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An open North Korea

Kim Byung-yeon
*The author is a professor of economics at Seoul National University.

Though a hermit kingdom, North Korea aspires to become internationalized. A professor from the elite Kim Il Sung University in a forum in Yanbian in China a few years back said the university aims to join the ranks of the top 100 universities. Although the likelihood of that is very low, even having such a goal suggests how eager the country is to break out of its shell. The country’s late ruler Kim Jong-il advised his people to have their eyes on the world while keeping their feet on their soil. North Koreans, too, must have thought it was abnormal to be isolated from the rest of the world.

Internationalization is the only way for North Korea to become a normal state. Its rigid bones can start to flex with an inflow of new thoughts, capital and contact with the outside world. Such transformations have been seen in China and Eastern Europe. Shenzhen, a city in Guangdong Province that was the first free economic zone in China, has transformed from a rural area into a major metropolis of over 10 million people. Xiamen, a sub-provincial Chinese coastal city along the Taiwan Strait, has expanded by an average of 16 percent annually since it was designated a special economic zone in 1980. The East European bloc has also dramatically changed since it opened up in the 1990s. After some years of recession and unrest, the countries have all become settled with market economies and democracies. Most of them have joined the European Union.

Internationalization can ensure North Korea stays on a nuclear-free path. The regime hardly would think of pursuing a clandestine weapons program when such a move could risk ties with other states with intricate business and other relationships. If stock and bond markets open up in North Korea, nuclear development could not only wreck havoc on the economy but also could be political suicidal. Denuclearization became the main item on the agenda for the inter-Korean summit and the upcoming summit between Pyongyang and Washington because North Korea now relies on commerce.

The economy’s reliance on trade neared the global average before exports plunged 40 percent last year as the result of heightened sanctions. North Korea turned to dialogue amid forecasts that exports would plummet more than 90 percent this year. The economy has become the Pyongyang regime’s Achilles’ heel as well as a window of opportunity.

We must draw up an outline to help North Korea go global as soon as it completes dismantlement. Inter-Korean economic cooperation cannot be enough to advance the North Korean economy. The North Korean economy must be able to connect with China, Russia, Japan and the United States so that the regime cannot reverse the wind of changes from outside regardless of its endeavors to fend off capitalism. Inter-Korean joint ventures in Kaesong or tourism programs alone cannot bring about such a sea of change. Permanent denuclearization is possible when its benefits affect China and Russia. Opening and reform cannot be stopped if internal market activities are coupled with internationalization. The two waves will push the regime into being a normal state. Projects are needed to mix the North Korean market with globalization. For instance, a high-speed railway could connect the South and North and pass the Northeastern borders to as far as Beijing. Market activities must be invited to add value. Part of the benefits must be institutionalized to go to small businesses and to the construction of schools and hospitals.

Reinforced market activities also can strengthen civilian capabilities. A defector used to commerce in North Korea settles down in the South better than those unfamiliar with such activities. A person with five years of experience in market activities can settle down in the South faster than a North Korean without such experience who has been living in the capitalist South for five years. The market turns a person into more of a “homo economicus,” or independent, proactive and liberal being, than the Juche ideology of North Korea (North Korea’s ideology on political, economic and military self-reliance). A normal state is one in which homo economicus pursues his own self interest.

Inter-Korean ventures must be reevaluated in the context of advancing and internationalizing the North Korean markets. If electricity is supplied without the participation of private enterprises, power would only go to state-owned entities and strengthen state control. This is not only inefficient but can also dampen market activities. The long-term prospects of the North Korean economy hinge on private enterprises.

Economic cooperation should go hand in hand with denuclearization. If aid goes ahead, it can slow the denuclearization procedure. Economic cooperation in the initial stage should be restricted so as not to disrupt the sanctions framework. Otherwise, we would not just be looking for heated water around the well, but end up looking for water after ruining the well.

Translation by the Korea JoongAng Daily staff

JoongAng Ilbo, May 9, Page 31