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Mobilizing Private Capital for North Korea: Requirements for Attracting Private Investment
Published May 25, 2011
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The topic posed might seem to be a mission impossible: North Korea (the Democratic People’s Republic of Korea) is a country that has been largely cut off from the global economy for more than 50 years, and even before that time it was hardly a center of foreign investment. However, the same held true for many countries until relatively recent times; China and Russia come to mind. In an environment where investors now feel free to roam pretty much anywhere, it is important to recognize that things can change very quickly and often in a surprisingly positive fashion.

Although a theoretical approach to how North Korea would go about attracting foreign investment would be feasible, a more practical approach would be preferable. It entails facing up to the realities of the situation in the country, in the region, and in the global context. This paper takes the practical approach because the hoped-for result will be achieved only if several basic issues are confronted. This approach is mandated by the nature of what confronts North Korea and the risks that any foreign investor of private capital will have to undertake.

This paper therefore seeks to address what will be required to attract foreign investment and how North Korea might go about making itself a desirable location for such investment. The focus here is on private investment; others at this conference will address the potential for investment from public sources such as the World Bank. It may also be important to look at this in a Northeast Asian context because of North Korea’s location and its potential ability to attract capital in preference to other locations in the region.

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