Trends in North Korean Market Liberalization

T R E N D S I N N O RT H K O R E A N M A R K E T L I B E R A L I Z AT I O N A N D I T S G L O B A L P O L I C Y I M P L I C AT I O N S

B Y G A B R I E L L E B I S H O P, M . A . C A N D I D A T E ( N P S I A )

O U T L I N E

• Introduction

• Overview of current liberalization measures

• Domestic policy implications

• Global policy implications

• Conclusion

C U R R E N T L I B E R A L I Z AT I O N M E A S U R E S

• July 2002 (7.1) Measures

• June 2012 (6.28) Measures

• May 2014 (5.30) Measures

• Special Economic Zone (SEZ) development

J U LY 2 0 0 2 ( 7 . 1 ) M E A S U R E S

• Price reforms + marketization;

• Agricultural decentralization; and

• Increased promotion of investment + trade.

J U LY 2 0 1 2 ( 6 . 2 8 ) M E A S U R E S

• Fixed-rate tenancy for farmers;

• Private ownership of real estate; and

• Retention of earnings for state-owned enterprises (SOEs).

M AY 2 0 1 4 ( 5 . 3 0 ) M E A S U R E S

• Farmers allowed to retain up to 60% of harvest (up from 30%);

• Farmers allocated more private property; and

• SOE operators given greater managerial powers + production incentives.

S E Z D E V E L O P M E N T

• Slow strides since the 1980s (Kim il-sung in China);

• 13 new Special Economic Zones (SEZs) announced in 2013; and

• “Bottom-up” approaches being experimented with.

N O R T H K O R E A’ S P L A N N E D S P E C I A L E C O N O M I C Z O N E S

C AT E G O R I C A L B R E A K D O W N O F N O R T H K O R E A’ S P L A N N E D S E Z S

( P R E PA R E D B Y A N D R AY A B R A H A M I A N AT T H E U S - K O R E A I N S T I T U T E AT S A I S )

D O M E S T I C P O L I C Y I M P L I C AT I O N S

• Continue the status quo: slow, inefficient marketization;

• Pursue rapid marketization; or

• Pursue steady, calculated marketization.

G L O B A L P O L I C Y I M P L I C AT I O N S

• Discount liberalization efforts - refuse to engage with North

Korea until human rights, nuclear

program concerns are addressed; Engage with North Korea with certain reservations

• Engage with North Korea with certain reservations; or

• Fully engage with North Korea on North Korea’s terms.

C O N C L U S I O N

• North Korea has made remarkable strides towards liberalization.

• However, significant barriers associated with these trends still exist.

• These barriers must be addressed domestically and internationally in order for these trends to have meaningful impacts in 2015 and beyond.