An Economic Blueprint for North Korea


Jun 4, 2021

People take part in the celebrations for the National Liberation Day near the Arch of Reunification in the city of Pyongyang, North Korea, August 14, 2005, photo by Yuri Maltsev/Reuters

People take part in the celebrations for National Liberation Day near the Arch of Reunification in Pyongyang, North Korea, August 14, 2005

Photo by Yuri Maltsev/Reuters

This commentary originally appeared on The National Interest on June 3, 2021.

Acts of outrage are committed by North Korea with alarming regularity, and unsurprisingly the country featured heavily in the recently concluded summit between President Joe Biden and South Korean President Moon Jae-in. The latest conflict between Israel and Palestine has been held in abeyance by a fragile ceasefire, and a two-state solution is looking ever more distant. Given these situations, it might seem downright naïve to engage in exercises to develop futuristic plans for prosperity. However, they do serve a useful purpose for several reasons.

Unlike competition over land or political positions, where a win for one typically implies a loss for the other, economic development is not a zero-sum game for nations. The last few decades have shown it is possible to create wealth and surplus to benefit all nations. For instance, investment by developed country investors seeking higher returns to their capital in less-mature markets has fueled the increase in economic standards of living in many emerging markets. And international trade is based on the explicit premise that all trading countries can become better off in the aggregate by exchanging goods and services based on specialization in sectors in which they have a comparative advantage.

This process of globalization has hardly been smooth, and the surplus has not been evenly shared, but it is hard to dispute the eradication of poverty and the improvement in global well-being it has ushered. Therefore, pondering the prospect of economic integration and development can sometimes break the logjam in thinking, steering the mindset of all concerned from unsolvable conflicts into the realm of the possible.

As intractable as current geopolitical conflicts might seem, drastic changes to the status quo have occurred. China moved from being a socialist country based on collective ownership to embracing private property and a market economy. The Soviet Union did eventually collapse, and member countries undertook market reforms, albeit with varying success. And even as conflicts rage in many parts of the world, ASEAN's Treaty of Amity and Cooperation to “promote perpetual peace and cooperation,” continues to attract new signatories, now numbering over forty nations. When the unimaginable breakthrough does happen, it would be helpful to have handy roadmaps for economic reform such as one developed for North Korea.

RAND recently published an atypical study on North Korea. It is silent on sanctions and denuclearization, and the peace process through which the country could become integrated with the global community. Instead, using foreign investment as an organizing framework, it engages in blue-sky thinking on a blueprint for economic development in one of the poorest countries in the world once the country becomes ready for reforms. The study was in part inspired by yet another RAND report from over a decade back, which examined how a Palestinian state, if created, could be made successful.…

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Krishna B. Kumar directs international research for the nonprofit, nonpartisan RAND Corporation, and the Pardee Initiative for Global Human progress at the Pardee RAND Graduate School. He recently led the RAND Corporation study “From Hermit Kingdom to Open for Business: Developing a Blueprint for North Korea's Economic Development.“

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