Li Zhonghe: Can North Korea be the next Vietnam?

Li Zhonghe

After decades of deadlock, the Korean Peninsula seemed to have finally had some diplomatic actions.As a North Korean leader and the first meeting at the President of the United States, Kim Jong -un and the Trump Summit in June reached a joint statement. Kim Jong -un agreed to the North Korean Peninsula to thoroughly verify in exchange for Trump's security guarantee.

Of course, when some people cheer for this, some people remind us that there are traditions of tearing promise in North Korea.But even if Kim Jong -un's commitment is serious, his regime can only benefit from these guarantees and the end of severe international sanctions when trying to repair the broken economy of North Korea.Can it take Vietnamese experience as an example?

In 1986, Vietnam adopted Andrdquo; (Doi Moi) policy. This series of economic reforms are similar to Deng Xiaoping's reform in China. It aims to create a market economy under the solid rule of the Communist Party.

The government has dissolved rural cooperatives, canceled agricultural product price control, and allows farmers to have land.It also privatizes many companies, relaxes foreign investment supervision, creates a more favorable environment for private enterprises, established an export processing zone, and promoted the development of labor -intensive manufacturing.

In the following 30 years, the Vietnam economy increased at an average of 6.7%per year.By 2017, its per capita GDP reached 2340 US dollars, and the total export volume exceeded US $ 210 billion, which was almost observed with Australia and Brazil.Foreign investors, including Samsung and other Korean corporate groups, played an important role in the process.

According to reports, at the Korean and North Korean summit on April 27, Kim Jong -un said that he was interested in imitating Vietnam's economic reform model.US Secretary of State Pompeo agreed to this, claiming that North Korea can copy Vietnam's path to economic prosperity and establish a normal relationship with the United States.

If North Korea, the most isolated country in the world, has decided to carry out such reforms. There is no doubt that it will face huge obstacles.Among them, the central plan economy has been in a state of stagnation for a long time, with an average growth rate of less than 1%in the past 10 years, and the per capita GDP is only $ 1,300 (according to the estimated by the Bank of Korea).

The sanctions further restricted the economic performance: In 2017, GDP shrinks 3.5%, the total export value plummeted by 37%, only 1.77 billion US dollars.

Nevertheless, North Korea has a relatively good economic fundamentals. It has good educational workers, rich natural resources, and geographical advantages such as natural ports.If competitive market reforms are adopted to achieve large -scale foreign investment and technology applications, copy the Vietnamese economy and "miracle Andrdquo;

According to this situation, North Korea can achieve double -digit GDP growth, making the per capita income reach $ 10,000 in 30 years.Just the normal trade and direct investment relationship with South Korea can increase the annual growth rate of GDP three percentage points.

Therefore, the real problem is how strong North Korea's willingness to take this road.In this regard, we also have a reason to maintain optimism, because Kim Jong -un did show more reform thinking than his predecessor.Unlike his father's pre -military policy, his main domestic policy Andmdash; Andmdash; in parallel, it is required to carry out both lines of nuclear weapons and economic growth.

As part of this policy, he gave farms and factories more autonomy and opened some markets.

In April last year, Kim Jong -un announced that he would no longer implement a parallel policy. He said at a meeting of the Labor Party that it was time to focus on the reconstruction of the country's resources.But the intensity of this commitment still needs to be observed, especially the lack of reliable information about North Korea's economic situation.

The public in Vietnam requires to be transformed into actions through collective leadership. Different from this, North Korea is made by an unpredictable autocratic ruler.This does not rule out the possibility of economic reform, but if North Korea wants to imitate Vietnam, it needs to maintain political and economic stability while pursuing comprehensive privatization and liberalization.

However, North Korea must first make significant and credible actions in terms of de -nuclearization, which is the prerequisite for relaxation of economic sanctions on the North Korea.Once sanctions are relaxed, South Korea can strengthen humanity, hygiene and environmental cooperation, and discuss restarting the Kaicheng Industrial Park.

Only when the nuclearization is completed can the sanctions be canceled.At that time, North Korea can establish a real trade and investment partnership with other countries in the world, and it is expected to obtain multilateral loan institutions such as the World Bank and the Asian Development Bank, as well as financial assistance from neighboring countries (the most important is South Korea).In addition to other, the South Korean government will build the North -South Railway, highway and energy networks.

The normalization of North Korea's relations with South Korea and other Asia -Pacific economies (including Japan and the United States) will stimulate deeper economic transformation.This will greatly improve the well -being of the Korean people, and they are difficult to wear under the current closed system.

In all fairness, considering the "extensive, deliberate, serious and serious Andrdquo; human rights violations of human rights, North Korea will have to wait a long time in order to imagine that the international community treats it as a normal country.

But this is by no means a reason to wait; on the contrary, it requires North Korea to take action immediately and embark on a new path. It must not only deduct nuclearization, but also take wise and continuous reforms.

The most important thing is that the success depends on the reduction of the pressure of economic and diplomatic isolation (very similar to the situation faced by Vietnam in the early 1980s), and the two may exhaust the small resources that North Korea has kept.

The future direction of the Korean Peninsula will affect everyone.Therefore, the international community must promote North Korea to seize opportunities, do not waste resources on the development of nuclear weapons and missiles, but use it to launch a comprehensive economic reform plan.Vietnam should be a role model for North Korea.

Author Lee Jong-WHA is a professor of economics and director of the Institute of Institute of Institute of Goryeo University.He recently co -authored "Education Mats: Global Gains from the 19th to 21stCentury.).

English Title: Can North Korea Be the Next Vietnam?

Copyright: Project Syndicate, 2018.