The Possibility of Achieving Economic Catch-up in North Korea: Policy Options under Transition Scenarios (in Korean)

Keun Lee () and Jiyoung Choi ()
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Jiyoung Choi: International Economics Team, Economic Research Institute, The Bank of Korea

No 2014-15, Working Papers from Economic Research Institute, Bank of Korea

Abstract: North Korea proposed 'leapfroggingas an alternative to overcome its economic difficulties in the early 2000s; and undertook limited reforms in 2002 (7.1 Measures) and 2012 (6.28 Directives). However, they have yet to realize the intended results. This paper focuses on the policy options available to North Korea to achieve economic catch-up. To this end, three possible scenarios, i.e., gradual transition, socialist market economy like China, and economic integration of two Koreas, are set up and policy options under such scenarios are explored. The following policy options can be considered for North Korea's economic catch-up: (i) the export-oriented, labor-intensive industrialization of Fujian Province in China based on the massive inflow of capital from overseas Chinese; (ii) India's IT-oriented export model using international linkages, low cost and well-educated labor pool; and (iii) development strategy utilizing the export revenue from natural resources. To accomplish catch-up growth based on these options, North Korea needs to shift its focus from limited reforms to overall reforms and opening up, and also to utilize much of South Korean capital as well as international linkages.

Keywords: catch-up; leapfrogging; North Korea; economic reform; transition (search for similar items in EconPapers)
JEL-codes: O10 O53 P20 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-05-31
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