The Possibility of Economic Reform in North Korea

Bibliographic Data

ID3985893
AuthorsKeun Lee (0000-0002-0403-6348, Seoul National University), Byung-Yeon Kim, Byung‐yeon Kim (Seoul National University), Insook Lee (0000-0002-7260-3877), In-Sook Lee (0000-0002-7896-6185, Seoul National University)
Year2009
Volume39
Issue2
Pages279-294
Publication date2009-05-01
Open AccessNo
TypeARTICLE
VenueJournal of Contemporary Asia (JOURNAL)
Journal identifiersISSN: 0047-2336 • E-ISSN: 1752-7554
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00472330902723865
OpenAlexW2133779308
LanguageEN
Citations received3
References cited19

This article argues that North Korea can achieve an economic catch-up after decades of economic isolation and stagnation by promoting an economic opening focused on foreign trade and investment in a sustained manner. An analogy is been made with the case of Fujian Province in China, which has accomplished economic catch-up, mainly due to Taiwanese investments. To realise its potential, it is argued that North Korea treats its foreign direct investment (FDI) from South Korea as intra-Korean investment. The article also discusses the diverse modes of engagement with foreign capital that are available for North Korea, considering its own capability (absorption or management capabilities), rivalry among possible foreign investors, implications for market structure (monopoly or more competition), the nature of target technologies or facilities, opportunity for learning and transfer, and so forth. Finally, the article discusses the economic and political preconditions for such and economic catch-up. The authors would like to thank two anonymous referees and Professor Moon Soo Yang for their insightful comments. Notes 1 Editorials in the newspapers of the Workers' Party, Military, and the Youth League are the three main official channels for the announcement of policy directions. 2 By paradigm change, Freeman and Perez (Citation1988) meant a transformation of the prevailing engineering and managerial "common sense" for best productivity and most profitable practice. The shift from analogue to digital era is an example. 3 This skipping of ODM was possible because South Korean firms were able to resort to technology transfer, including licensing and sub-contracting from Japan. In this way, South Korea has remained dependent on Japan and has been experiencing persistent trade deficits as it has had to import technology and capital goods from Japan (see Lee, Citation2005). 4 Of course, some might suggest that in this model of business, the South Korean firms dominate and exploit cost savings by hiring North Korean workers. 5 In China, a zero corporate tax rate is applied for the first three years of investment and a half tax rates for the next three years (see La Croix and Xu, Citation1995). 6 Raised by a staff member of a firm in the Gaesung Industrial Complex with one of the authors during a visit there in 2007

Business · Capital (architecture · China · Competition (biology · Economic system · Economics · Foreign direct investment · International economics · International trade · Investment (military · Macroeconomics · Market economy · Monopoly · Political science · Politics · Rivalry · Asian Industrial and Economic Development · International Business and FDI · Korean Peninsula Historical and Political Studies

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