Does increasing reliance on China help the North Korean economy? Evidence from export composition

Abstract

ABSTRACT This Research Note suggests that reliance on China impedes the development of the North Korean economy. We conduct empirical analyzes using export structure, which is considered a significant predictor of economic growth potential. Using the export sophistication index, we find that increasing dependence on China has led to a qualitative decline in the composition of North Korean exports. This relationship is not attributable to economic sanctions, and our instrumental variable (IV) strategy further supports the causal interpretation of empirical evidence.