ensuring that North Koreans were not reliant on foreign assistance, and that they were able to solve their problems independently.

In the article encouraging currency circulation, it was stated that “the oppressive isolation policy of the imperialists grows worse every day,” but that by maximizing capital circulation, domestic economic problems could be resolved and the North could complete its bid to create an economically strong nation even more quickly.

The article reflects the DPRK government’s attempt to encourage spending of Won, Dollars, and Euros by institutions, enterprises and even individuals in an attempt to ease economic woes even in the face of international sanctions. Jung Yeon-ho, a researcher with the Korea Development Institute (KDI), reported in 2003 that North Koreans were sitting on as much as 600,000-1,000,000 USD. Since 2003, North Korean authorities have been trading US dollars for Euros due to sanctions from Washington, so now many in the North also have considerable amounts of Euros stashed away, as well.

Kim Il Sung University, through its paper, insisted that banks needed to strengthen their role in currency circulation and lending, and to ensure that their services were in line with the demands of the times. It noted that banks were taking note of the needs of individuals and enterprises, and catering to their demands in order to more appropriately respond to their issues and not only meet their needs, but to encourage their continued use.

Some North Koreans have had bad experiences with banks, not being able to withdraw previously deposited funds or not earning expected interest. This has led some to avoid banks in order to guarantee their savings.

After the North’s July 1st (2002) Economic Management Reform Measure, an attempt to make policy reflect reality in the North, the government began selling 10-year ‘People’s Lifestyle Bonds’. In early 2006, North Korea’s banks began offering savings accounts, loans, and other services to individuals and enterprises in order to encourage spending.

Posted in 2002 Economic reforms, Banking, Domestic publication, Finance, Fiscal & monetary policy | 1 Comment »

Pyongyang Strikes Back: North Korean Policies of 2002–08 and Attempts to Reverse “De-Stalinization from Below”

Wednesday, July 15th, 2009

Andrei Lankov
Asia Policy 8, July 2009
The National Bureau of Asian Research

Download the article (PDF) here.

Executive Summary
This article explains why the North Korean government has attempted to reassert state control over society—which had been eroding from 1994–2002—and offers predictions regarding the impact that this shift will likely have on North Korean society.

Main Argument
From 1994 to 2002 North Korean society changed tremendously: state-run industry collapsed, the rationing system ceased to function, and free-market activity, though still technically illegal or semi-legal, became most citizen’s major source of income. Although not initiated by the government, in 2002 some of these spontaneous changes won the belated and conditional approval of the regime.

The evidence emerging in the last three to four years demonstrates, however, that the North Korean government has chosen not to tolerate those changes. This policy of recrudescence, while economically self-destructive, makes political sense because the existence of an affluent and free South Korea makes North Korea far more insecure. The leadership in Pyongyang has reason to believe that any domestic liberal reform in North Korea would lead to a regime collapse.

Policy Implications
1. Pyongyang’s decision to reject reformist policies is based on a rational and well-informed assessment of North Korea’s domestic and international situation. Therefore, the outside world can do very little to influence the regime’s position, and thus there is no chance of meaningful reform in North Korea in the foreseeable future as long as the current regime remains in power.

2. Because the current policy makes sustainable economic growth impossible, the North Korean government will need to rely on stratagems to secure vital foreign aid, with the U.S. being one of the main (but not only) targets of these maneuvers. The “North Korean problem” will remain a part of the international landscape in the foreseeable future.

3. If the current attempt by the government at counter-reform fails, this failure will create additional avenues for influencing the North Korean government from within.

Download the article (PDF) here.

Posted in 2002 Economic reforms, Black markets, Economic reform, Food, General markets (FMR: Farmers Market), Political economy | 1 Comment »

DPRK market closure reports deemed rumor

Wednesday, July 8th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-7-8-1
7/8/2009

North Korea’s main wholesale market, in Pyongysong, was temporarily closed for just over a week during mid-April, but it has reportedly been open and operating normally since then. It was rumored, and reported [previously (see below)], that the Pyongysong Wholesale Market was shut down in mid-June. There was a report that officials felt the market had grown too large, and there was a plan to divide it into East and West Markets. However, reports of these plans have now been deemed nothing more than rumor.

A source in Kangdong-gun stated that there has been much talk of closing markets since the beginning of the year, but that no measures have been enforced and everything is operating normally. Another source reported that many traders are traveling to and from Sinuiju and Pyongysong, and that their numbers have been growing since the onset of summer. While rumors still abound regarding market closures, the source noted that there is significantly less talk of such measures compared to earlier in the year.

In January, North Korean authorities released a statement indicating that general markets would be transformed into farmers’ markets, and only open once every ten days. However, six months has already passed, and there has been no action taken. There have been no measures to transform even some of the largest markets, in Hyeryong, Hyesan, Musan and Sinuiju. That said, it is always possible that the North Korean authorities proceed with plans to close or transform the markets.

The majority of North Koreans trading in the markets do not believe the authorities could easily carry out market-closing measures. Due to the likelihood of large-scale civil revolts, the regime must come up with an alternative to the markets if it intends to close or transform them. The current food issues faced by the North make it impossible to close markets. In addition, transforming general markets into farmers’ markets would force residents to buy daily necessities and other manufactured products at department stores or government-run shops, but these shops have nothing in stock. Furthermore, preventing residents from selling in the markets makes it more difficult for them to acquire the food necessary to sustain themselves and their families. The number of empty stalls in markets appears to be slowing increasing, but a complete shutdown of the market would likely lead to protests.

Original Post:
North Korea begins closing general markets
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-6-26-1
6/26/2009

It has been reported that North Korea’s market closing measure is slowly beginning to be enforced. The June 23 27* issue of North Korea Today, a newsletter from the South Korean group Good Friends, announced that the Pyongsong general market has now been shut down, in what some call the most prominent omen that all general markets will be shut down throughout the country. As the Pyongsong general market served as the central wholesale market for the entire North, some believe it was shut down first in order to encourage the use of smaller, more local traditional markets. In addition, central Party authorities have ordered department stores and general stores in Pyongyang to stock up on Chinese goods. The North Korean government has announced, on a number of occasions since last year, that general markets would be closed and turned into farmers’ markets, but for a variety of reasons, the measure has been on hold for over six months.

Regional authorities were also ordered to import various goods from China, in accordance with the demands of local citizens and regional conditions, in order to head off any concerns that daily necessities might not be available after the markets are closed. This series of measures indicates that the government is concerned that attempts to forcefully close the markets may lead to citizen revolts, as clashes between traders and police occurred previously when the North attempted to enforce market restrictions.

One official in Pyongyang stated that this measure put citizen’s concerns and inconveniences first, stating, “[The Party] must unconditionally get rid of markets. But on the inside, they see that there will be huge opposition from the citizens if they only use force, so this time they decided to combine it with conciliatory policies.” The source added, however, that authorities plan to continue to operate restricted markets while at the same time, completely changing the market system before the end of this year.

Currently, as the 150-day ‘battle’ campaign to improve the economy is underway, more and more lectures are also being given. One week after the North’s second nuclear test, propaganda speeches were given in each factory and business in Pyongsong, South Pyongan Province, stating, “Now there is no one in the world that can face off with our military might,” and, “If the United States and those countries that kowtow to it carry out an economic blockade against our country, we will see it as an act of war and stand against it with military power. If only we carry out the 150-day battle well this year, we will completely attain a Strong and Prosperous Nation. [All the people] must follow after the revolutionary military spirit of the People’s Army and open the door to a strong and prosperous nation without one day’s delay.”

UPDATE: According to the Daily NK, the closing of the Pyongsong Market was not successful:

Despite North Korean official attempts to shift general markets onto an agricultural format, the general markets are operating as normal because of popular resistance to change.

A source residing in Kangdong-gun, Pyongyang told Daily NK, “In mid-April, a wholesale market in Pyongsung was shut down for around ten days, but after that it reopened and continues to operate.” He added that, “I’ve heard that the existing market was supposed to close early this year and be changed into an agricultural market, but there have actually been no shutdowns at all.”

He continued, “I don’t know the exact reason for the closure of Pyongsung market in April, but I’ve heard that there was an investigation of the individuals who manage the big wholesale businesses there. Traders strongly opposed it, so the closure of the market could not be completed.”

The source added, “In Kangdong-gun and other districts of Pyongyang, there have been many rumors about market closures, but there have not been any so far. Markets are operating normally.”

A source from Shinuiju confirmed it. “Many rumors of market closure have circulated, but they are working as usual,” the source said, “Markets in Pyongsung are operating as well, so there are still many traders coming and going between Shinuiju and Pyongsung. Especially, as summer approaches, trade is increasing.”

He added, “People still talk about the closure of the markets, but they don’t talk about it as much as earlier this year. In truth, if the jangmadang is closed, it will be hard for even the cadres to live, let alone ordinary residents. So cadres also have a negative opinion of the measure, and for that reason it will be difficult to shift to agricultural markets.”

Read the full story here:
Markets Continue Despite Official Bluster
Daily NK
Lee Sung Jin
7/3/2009

Posted in 2002 Economic reforms, Black markets, Economic reform, General markets (FMR: Farmers Market), Good Friends, Institute for Far Eastern Studies | 4 Comments »

More on the market closing measure

Sunday, July 5th, 2009

Barbara Demick has an informative article in the Los Angeles Times. The whole piece is worth reading but here are some themes and excerpts.

Market restictions ordered

In the markets of Kilju, a city of 100,000 near North Korea’s eastern seacoast, the ruling Korean Workers’ Party has ordered the removal of Chinese-made cookies, candies and pharmaceuticals.

Even soybeans, many articles of clothing and shoes are now forbidden.

It is all part of a great leap backward taking place in the secretive autocracy. North Koreans interviewed in China in recent weeks say that the regime of Kim Jong Il has made a concerted effort to roll back reforms that had over the last decade liberalized the most strictly controlled economy in the world.

…

So many Chinese goods are now taboo that markets stock only about 35% of the merchandise previously available, some say.

Import substiution policy implemented?

“They want to promote our own products made in North Korea, but since everything is ‘made in China,’ there is nothing to buy,” said Kim Young Chul, a civilian working for the North Korean military who had come to China to sell wild ginseng on behalf of his employer.

Exports curtailed

Kim Chol Hee, a trader from Yanji, a Chinese city near the border with a large ethnic Korean population, said it was harder now than at any time in the 10 years he’s been in business to import from North Korea.

“I used to bring in squid, crab, steel parts from Chongjin. We can still buy seafood, but the North Korean government won’t let us buy steel,” he said Kim. “They say they need to keep all their resources for themselves.”

Restrctions inefective

Kilju residents have not dared to hold public protests against the restriction. But the Korean Workers Party nonetheless might be fighting a losing battle. Much of the trading is done by people with powerful connections in the provincial government and the military. Many state-owned enterprises do illegal trading to raise cash for their operations.

For example, trader Kim Young Chul says he is responsible for raising about $900 each year for his work unit by selling ginseng, while he and his partners keep any additional profits.

“I have a lot of freedom. They don’t dare ask me too many questions in North Korea, because I work for the ministry,” said Kim.

Just as quickly as the Korean Workers’ Party issues a decree, people find a way to circumvent it. Vendors banned from the market bring out their mothers and grandmothers, while secretly running the businesses from behind the scenes. Others sell banned good from their homes, or simply stash it behind other merchandise.

“If you want to buy cosmetics in Kilju, you still can find them, but they are usually hidden underneath the table,” Lee said.

Once a loyal member of the Workers’ Party, Lee said she had remained devoted to Kim Jong Il up to her departure from North Korea in May, vowing that she would return home as soon as she got money for her family.

“Even the day I left, I was singing songs about Kim Il Sung and Kim Jong Il in my house,” said Lee. “Now that I’ve come to China, I’m not so sure.

Read the full article here:
North Korea moves to restrict economy
Los Angeles Times
Barbara Demick
7/5/2009

Posted in 2002 Economic reforms, Black markets, Economic reform, Foreign direct investment, General markets (FMR: Farmers Market), International trade | Comments Closed

The Political Economy of North Korea: Implications for Denuclearization and Proliferation

Tuesday, June 16th, 2009

Stephan Haggard and Marcus Noland
East-West Center Working Papers
Economics Series, No. 104
Download paper here (PDF)

Abstract:
Despite North Korea’s turn away from economic reform and the constraints of the second nuclear crisis, the country has in fact become more economically open. But it has emphasized closer economic relations with China and other trading partners that show little interest in political quid-pro-quos, let alone sanctions. Yet the U.S. can still exercise economic leverage by going aggressively after third-party financial intermediaries. This particular form of sanction does not require multilateral coordination, since foreign banking institutions that conduct significant business in the United States have a strong interest in avoiding institutions that the United States Treasury has identified as money laundering or proliferation concerns.

There is some evidence that North Korea moderated its missile proliferation activities during periods when rapprochement with the United States, and to a lesser extent Japan, was a priority, but in the absence of such interest and as legitimate trade, investment, and aid dry up, the incentives to intensify proliferation activities increase.

The internal organization of the North Korean economy has important implications for any policy seeking transformation via engagement. The economy is structured in such a way that outside economic ties are still largely monopolized by stateowned enterprises and other gatekeepers, such as the military. Under such circumstances, the precise design of engagement policies requires very close scrutiny. Even nominally commercial relations can be exploited if the North Korean counterparties believe that they are ultimately political in nature, subsidized and thus vulnerable to blackmail. If economic ties are truly commercial in nature, those choosing to trade and invest with North Korea do so at their own risk. Under these circumstances, private actors will make economic decisions fully factoring in political risk, and North Korea will bear the costs if it chooses to renege on commitments or fails to provide a supportive policy environment.

Paper prepared for the conference on “North Korean Nuclear Politics: Constructing a New Northeast Asian Order in the 21st Century,” University of Washington, June 4-5, 2009. We would like to thank the Smith Richardson, MacArthur, and Korea Foundations for financial support and Jennifer Lee for research assistance.

UPDATE: A shorter version of this paper can be found here.

Posted in 2002 Economic reforms, Arms shipment, Banking, China, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities, Military | Comments Closed

DPRK not about to collapse

Sunday, May 31st, 2009

Newsweek has an interesting article which makes the case that the DPRK economy is not as bad as the public tends to think. According to the article:

…North Korea isn’t broke—and its economy has been moving away from collapse in recent years-. The Hermit Kingdom may not be getting rich—the CIA estimates its GDP at roughly $40 billion, ranking 96th in the world. But it’s not failing either, and for the past decade, its economy has grown at an average rate of about 1.5 percent a year, according to South Korean statistics. While Seoul estimates that the North’s GDP shrank by 2.3 percent last year, some analysts say it actually expanded, arguing that South Korea’s recent figures on the North are deflated for political purposes.

To understand how the Dear Leader has managed this, you must first drop a few of the myths surrounding his country. First, the North Koreans haven’t been living in caves for the past two decades, nor is their economy de-industrializing, as is sometimes reported. Instead, with help from Beijing, Pyongyang has revamped its outdated infrastructure in recent years and repaired the mining facilities that were battered by massive floods during the mid-’90s. It now aims to shift from recovery to growth, with a focus on steel production, mining and light-industrial manufacturing.

Second, the North doesn’t have to rely on the black market to support itself. True, Pyongyang has sold missiles to Iran, Syria and Pakistan, and annual revenue from such exports is roughly $100 million, but analysts say that other illicit activities like drug trafficking and counterfeiting add very little to that sum. According to a former U.S. diplomat in East Asia who asked not to be named discussing sensitive intelligence, during the Bush years Washington investigated the oft-heard counterfeiting accusations, and found that the notes in question had actually been produced privately by former Chinese military officials, in China. “The Treasury Department couldn’t find a single shred of hard evidence pointing to North Korean production of counterfeit money,” the American says.

The biggest myth is that North Korea remains isolated. Despite supposedly comprehensive sanctions, Pyongyang today has diplomatic and commercial relations with more than 150 countries, including most European Union members. North Korea trades its abundant gold reserves—estimated at 1,000 to 2,000 tons—in cities like London, Zurich and Hong Kong, and buys and sells shares on the New York Stock Exchange via a legitimate London-based brokerage firm it essentially owns. While there are no figures on the volume of such transactions, the former U.S. diplomat says that such activities are “a substantial source of hard currency for North Korea.” In recent years, European firms have also begun eyeing investment opportunities there; In 2004, the London-based energy firm Aminex signed a 20-year deal with Pyongyang for exclusive rights to explore on- and offshore oil-and-gas deposits. Other companies are looking for ways to exploit the North’s cheap labor supply, and while most of these deals have yet to take off for technical and political reasons, ties to the outside world are expanding. In 2008, the country’s overall trade rose 30 percent from the previous year, reaching a record $3.8 billion, including imports of $2.7 billion, according to Seoul’s Korea Trade-Investment Promotion Agency.

North Korea has proved adept at avoiding restrictions: when Tokyo slapped it with sanctions five years ago, Pyongyang simply reshuffled its deals, turning to the BRIC economies as well as South Korea and Singapore. Meanwhile, China now accounts for nearly three quarters of North Korea’s total trade, sending it crude oil, petroleum and manufactured goods in exchange for coal, steel and rare metals like tungsten and magnesite. The North’s natural resources have become a major growth engine: the Musan mine in the country’s northwest is now said to be one of the largest iron-ore fields in Asia, and could eventually yield 10 million tons of ore a year.

Finally, there’s the southern connection. Despite deteriorating relations between Seoul and Pyongyang, factories at the joint Kaesong Industrial Complex are still operating at full gear, earning the North about $35 million annually—enough for eight or nine No-dong missiles. And that figure was projected (before the current crisis hit) to jump to $100 million by next year, says Lim Eul Chul of Seoul’s Kyungnam University.

I should point out that the CIA estimate of the DPRK’s GDP is among the highest. Most other estimates are below $30 billion for 2008.

Read the full article here:
How Kim Affords His Nukes: The myth of a failing economy.
Newsweek
5/30/2009

Posted in 2002 Economic reforms, Aminex, Arms shipment, Counterfeiting, Drug smuggling, Economic reform, GDP statistics, Illicit activities, International trade, Statistics, Trade Statistics | 2 Comments »

North Korea’s Refugees: A Window into North Korea

Saturday, May 2nd, 2009

From the Peterson Institute event last week:

As North Korea once again makes headlines with its provocations, the Institute hosted an event April 29, 2009, to present new research by Senior Fellow Marcus Noland based on a recently completed survey of North Korean refugees in South Korea, a companion survey to one done earlier in China by Noland and collaborators. The new survey provides extraordinary insight into the changing pathways to power, wealth, and status within North Korea, as well as the rise of inequality, corruption, and disaffection in the decade since the famine of the 1990s, along with the refugees’ assessments of the regime, its motivations, and its capabilities.

Dr. Noland’s findings can be downloaded in PDF here.

Noland and Haggard conducted a similar survey in China last year. You can download it here.

Posted in 2002 Economic reforms, Food, International Aid | 2 Comments »

North Korea’s transformation: A legal perspective

Thursday, February 12th, 2009

The Institute for Far Eastern Studies (IFES) published an interesting paper (with the above title) on legal reform in the DPRK. Below are some highlights. Links to the entire paper at the bottom.

As citizens have been left without state provisions for subsistence since the state did not have the material resources to supply the people through its central rationing system, the vast majority of individuals and organizations had to support themselves. Legitimizing commercial and market activity and expanding the scope of private ownership were a part of this effort. One of the most important laws reflecting this transformation is the Damage Compensation Law (sonhae bosang-beop), which is the North Korean version of a general torts law. This law holds an individual or any legal entity liable for its tort when damage is inflicted. Monetary compensation is the rule, while restoration is allowed when possible.

Under the socialist system, where the state is responsible for the provision of a citizen’s livelihood, tort law was of little use. Even in the case of death, one’s family would not suffer economically since the state provided sustenance rations. However, with the collapse of the public distribution system, the North Korean authorities could no longer maintain their socialist system. Since an individual now has to rely on his or her own devices, the loss of the employment, for example, directly inflicts a financial burden on the individual or family. Therefore, damage to property or person should be compensated for by the responsible party. Therefore, the new damage compensation law acts as a new mechanism for the protection of private property, and strengthens individual responsibility for negligent acts that inflict damage on others.

and…

Relaxation of law and order, along with the laxity of organizational control due to economic difficulties, changed individual attitudes toward government authorities and organizations in which these individuals were members. Individuals became more independent from the state and its organizations, since both the state and more directly engaged organizations lost important means of control over individuals in society due to the lack of resources and the inability to provide basic necessities to the people.

Under these circumstances, individual victims had no appropriate method to seek compensation for damage through an official dispute resolution process. This has led to an environment in which self-remedy has become the rule, rather than the exception. Although new criminal law punishes those who have used force in asserting their rights, there is no effective means of dispute resolution outside of taking advantage of officials willing to look the other way in exchange for favors, or hiring thugs to more directly resolve disagreements. Citizens can buy justice through bribes, and law enforcement officials are especially helpful in these endeavors when their palms are greased. This is much more economical as well as effective than bringing a case to the relevant official agency, which is generally incapable of resolving problems and instead further exploits the situation.

On courts and lawyers…

For example, the most prominent role of the court in North Korea, where other types of lawsuit are very unusual, was to handle divorce settlements, since divorce through simple agreement of the two parties was not allowed. Ordinary citizens went so far as to perceive settlement of divorce to be the most important role of the court. Criminal cases were also unusual. Political crime is handled through a non-judicial process, while many deviances are resolved through unofficial processes within more local organizations. The role of the court in resolving disputes was negligible, aside from divorce. Since the role of law enforcement agencies is to protect the state and secure the socialist system, the most important qualification for them is not legal expertise, but rather, loyalty and devotion to the North Korean ideology and system.

On the other hand, the Lawyer’s Act of 1993 prescribes the required qualifications of a lawyer. Those who are eligible to work as lawyers are those who are certified legal professionals, those who have working experience of no less than 5 years in legal affairs, or those who have a professional license in a certain area and have passed the bar examination after a short-term course in legal education. This qualification for working as a lawyer signifies that the state wants to equip the judicial system with legal professionals. Although there is no explicit professional qualification for a judge or prosecutor, we may assume that legal professionals have been elected or recruited in practice. This trend is likely to be reinforced as these social changes continue to unfold.

New provisions were also introduced to reinforce the judicial system. For example, interference with a law enforcement official’s performance of duties is now a punishable offence ; Threatening a witness or exacting revenge has been criminalized ; Non-execution of judgment will now be punished. Although the introduction of these provisions was an expression of the government’s effort to bring in a more effective judicial system, it would not be an easy task under the vague status of transformation. The state is very cautious and reluctant to undertake bold or fundamental changes due to concerns about political instability. Therefore, it takes time for various coherent mechanisms to fully support a market system.

You can download the entire paper in PDF format here.

You can read it on the IFES web page here.

Posted in 2002 Economic reforms, Automobiles, Aviation, Black markets, Damage Compensation Law, DPRK Policies, Economic reform, Finance, Foreign direct investment, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, Insurance, International trade, Joint Ventures, Lawyers Act, Light Industry, Manufacturing, Price liberalization, Private property, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Sea shipping, Special Economic Zones (Established before 2013), Transportation | 2 Comments »

North Korea between collapse and reform

Friday, December 19th, 2008

Asian Survey Vol. 39, No. 2 (Mar. – Apr., 1999), pp. 287-309
Kongdan Oh and Ralph Hassig

Download PDF here or download from Jstor.org here

The refusal of North Korea’s letters to institute serious economic reforms has frustrated those who study the country and those who seek to alleviate the suffering of the North Korean people. Two French medical aid organizations have withdrawn from the country complaining that the Pyongyang government interfered with their work. This is but one sign of a growing donor fatigue. The muddling through plan that the Kim regime has adopted involves soliciting foreign aid, bargaining with its military and nuclear products, making minimal unofficial changes in the domestic economy, and waiting for the international environment to become more favorable—perhaps even expecting a resurgance of international communism. Equally important, Kim and his ruling cohorts are willing to sacrifice the economic health of their nation for the security of their regime, just as other dictators, both communist and non-communist have done. The painful difference in North Korea’s case is that it is half of a divided nation, posing an immediate humanitarian dilemma for the millions of Koreans in the Southern half of the penninsula whose families are suffering in the north. For this reason more than any other, the future of North Korea cannot be ignored.

Posted in 1990s Famine, 2002 Economic reforms, Agriculture statistics, Arduous March, Black markets, Demographics, DPRK Policies, Economic reform, Emigration statistics, Food, Foreign aid statistics, GDP statistics, General markets (FMR: Farmers Market), Juche, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013), Statistics, Trade Statistics | Comments Closed

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