We hosted another installment of the Korea Business Interview Series at Korea Business Central a couple weeks ago. This time, our very own Tom Tucker discussed the North Korean economy with author and economist Marcus Noland.
Here's the link to the 29 minute podcast interview:
In addition, the discussion at Korea Business Central, along with the full transcript, can be found here:
Marcus' book can be purchased on Amazon by clicking here.
The main points of the interview:
- In response to economic collapse and state failure in the mid 1990s, the North Korean economy has moved from central planning to a very highly distorted market economy.
- North Korea should be growing at a reasonable rate thanks to economic benefits from the surrounding countries. Its economic problems are self-imposed.
- The state is currently trying to reinvigorate state institutions to regain control of market activities in the economy.
- The government's recent currency reform was aimed to undercut the market by confiscating people's savings, which has destroyed the working capital of private entrepreneurs.
- China functions as North Korea's ultimate guarantor both in economic and political respects but its efforts have not had a positive impact on North Korean behavior.
- Unlike China and Vietnam under central planning, North Korea is an industrialized economy. Therefore, it is questionable whether the Chinese and Vietnamese models of economic reform would be effective in the North Korean context. Economic reform in North Korea could be more explosive politically than they were in China and Vietnam also. Thus, reform in North Korea is more difficult.
- From a South Korean perspective, engagement with the North makes sense but the North Korean regime recognizes the threat they face from this and have been restrictive in what they allow South Korea to do.
- It is unlikely that North Korea will have the same political regime in 10-20 years that it has now. But unification with the South is not a foregone conclusion as North Korea could still end up over the long term as a tributary state to China that remains independent from South Korea.
- The solution to the North Korean nuclear issue will require convincing North Korea that they can achieve their goals without nuclear weapons. But it is almost impossible to envision a deal that is grand enough to convince the North Koreans to give up their nuclear weapons.