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Kim Jong Un's economic plans - realistic or not?

Lee Geun Young, Professor, Yanbian University  |  2018-01-12 17:28
In the aftermath of Kim Jong Uns sixth New Years address, various organizations and media outlets have cautiously welcomed the change in North-South relations. Kim Jong Un declared that 2018 will be a meaningful year for both North and South Korea. This year marks the 70th anniversary of the founding of the DPRK (North Koreas official name) and will also feature the Pyeongchang Winter Olympic Games.

The New Years address provides insights into Kim Jong Uns frame of mind, and this years speech was distinguished by changes in form and content. The speech laid out Kims positions and proposals on matters including foreign relations and the status of North-South ties. There were also parts of the speech that were predictable, aspects that are an extension of themes and content previously seen in Kims past addresses. The truth is that Kim now faces the international community as the leader of a nation with a missile and nuclear weapons program.

It may seem paradoxical, inasmuch as America believes that North Koreas weapons program is a threat to the stability of Northeast Asia, but Kim says that he now has an effective deterrent. With this in mind, there is a possibility that Kim could use the occasion of the Olympics to propose an armistice or return to a diplomatic resolution such as a revival of the Six Party Talks. The New Years address also reveals Kims thoughts on new policy directions. He used the new phrase domestification [carrying a connotation of national autonomy] to describe accomplishments in various sectors.

The meaning of the phrase domestification in the context of nuclear weapons and foreign policy means that the North believes it has advanced significantly with regards to missile and nuclear weapons development despite international sanctions. With the past years flurry of tests behind him, analysts believe that Kim will not need to conduct more than 3-5 tests in the future. This should be followed by a lull, indicating that the development of these programs is operationally complete, which may occur within four to five months, when the US and ROK conduct their joint military exercises.     

With regards to the domestification of the Norths military, and with special emphasis on nuclear weapons and missiles, we can look to Chinas nuclear testing in the 1970s as an example. In June 1973, China tested a 5 megaton bomb (150 times the yield of the bomb dropped on Hiroshima). This test was conducted for the same political reasons that North Korea conducts tests. By domestically producing nuclear weapons, Kim Jong Un believes that North Korea can emerge on the world stage as a country that wields influence. The nuclear weapons simultaneously help Kim maintain the regime and function as a deterrent to prevent an attack.      

The word domestification also carries economic significance. In economic terms, this entails modernizing production methods and diversifying production lines. Kim claims to have achieved this. The Kim Chul United Ironworks Factory has normalized the production of anthracite, satisfying the five-year economic plan. In terms of machinery production, the North has improved the domestic manufacture of tractors and other vehicles. These advances assumedly make the country slightly less vulnerable to drought, flooding, and other climate-related problems.

Another point of economic interest is that scientific technology has been utilized to assist the development of various sectors. There is a strong relationship between scientific technology and economics on the one hand and education and textiles production on the other. The number of theses published in North Korean institutes relating to economics in the past five years has surpassed 1,500, significantly more than any other subject. This reflects the regimes interest in using science and technology to solve economic problems and reduce their vulnerability to sanctions.    

Long ago, North Korea began to pursue its Byungjin policy of simultaneous nuclear and economic development. But this years New Years address gives the impression that Kim Jong Un feels he has fulfilled his father and grandfathers goal to attain the military firepower of one of the strongest nations, something that the previous two leaders devoted their lives to. But it seems as if Kim Jong Un will be committing his focus toward economic advancements. The references to improving the livelihood of the people are in reference to this.  

But the road ahead does not look to be a smooth one. It might have been feasible for the North to inch towards that goal using substitute equipment and facilities in sectors like agriculture, fisheries, and machinery production, but they will soon be unable to acquire the raw materials and equipment needed. In the absence of these resources, it will prove challenging to modernize the countrys enterprises and expand production in a stepwise manner. It is hard to imagine that Kim will be able to use scientific technology alone to compensate for these shortfalls to mass produce and expand the state economy to the extent that it begins to improve the peoples lives.

In order to bring about achievement in the political and economic fields, Kim Jong Un warned about the presence of anti-socialist elements. A warning was given that controls over these elements would be strengthened.   

Domestification thus carries many nuances, with reference to the military, economy, and politics. Kim stressed that the country must strides towards independence in all three of these areas. It now seems reasonable that Kim will look to lay the groundwork for continuing this progress in terms of external relations, which means working on the North-South relationship and perhaps moving toward dialogue with the US. This is similar to the behavior exhibited by China after its opening and reform. China was able to resolve its major issues without removing the leadership, and we might expect North Korea to evolve along similar lines towards a Chinese-style socialist market economy.   

Can North Korea reform in the same way that China did?

From the mid 1970s to the early 1980s, Chinas market economy paradigm became dominant, and then in the mid 1980s, socialist states around the world began to collapse. States began abandoning the socialist ideology and sought out relationships with new countries. A centrally-planned economy was determined to be detrimental to the long-term development of society, so former socialist states moved to embrace the market economy. In cases where the Workers Party collapsed suddenly, the methods used to get the economy up and running were distinct from the systems used in capitalist states. There was a wide variety of approaches used.      

In Eastern Europe and Russia, where there was a high degree of centrality to the economies - with 65-95% of GDP under central control, the transition was more difficult. In the cases of Poland and Hungary, which had less centralized economies, the adaptation period lasted just a few months. In many industries, the economies of these countries had already become independent of Soviet central control.

The economic transition of developing Asian socialist states including Myanmar, Vietnam, and Laos was different from that seen in Eastern Europe. There are many explanations for this, including those related to history and social structure, with it being easier to use directives to reform sectors in the early stages of development. In the case of Vietnam, there were already significant unofficial economic industries contributing to a sizable portion of the national GDP. The existence of these sectors could be looked on as a supporter of political transition. The early stages of reform deal with changes that revolve around state-level political functions, but gradually fan out to include more personal and individual levels.

Laos also underwent such changes in the 1970s. It sought to deliver market reforms while refusing to abandon its socialist politics, a paradoxical situation. Vietnam has not officially moved away from its socialist system, despite the country adopting a market economy. In contrast, Laos and Myanmar officially abandoned the socialist system before undertaking economic reforms.

In order to abandon socialism and embrace democratic principles, a few requirements exist. We can look to the example of Myanmar, which used its central military power to initiate economic reform. The sequence of reforms and the elements required to make those reforms a success vary from country to country, depending on history and social structure. But there are some common elements. Eastern European nations like Hungary, Poland, and post-Soviet Russia experienced strong political and economic upheaval. Mongolia, Vietnam, China, and Laos had weaker political changes but strong economic changes. Myanmar and Cambodia had both weak political and economic changes. It is this last category where North Korea belongs.  

Kim Jong Uns ideal version of reform involves minimal political change. This will allow North Korea to evade uncertainty and danger precipitated by such changes. He hopes to achieve the goals described by his grandfather and father by making economic strides. But the more inadequate the initial conditions for change are, the slower the rate of change. The pacing is a function of the regimes stamina and how much the regime is able to benefit from the changes.     

What should we prepare for?

Here it is appropriate to be cautious with regards to South Koreas special relationship with the North, as both parties view this special relationship very differently. Both sides have a tendency to interpret the official announcements, editorials, and research of the other side as detrimental to itself. For North Korea, this special relationship means one is divided into two nations and approaching unification.

Compared to the costs, the benefits of unification would be immense, and sufficient to justify the costs. Ideas on the best way to approach this eventuality are split along ideological lines, but in order to improve North-South relations, we need to take a position that is in line with the realities of the North. That will be the first step in the right direction.  

*Views expressed in Guest Columns do not necessarily reflect those of Daily NK.
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