Do As I Say, Not As I Do

Stephan Haggard (PIIE) and Marcus Noland (PIIE)
January 24, 2011 4:30 PM

Any signs of economic reform coming out of North Korea? A naïve reading of the joint New Year editorial (akin to the State of the Union message) might suggest so. Titled "Bring about a Decisive Turn in the Improvement of the People's Standard of Living and the Building of a Great, Prosperous and Powerful Country by Accelerating the Development of Light Industry Once Again This Year," the editorial once again promises to give priority to raising living standards. 

However, it is not clear what significance, if any, should be attached to such statements.  Last year’s statement completely ignored the disastrous currency reform that had occurred only a month earlier, followed by the sacking of the prime minister and the dismissal of his party counterpart.

And this year a series of other recent policy and institutional developments appear inauspicious. In late 2010, the government passed new economic laws designed to strengthen the planning apparatus. These were followed in the new year by a Cabinet announcement of a decision to initiate "10-Year State Strategy Plan for Economic Development" and to set up a new agency called the State General Bureau for Economic Development. Anything that strengthens the cabinet is probably a good thing, but the simultaneous elevation of the state price bureau into a higher-level commission suggests that planning means just that: continued if not heightened controls. And in another sign of re-centralization, the government has created a supra-cabinet body to oversee foreign direct investment under the 10-year plan. The Taepung Group, headed by a Chinese-Korean businessman with ties to the North Korean military, has a board consisting of regime heavyweights. A one-stop shop for investment approval would be an advance, but the composition of the group could also be read as a map of the regime’s internal political economy and the organizations and factions best placed to rake off rents.



It's important to note that the Taepung Group is not new, nor is it the only high-level body on the hunt for foreign investment. True, though, that Taepung's shout-out in the 10-Year Plan news release raised its profile compared to others like the Joint Venture Investment Committee. As for Pak Chol Su, his ties to the North Korean military are not all that clear... he sold them oil, is that it? And in any event, he has been pretty quiet for the last nine months. We're not even sure he's still in charge or if he's been Yang-Bin'd. What about the State Development Bank? Could you expand some on the political economy map concept? I agree that this merits closer attention, but I haven't examined it yet myself.

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