RAND Study Offers Ways to Help North Korea Peacefully Modernize Its Political, Economic Structure

For Release

March 10, 2008

An unprecedented joint report issued today by researchers from the United States, China, Russia, Japan and South Korea recommends a new approach to promoting the modernization of North Korea.

The RAND Corporation study, stemming from a 2½-year-long collaboration between RAND and five research institutions, prescribes specific policies that could be pursued by the United States and the other countries to create fundamental, but peaceful, change in North Korea's archaic political, economic and security systems.

"Promoting these policy changes won't work overnight, and they won't work at all if North Korean leaders are not convinced that their country will gain from change," said Charles Wolf Jr., lead author of the study and a senior economic advisor at RAND, a nonprofit research organization. "By collaborating with other nations and working together to encourage North Korea to modernize, the United States has a better chance to create a win-win situation that benefits all."

The study does not advocate regime change, noting that "without broader and deeper modernization of the North Korea system itself, 'normal' relations with the outside world will not be possible."

Besides RAND, the institutions behind the study are the POSCO Research Institute and the Research Institute for National Security Affairs, both in Seoul, Korea; the Center for Contemporary Korean Studies at the Institute of World Economy and International Relations in Moscow; the China Reform Forum in Beijing; and the Institute for International Policy Studies in Tokyo. North Korea was invited to participate in the group's five workshops, but declined. All six institutions agreed on a portfolio of recommendations, which include:

  • Verifiable denuclearization of the Korean peninsula
  • Six-nation declaration of non-aggression and peaceful co-existence
  • Direct bilateral and multilateral talks toward normalization of relations with North Korea
  • Encouragement of fledgling market-oriented experiments such as free economic zones
  • Assistance for the development of small businesses and protection of private property rights
  • Creation of modern financial and budgetary systems, including microfinance
  • Generate government revenues by taxing legitimate enterprises, replacing monies from illegal enterprises
  • Joint programs on medical monitoring, telecommunications and the environment
  • Academic and cultural/arts exchanges

The study includes appendices containing suggestions contributed by each of the collaborating institutions, as well as a "tool kit" to enable North Koreans to create their own modernization plans.

Although modernization of North Korea would benefit the interests of the United States and its allies, North Korea also has much to gain, including higher economic growth rates; a larger domestic economy; enhanced political legitimacy and improved prospects for stability and the survival of the current regime and its leadership; expanded interactions between North and South Korea; and wider participation and increased influence in the international community.

Wolf said the study has been translated into Korean, so that it may be distributed through intermediaries into North Korea with the hope the ideas will be discussed and adopted by North Koreans most receptive to change. He said an isolated and potentially hostile North Korea poses long-term challenges to all five countries represented by the project, with each of those nations having its own list of concerns.

North Korea trades only with a few other countries, including China, Laos, Vietnam, and to a limited extent, South Korea. It views outside influence as creating the potential for ideological and cultural "contamination," according to the RAND report.

Shielding North Koreans from information about the outside world and ensuring absolute ideological conformity remain at the top of the regime's priorities. North Korea's "Dear Leader," Kim Jong-Il, has further created a "fortress society" by dedicating more than 30 percent of the country's gross domestic product to the support of the military, and has conducted nuclear tests.

The study, "Modernizing the North Korea System: Objectives, Methods, Applications," can be found at www.rand.org. It was written by Wolf and Norman D. Levin of RAND. Support was provided by the Smith Richardson Foundation, and the John D. and Catherine T. MacArthur Foundation.

The study was conducted within the RAND Center for Asia Pacific Policy, a part of the RAND National Security Research Division. The National Security Research Division conducts research and analysis for the Office of the Secretary of Defense, the Joint Staff, the Unified Commands, the defense agencies, the Department of the Navy, the U.S. intelligence community, allied foreign governments and foundations.

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