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KEI Spotlight

We need new economic model for North Korea

June 26, 2019

While the U.S. government hopes for North Korea to look to Vietnam or China as a model for post-sanctions development, KEI Senior Director Troy Stangarone rightly points out that this may not be a lesson that North Koreans appreciate.

For one, North Korea is in a different stage of development than when China and Vietnam took on their respective reforms. Today only 38.3 percent of North Koreans lives in rural areas. By contrast, when China began its economic reforms in 1978, 82.1 percent of the population was rural. When Vietnam began its reforms in 1986, 80 percent of the population was rural. Despite the success of Vietnam's reforms, 64.8 percent of the population is still rural today.

North Korea has also said that it does not want to become "implanted with the imperialists' outsourcing economy" – a rejection of the model pursued by Vietnam. Moreover, North Korea has signalled its intentions to acquire high-tech value-added industries, skipping steps taken by China and Vietnam.

In this environment, the right model for North Korea may actually be Eastern Europe, which also experienced rapid industrialization in the post-WWII decades and rapid deindustrialization before the fall of communism.

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