Is North Korea a Viable Economic Partner?

Abstract

IntroductionNorth Korea is no longer the isolated communist country it has been portrayed as for the last half century. In recent years North Korea has entered into diplomatic ties with i3 countries, giving them a total of i49 formally established international relationships, compared to i36 such relationships just three years ago. This is no less significant than the i84 ties to countries that South Korea has, considering South Korea has been an active partner with the U.S. and many other countries in the free world for the last half century.There are few countries that are watched, studied, and monitored as much as North Korea is. The country has been receiving much attention recently for two reasons. The first reason is a decade-long economic decline that has led to speculation that millions of North Koreans have starved to death. No one knows for sure how many North Koreans died from food shortages in the 1990s because North Korea restricts most media reporters. U.S. Congressional sta∂ers who have visited the country concluded that from 1995 to 1998 between 900,000 and 2.4 million people died from starvation, with deaths peaking in 1997 (Kirk, 1998). International aid organizations estimate that the number of starving people ranges from 2.8 to 3.5 million (Noland, Robinson & Wang, 200i).The second reason is the political fallout from being branded, along with Iran and Iraq, in President Bush's 2002 State of the Union address as the axis of evil (Bush, 2002). In the address, North Korea was described as a regime arming itself with missiles and weapons of mass destruction while starving its citizens. The majority of Americans (59%) believe that North Korea is a major problem, but of those surveyed a greater number of people support a diplomatic relationship between the United States and North Korea. The Harris Poll conducted in November 2000 showed support for a diplomatic relationship with North Korea by 69% of Americans, 63% of Japanese, and 70% of South Koreans (Polling Report.com, 2003). The percentages in these three countries may have spiraled upward as the result of the Iraq war.North Korea has adopted economic reforms as of July 2002 to improve its market system, and has revealed nuclear energy programs to deter U.S. military threats. The World Food Program has been a lifeline to sustain one-third of the 23 million North Koreans. We have yet to see results from the economic policies.Four Reasons to Do Business with North KoreaThere are four compelling reasons to do business with North Korea: (i) its potential economic growth, (2) a peaceful political future, (3) the availability of a highly motivated workforce, and (4) its strategic geographic location. This paper explores each of these four reasons in order to shed a brighter light for Far-Eastern prospects than the common dark picture drawn by some ultra-conservative viewers.Reason One: Potential Economic GrowthToday North Korea is seen by people around the world as the recipient of a vast amount of economic aid. Between 1996 and 2004 North Korea became the largest recipient of U.S. aid in Asia, with annual contributions totaling more than $i billion in food, conditional fuel oil, and medical supplies. The relationship with the Clinton administration was much friendlier than has been the Bush era relationship. In the late 1990s, the U.S. allowed the easement of 50-year-old trade sanctions with North Korea that fell under the Trading with the Enemy Act. In conjunction with the easement of trade sanctions, North Korea hosted U.S. Secretary of State Madeline Albright for an unprecedented three-day visit to Pyongyang in 2000. President Clinton himself was tentatively planning to visit the country, though the trip did not materialize.Improving diplomatic relations with North Korea is not a question for only the United States. North Korea's positive relationship with countries around the world presents a more favorable environment for commerce than in the past. …