North Korea's Move to a Market Economy: Is Reunification with South Korea Necessary?

Abstract

IntroductionAn independent kingdom under Chinese suzerainty for most of the past millennium, Korea was occupied by Japan in i905 following the Russo-Japanese War. Five years later, Japan formally annexed the entire peninsula. At the end of World War II, Korea was split into two politically, economically, and philosophically different countries. These differences could not be managed on a somewhat small peninsula and it didn't take long before the outbreak of the Korean War. After three long years of fighting, the armistice that was signed did little to map out the future for North Korea. Under President Kim Il Sung, North Korea became increasingly isolated both politically and economically. In order to avoid influence from larger neighbors China and the super-power Soviet Union, policies were developed to allow North Korea to, in essence, go it alone.This of isolation included a political and economic system that is radically different from that of South Korea. These differences coupled with an aggressive build up in both military manpower and infrastructure have created a dichotomy between the two Koreas. The last 50 years have been a study in how these two vastly different systems have evolved. South Korea has prospered while North Korea has not. The majority of the issues are directly related to mismanagement by the North Korean rulers.North Korea has been mired in economic turmoil for decades. While the South has two times as many citizens, its gross national product (GDP) is over 30 times that of the North. Instead of using natural resources to build industries for trade purposes, the North used the resources to build a military. North Korea's long-range missile development, research into nuclear, chemical, and biological weapons and massive conventional armed forces are of major concern to the international community. In December 2002, it became clear North Korea was pursuing a weapons program based on enriched uranium in violation of a i994 agreement with the United States to freeze and ultimately dismantle its existing plutonium-based program. This revelation led to North Korea expelling monitors from the International Atomic Energy Agency (IAEA), and in January 2003 declaring its withdrawal from the international Non-Proliferation Treaty.In mid-2003, Pyongyang announced it had completed the reprocessing of spent fuel rods to extract weapons-grade plutonium and was developing a nuclear deterrent. From August 2003 to June 2004 North Korea participated in six-party talks with the China, Japan, Russia, South Korea, and the United States to resolve the stalemate over its programs.The decade-long drain on the economy left North Korea in a very vulnerable state. Citizens have suffered from on-going food shortages and a failing infrastructure. Weather issues and a lack of arable lands have contributed heavily to the country's inability to continue it isolationist policy. While other countries in the region have prospered over the past 50 years, North Korea has fought to simply support its own people. There have been dramatic changes both politically and economically in two of its largest neighbors. The collapse of the Soviet Union and China's move to a more open economy should have shown North Korea that change is needed and a change could provide long-term benefits, but it seems that the regime in Pyongyang chooses to ignore the signs.There are several options available to North Korea, from a complete reunification with the South, to simply opening up to a market-based economy, or to continue down it's current path. One thing seems certain-some sort of change is needed.Current State of the North Korean EconomyNorth Korea's faltering economy and the breakdown of trade relations with the countries of the former socialist block-especially following the fall of communism in Eastern Europe and the disintegration of the Soviet Union-left Pyongyang confronted with di[double dagger]cult policy choices. …