The benefits of economic openness for North Korea

Abstract

This paper examines the possible role of economic openness in the resurgence of the devastated North Korean economy. The North Korean economy has suffered severely for several decades resulting from military build‐ups from the 1970s to the 1990s and also from focusing on nuclear bomb threats in the 2000s to 2010s. But if North Korea denuclearises and instead liberalises its economy, the benefits of economic openness could be expected to be significant. Based upon the economic benefits of openness, we suggest a proposal to unify the two Korean economies. If the two Koreas combine their economies, even maintaining their current political systems, the growth of the unified economy will be faster and stronger. In this case, the most difficult part for North Korea will be how to switch the socialist command economy to a socialist market economy. Although the political and military concerns of a worst‐case scenario are immediate barriers to its economic openness, the success story of China's economic growth should be a role model for North Korea.