Abstract

In this study, China’s agricultural and rural development factors after reform of the collective farm are analyzed, and the possibility of deepening reform of the North Korea’s collective farm is reviewed using the theory of new institutional economics as the framework of the analysis, and the implications were drawn based on the results. Along with China’s reform of the collective farm, ‘the household contract responsibility system’ was implemented to restore the management system centered on individual farmers, which guaranteed private property rights. The development of the ‘Hyangjin enterprise’ meant the development of the associated industries in agriculture and rural areas, and the increase in business activities resulted in the reduction of transaction costs. The market economy was promoted by improving the market system, including the government-led purchase system reform, to ensure freedom of contract among market players. Recently, the market economy has been revitalized in North Korea due to the implementation of the system for farmhouse responsibility management and corporate responsibility management and the development of marketplaces (Jangmadang). But there is not enough desire for production due to the limited guarantee of private property rights; The risk for businesses could be increased, because government transfered excessive autonomy to corporates; Jangmadang should be improved qualitatively through the monitoring and supervision.

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