North Korea is experiencing “real economic reform,” said professor Alexander Vorontsov at the 98th Washington Asia Forum, which the Center for Asian Studies sponsored Wednesday.
In July 2002, the North Korean government announced new economic reforms, including raising wages and food prices, greater independence for the managers of companies and the end of subsidized rice production. These reforms were coupled with a time of improved relationship with and increased recognition by the international community.
The North Korean government also opened two new zones of economic advancement: one in the demilitarized zone of the country and one in the eastern part of the country. These zones allow investment by foreign businesses. In the region near South Korea, 13 new enterprises have been created, and the region is expanding, said Vorontsov.
The collapse of the Soviet Union, North Korea’s main supplier of electricity and fertilizer and main trading partner, coupled with severe floods in North Korea in the mid’90s, forced North Korea to allow certain economic reforms, according to Vorontsov.
Vorontsov said that North Korean leaders studied similar reforms in Russia, Vietnam, and, notably, China. North Korean reforms are most often compared to the Chinese, but the Chinese experience was a “different situation,” he said.
“They cannot follow the Chinese experience,” Vorontsov said, because the Chinese population, at the time was largely rural, but the North Korean population is mainly urban.
North Korea cannot follow the example set by Russia, either. Though Russia could survive the economic downturn it experienced after its move to capitalism, North Korea cannot do the same because of its small size.
According to Vorontsov, there are two schools of Korean specialists in regard to economic reform. The pessimistic school is comprised mostly of Americans and believes the reform is “not deep, not real reform,” he said. The other is comprised mostly of South Koreans and believes that the economic reform is real.
“If you have patience,” Voronstov said, “you can succeed in dealing with North Korea.”
Vorontsov is the head of the Department for Korean and Mongolian Studies at the Institute of Oriental Studies of the Russian Academy
of Sciences. Currently, he is a visiting fellow at the Center for Northeast Asian Policy Studies at the Brookings Institution. He has also served as a Russian diplomat to North Korea.