Breaking the Cycle of North Korean Provocations

Breaking the Cycle of North Korean Provocations

by Marcus Noland, Peterson Institute for International Economics

March 1, 2011

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North Korea: Witness to Transformation

The North Korean regime resembles a surfer attempting to maintain his balance on top of a changing, unstable foundation. While attention has understandably focused on the nuclear issue, it is worthwhile to examine the wave as well as the surfer to understand how the ride may end.
I would like to make three basic points:

The growing centrality of markets in the North Korean economy over the past two decades is primarily due to state failure, not pro-active reform. The market is emerging as a semi-autonomous zone of social communication and, potentially, political organizing. On its own terms, the state is right to fear the market.
This fear of the market prevents the North Korean authorities from embracing economic reforms that would allow them to address their chronic food problems, which appear to be worsening.
One aspect of the economy's unplanned marketization has been a substantial growth in cross-border exchange, particularly with China, which accounts for a rising share of North Korean trade. China appears utterly uninterested in implementing sanctions in response to North Korean provocations. In turn, North Korean authorities are attempting to re-centralize trade, eliminating the decentralized market-oriented participants, and replacing them with intermediaries subject to greater direct political control.

The tragedy of North Korea is that while the circumstances of many are abysmal the government is almost wholly unaccountable for its manifest failures.

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