North Korea’s push for special enterprise zones: Fantasy or opportunity?

Bradley Babson
38 North

In recent weeks North Korea has actively publicized in domestic and foreign news media its determination to pursue an aggressive strategy to develop special enterprise zones (SEZs) throughout the country. This follows and complements the agreement reached between the two Koreas in September to reopen the Kaesong Industrial Complex (KIC)—which was closed unilaterally by the North in April—and to establish new joint management arrangements for that zone designed to ensure its stability in the future and to attract international, not just South Korean, investors.

Both developments have been met with considerable skepticism following erratic North Korean decision-making and the significantly negative impact of the KIC’s closure on South Korean companies as well as on investor risk perceptions of the reliability of investing in North Korea at all. Clearly, whether rebuilding and internationalizing the KIC or proceeding with ambitious plans to expand the role of SEZs as an economic development strategy, North Korea faces major uphill challenges in attracting investors and finding a formula for success. To many experts and economists, these challenges seem near insurmountable, given the current state of North Korea’s economy and investment climate. This leads us to ask:  should anyone take this new SEZ development strategy seriously?

Read more from Dr. Babason here.

Previous NKeconWatch posts on the Economic Development Commission here.


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