North Korea in Transition by Kyung-Ae Park

Author:Kyung-Ae Park
Language: eng
Format: azw3, epub
Publisher: Rowman & Littlefield Publishers
Published: 2012-10-04T16:00:00+00:00

Chapter Seven

Future Strategies for Economic Engagement with North Korea

Bradley Babson

North Korea’s economic isolationism has deep roots in Korean history, post–Korean War political philosophy and national identity, and contemporary political realism both at home and in its international relations. Principles of economic efficiency and welfare distribution that derive from Western economic thought and experience with balancing the roles of governments and markets, and that have been institutionalized in the global economic system, have not figured significantly in North Korean economic policy or strategy for becoming a “strong and prosperous” nation. It is thus not surprising that North Korea remains among the last of the nations of the world to join the International Monetary Fund, World Bank, and World Trade Organization. Indeed, contact between North Korean economic officials and these core institutions of the global economic order has been hesitant and sporadic at best over the years, reflecting both North Korean ambivalence about the costs and benefits of joining this club, and equally an ambivalence among the larger shareholders—the United States, Japan, and Europe—about accepting North Korean participation in this system without first attending to their unresolved security and political concerns. The challenges of North Korea’s global economic integration are thus inextricably linked with the political challenges of the transformation of North Korea’s domestic political economy and its relations with its neighbors and with the international community at large. Following the death of Kim Jong Il, these challenges have taken on a new urgency for stable regime succession and economic improvements that will be important for future regime legitimacy. While the risks are higher than ever before, there is now unprecedented opportunity for fresh consideration of policy changes that could dramatically alter future North Korean economic prospects and external economic relations.

The present situation needs to be understood in the context of transformations that have been taking place within North Korea and the evolution of external economic and political engagement experiences since the early 1990s. These have set in motion dynamics of change that are compelling North Korea toward a future where markets play a larger role than in the past and which requires a deepening of external economic integration. The path of future integration of the North Korean economy with the global economic system is however uncertain and could evolve in a number of different ways. This path will depend on policy choices made by the North Korean leadership and policy choices made by those countries with most at stake in North Korea’s external economic and political relations, especially South Korea, China, the United States, Japan, and Russia. The Six-Party framework for negotiations over North Korea’s nuclear future is thus also highly relevant for shaping a commonly shared vision and coherence in policies for defining a path for North Korea’s economic future.

Historical Perspectives

North Korea’s historical image as a “Hermit Kingdom” has roots in Korea’s historical geographical position caught between two large powers—China and Japan—and the psychology built from centuries of experiences of being a “shrimp among the whales” and seeking refuge from unwanted external influences in isolation and self-reliance.

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