Can Economic Theory Demystify North Korea?

The starting point of this paper is the assumption that North Korea is de facto a well defined nation-state with a national economy and inhabited by individuals that bear the same basic economic and social characteristics as individuals elsewhere. Despite the obvious specifics of the economic system and the institutional structure of that country, standard economic theory should be applicable to the question of North Korean economic development. The article seeks to prove this as broadly as possible, showing that concepts as diverse as classical and neoclassical, Marxist, Keynesian, institutional, developmentalist, neo-liberal or structuralist perspectives, dependency analysis and many others including regionally centered approaches can be utilized to explain the North Korean case with acceptable results. To understand the development process in North Korea properly, we do not need any new, specific theory, model or framework. Without arguing against or in favor of one of the available theoretical methods, this article intends to provoke further research on North Korea as another case of development in East Asia, rather than a mystical exception to the rule. I. North Korea: (How) Can It Be Understood? North Korea is changing. While there seems to be a broad consensus among academic observers and policy makers on this basic issue, opinion differs strongly on the reasons, direction, scale, scope, and future of these changes. This article seeks to contribute to the debate by arguing that North Korea, although very specific in detail, is in fact just another case of development and can be understood as such. From the perspective of state and aggregate-centred approaches, it is important to note that the Democratic People’s Republic of Korea (DPRK) has a permanent population, a defined territory, a government, and the capacity to enter into relations with other states, and thereby meets the four criteria for statehood as set out by article 1 of the Montevideo Convention (Montevideo Convention, 2006). North Korea has been ∗ The author would like to thank the Korea Foundation and the Graduate School of International Studies of Korea University for its vital support of the research that led to this paper, as well as anonymous reviewers for their helpful comments. ∗∗ Dr. Ruediger Frank, University of Vienna, East Asian Institute, Spitalgasse 2-4, 1090 Vienna, Austria; Tel: +43-1-4277 43822; Fax: +43-1-4277 9438; e-mail: [email protected] 3 6 4 • Korea Review of International Studies recognized by a large number of other states, including the People’s Republic of China, but also “Western” partners such as the European Union, Canada, and Australia; since 1991, it is a member of the United Nations. For individual-based approaches, it will be relevant that North Koreans are members of the human race, although with a countryspecific value or institutional system. In particular the latter is a point we will return to later; for now, it is sufficient to determine that North Korea obviously is a state with a national economy, inhabited by individuals who share the same basic characteristics as people anywhere else. To analyze North Korea, it should therefore be possible to utilize tools that have been created as universally applicable meta-theories and models of social science. This is a simple, yet important analytical step, since it demystifies North Korea by including it into a long chain of established research and, despite or actually catalysed by the many remaining uncertainties, provides observers with a relatively solid ground for their attempts to understand the specifics of that highly interesting case. So far, most attempts at integrating North Korea into standard theoretical models have stopped at transitology or transformation theory. Whereas both approaches are indeed highly relevant for the case of that state’s politico-economic development, they cover only one historically very narrow period. Moreover, they imply a qualitative change from one economic or political order to another that is difficult to prove in the DPRK; in fact, it is yet unclear whether such a major change has already taken place. This constitutes one of the major weaknesses of the otherwise very powerful transitology/transformation theory approach. By moving the analytical framework one level up, i.e. by applying a general approach first, analysis of North Korea becomes more solidly founded and enables research to return to deeper, more specific levels this time, however, more firmly anchored in standard methodology. The purpose of this article is, very explicitly, not to find the one model that can most effectively be utilized to understand North Korean development or to make the best prescriptions. Rather, by applying a large number of well-established economic theories to North Korea, it will be shown that such an application is possible, although the results will naturally differ in quality. The choice of the appropriate methodological framework is, as usual, left to the individual researcher and will be determined by the concrete problem. It must be strongly suggested, however, that the unique and specific characteristics of North Korea, which doubtlessly exist, are not examined without the attempt of integrating them into one of the many available standard frameworks of analysis. II. What is Development, and is North Korea Underdeveloped? Before contrasting the North Korean case with a number of economic theories, a brief definition of development (or underdevelopment) is in place. Development is a 1 An analysis of the relatively narrow qualitative change from one regime to another. 2 Among the notable exceptions is Lee (2002) who applied the Big Push scenario to North Korean eco-