The Current Situation of Marketization in North Korea and Prospects for Change of Its Economic System

Abstract

The changes taking place in North Korea’s political, military, and economic aspects since Kim Jong-un inherited power, are drawing the world’s attention. In particular, as the Kim Jong-un regime places greater importance on the economy, there is a growing international interest as to whether the new economic measures will bring about positive changes in North Korea. Current policies of the North bear many startling resemblances to the reform policies of former socialist countries. At present, the time might not yet be ripe for predicting North Korea’s full transition to a market economy. However, the Stalinist state has been placed in an abnormal situation where a planned economy and markets coexist in the country. As it is not likely that the socialist-planned economy would prosper in such a situation, for North Korea, the transition to a market economy is almost inevitable. This report studies the marketization of North Korea and seeks to forecast the possibility of change in its economic system in commemoration of the advent of the new Kim Jong-un regime as well as the tenth anniversary of the “July 1st Economic Reform Measures” in 2012. The advances in marketization are likely to result in the weakening of the state control of North Korean authorities. In addition, the spread of markets suggests the high possibility of transition to a market economy, which occurred previously in socialist states in Eastern Europe and China.