North Korea’s Economic Statecraft: Reactive Inducements and Market Power for State Autonomy

Abstract

This chapter scrutinizes how the Democratic People’s Republic of Korea (DPRK) ensures its economic survival, while avoiding societal collapse in the face of the United States’ “maximum pressure” campaign and domestic calamities. As the economic dimension of the DPRK’s survival strategy has seldom been researched, this study will examine the domestic and international dimensions of the DPRK’s economic statecraft in the face of myriad challenges. The analytical framework of this study is based on Solingen’s positive and negative inducements (2012) and integrated with the concept of market power, as elucidated by Joo (2010), Stein (2012), Smith (2015), and Gray & Lee (2021), referring specifically to North Korea. Using available and credible resources on North Korea, this chapter provides structured explanations of North Korea’s economic statecraft from Kim Il Sung to Kim Jong Un. The first finding is that the main driver of DPRK’s economic statecraft since Kim Il Sung has been “reactive inducement,” where each North Korean leader adapted his response to the outreach of international actors. Second, sanctions have had minimal impact on North Korea because China has always provided the DPRK with formal and informal economic assistance to evade sanctions. However, the societal resilience through domestic market power, the least studied variable, requires more attention as it affects the elites’ economic statecraft in ensuring that a middle-class uprising does not threaten regime autonomy. This chapter concludes that the DPRK’s economic statecraft from Kim Il Sung to Kim Jong Un has responded to external positive and negative inducements through the domestic market power’s reactions, with regime survival and autonomy being prioritized over societal welfare.