North Korea beginning Chinese style reforms – Part 2

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[Excerpts of an opinion piece by Andrei Lankov, professor of Korean Studies at Kookmin University, Seoul]

From 2015 according to the “May 30th Measures”, North Korean farming households (for ideological purposes still branded “production teams”) will be allocated not 30 percent but 60 percent of the total harvest. Additionally, farming households will be given large plots of land – some 3,300sq m – to act as their kitchen gardens. Until now, North Korea never tolerated private agriculture to any significant degree.

And now the North Korean leadership has set its sights on reforming the moribund and hollowed out state industrial sector. Under the new system, factory directors will have the freedom to decide how, when and where they purchase technologies, raw materials and spare parts necessary for their enterprises. They will also be allowed to decide who to sell to. They are also given the right to hire and fire workers, as well as to decide how much to pay for a particular job. Under the new system, there is a tacit assumption that directors will be able to reward themselves generously for their own work – a feature that makes them virtually indistinguishable from private entrepreneurs in market economies.

There are however serious problems that the North Korean economy will have to overcome in the future, above all, the severe shortage of foreign investment. Due to the remarkably bad track record of North Korean companies in dealing with foreign investors, international sanctions, and the country’s dubious reputation, foreign investors will be wary.

It would also be naive to expect a reforming North Korea to become either significantly more liberal or to jettison its nuclear programme. The North Korean government is only too aware that their people face a highly attractive alternative that is South Korea, right next door. The government is not enthusiastic about an East German-style revolution. Hence, they are likely to remain highly repressive in their domestic policy, and they are also likely to maintain their nuclear potential in order to ward off possibility of humanitarian intervention.

Nonetheless, there are good reasons to believe that the new system will deliver impressive results. North Korean agriculture is already doing better than ever. One should expect that industry will start to catch up once capitalist (or if you prefer, “market”) system is introduced formally into the state sector. At the end of the day, this is good news for everybody in and outside North Korea, though one should not expect an overnight transformation.

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This entry was posted in , , , by Grant Montgomery.

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