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North Korea: Witness to Transformation

Do As I Say, Not As I Do

by and Marcus Noland | January 24th, 2011 | 04:25 pm
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Any signs of economic reform coming out of North Korea? A naïve reading of the joint New Year editorial (akin to the State of the Union message) might suggest so. Titled “Bring about a Decisive Turn in the Improvement of the People’s Standard of Living and the Building of a Great, Prosperous and Powerful Country by Accelerating the Development of Light Industry Once Again This Year,” the editorial once again promises to give priority to raising living standards. 

However, it is not clear what significance, if any, should be attached to such statements.  Last year’s statement completely ignored the disastrous currency reform that had occurred only a month earlier, followed by the sacking of the prime minister and the dismissal of his party counterpart.

And this year a series of other recent policy and institutional developments appear inauspicious. In late 2010, the government passed new economic laws designed to strengthen the planning apparatus. These were followed in the new year by a Cabinet announcement of a decision to initiate “10-Year State Strategy Plan for Economic Development” and to set up a new agency called the State General Bureau for Economic Development. Anything that strengthens the cabinet is probably a good thing, but the simultaneous elevation of the state price bureau into a higher-level commission suggests that planning means just that: continued if not heightened controls. And in another sign of re-centralization, the government has created a supra-cabinet body to oversee foreign direct investment under the 10-year plan. The Taepung Group, headed by a Chinese-Korean businessman with ties to the North Korean military, has a board consisting of regime heavyweights. A one-stop shop for investment approval would be an advance, but the composition of the group could also be read as a map of the regime’s internal political economy and the organizations and factions best placed to rake off rents.