Reviewed by Rüdiger Frank
University of Vienna

[This review first appeared in Acta Koreana, 8.1 (January 2005): 187-191. Acta Koreana is published by Academia Koreana of Keimyung University.]

North Korea is a country in transition, although the changes are so far occurring gradually and in a relatively well controlled fashion. The reform process is multi-layered, including the closely interconnected domestic and international dimensions. The structure of the DPRK’s national economy, which is traditionally oriented towards industrial production, suggests that without a proper integration of the country into international networks, a successful economic reform will be very difficult. To get the economy kick-started after decades of decline, North Korea needs infusions of foreign capital and know-how; to keep the engine running, it needs a stable level of exports and imports. This implies the adaptation of certain international standards in accounting, finance and legal affairs, membership in major international organizations, a reduction in the level of tension on the peninsula and the normalization of diplomatic relations with major prospective trading partners. In addition to economic considerations, North Korea is a place where the interests of some major international players including China and the United States intersect. This elevates the Korean question above the level of a bilateral or regional issue and makes it an important testing ground for the future in international relations.

The title of the book shows that it deals with this important set of topics. The strength of the edited volume is, however, also its weakness: The diversity of the presented opinions creates a structure that is rather loose and does not follow a stringent analytical concept. This becomes understandable after taking into account that the book is not the product of a consistent individual effort, but the result of a conference which took place in August 2001. As many as twenty-two authors have submitted contributions, the length of their articles ranging from just one to over twenty pages. The book is divided into six parts: (1) Recent developments on the Korean peninsula, (2) The North Korean economy, (3) Prospects for economic development in North Korea, (4) Korean unification and economic integration, (5) Economic cooperation with the DPRK, and (6) Where do we go from here? Among the contributors are internationally recognized experts from academia, active and retired diplomats, and professionals with an interest and often extensive experience in Korea. Their citizenship represents the involved parties—the USA, China, South Korea, Japan, Russia and the European Union.

The expertise of the contributors is beyond doubt, and so it is no surprise that the quality of the individual articles is usually very high. In his introduction, E. Kwan Choi emphasizes that unless North Korea joins a major free trade area, its future is uncertain. Kenneth Lieberthal explores the prospects of progress on the Korean peninsula. He concludes that the recent developments in the US-DPRK relationship have stalled progress towards a gradual unification, which he considers to be the best alternative to a collapse.

In part 1, Borje Ljunggren discusses recent developments in Korea from an EU perspective, emphasizing the EU’s role in building trust on the peninsula and acknowledging the fact that progress depends on the bilateral relationships between the DPRK, the United States and South Korea. Wolfgang Röhr provides information on the establishment of diplomatic relations between Germany and North Korea, and confirms Germany’s readiness to support reforms in the DPRK and peaceful development on the peninsula. Kim Myong Chol touches upon a crucial issue in his contribution on the significance of Chinese economic success to North Korea. He states that while North Korea has opened long ago, these efforts are being ignored by the United States, which is trying to keep North Korea out of the world economy. Establishing diplomatic relations with the USA in 1979 was a precondition for the success of China’s reforms, and it will play an equally important role for the DPRK. William Taylor briefly highlights some recent developments on the Korean peninsula, in particular in the bilateral relationship between P’yŏngyang and Washington. Rhee In Je, one of the candidates in the 1997 South Korean presidential election, explores the progress and prospects of economic cooperation between the two Koreas. He declares that North Korea’s policy orientation towards the South has not fundamentally changed, and that the North focuses on improving its military strength. He concludes that South Korea and the USA should cooperate in their North Korea policies.

In part 2, Bradley O. Babson of the World Bank explores the potential future role for multilateral development banks on the Korean peninsula. He emphasizes that the potential non-lending services (policy advice, technical assistance etc.) by the World Bank and the Asian Development Bank could play an equally important role in providing access to finance. He highlights a number of obstacles that both Koreas face before a successful economic integration can happen and develops a role for the multilateral development banks based on these challenges. Among the core tasks will be education and training, the mobilization of capital, and social adjustment. He concludes that there is an unprecedented potential role for the MDBs on the Korean Peninsula. Joachim Ahrens provides a long-term view of prospects and problems for Korean economic integration. He discusses an appropriate institutional design for a staggered economic integration process and identifies the reform requirements relating to the North Korean economy, concluding that the willingness of the DPRK elite to allow reforms is the precondition for a soft landing scenario. In his article about managing development assistance in the DPRK, Thomas McCarthy emphasizes the importance of the building of institutional competence in North Korea and urges International Financial Institutions to accept the potentially constructive role of China.

In part 3, Seon Lee and Nakki Baek explore the prospects for developing a North-South joint venture complex. They provide an overview of the development of inter-Korean economic and socio-cultural exchanges and list South Korean investments in the North. Bertrand Renaud writes on the urban dimension of the North Korean economy. He concludes that the urban system in the DPRK is inefficient and not sustainable in its current form. Won Bae Kim analyses inter-Korean cooperation in infrastructure development and territorial integration. He states that P’yŏngyang’s commitment to economic and other systemic reforms will be the key indicator of the depth and sincerity of inter-Korean cooperation. Bernhard Seliger applies lessons and non-lessons from Germany and Europe to the economic transformation of North Korea. He concludes that the lessons from economic transformations of former centrally pl anned economies are far from obvious.

In part 4, C. Kenneth Quinones writes on continuity and change in North Korea, explicitly going beyond the collapse scenario. He states that for the regime to survive, it has to pursue change. He shows that the North Korean ideology emphasizes constant change and adaptation to changing conditions, demanding researchers and politicians in the West to depart from the outdated and counterproductive Cold War mentality and stop equating the DPRK with China. He provides a rigorous textual analysis of Kim Il-sung’s and Kim Jong-il’s writings and concludes that North Korea possesses a program of change designed first to stabilize and then to recharge the country’s flagging energy. Felix Philipp Lutz explores the foreign policy framework of Korean unification, analysing the position of each involved party and offering a comprehensive approach towards unification. Jang C. Jin writes on openness and growth in North Korea, based on evidence from time series data and utilizing the Granger causality model.

In part 5, Erich Weingartner reports on NGO contributions to the transition from humanitarian to development assistance in the DPRK. Since the food shortage in North Korea is of a systemic nature, international donors increasingly doubt the effectiveness of food aid. On the other hand, according to Weingartner, there is a reluctance to contribute to any programme that would build up the DPRK’s self reliance, because the recent reform steps are seen as a reaction to the desperate food situation. In his conclusion, he urges NGOs to appreciate the value of indigenous North Korean contributions and capacities. Roland Meinardus writes about Europe’s new role in Korea. He analyses the European goals in Korea and provides an overview of the EU’s 2001 top level visit to P’yŏngyang.

In the final part 6, John Merrill, Georgi Toloraya and Donald Gregg elaborate on the direction of future developments, mainly from the perspective of the United States and Russia. The authors expect further changes to occur in North Korea, reject the policy of bringing about a collapse, and support multilateral efforts to deescalate the situation on the Korean peninsula.

The individual articles were written in 2001, i.e. after the 2000 summit, but before the “War on Terrorism” and the 2002 price reforms. They provide an interesting and valuable snapshot of a period when only a few experts had realized that North Korea was indeed reforming itself. The editors were able to recruit a number of influential political figures for the volume. Their contributions are not primarily of empirical or analytical value, but most importantly reflect the perception of North Korea by the decision-making elite in Asia, Europe and the United States. As it often is the case with RoutledgeCurzon, the restrictively high price of the book has to be lamented, particularly from the perspective of students.

This edited volume is certainly not the last word on North Korea in the world economy. Such a work would require a clearer structure and a consistent methodological orientation. Nevertheless, the book definitely has to be recommended, in particular for those who already possess a structured knowledge of North Korean affairs. For students of North Korea, it is a valuable and rich source of readings on important issues.

Citation:
Frank, Rüdiger 2007
Review of North Korea in the World Economy, edited by E. Kwan Choi, E. Han Kim and Yesook Merrill (2003)
Korean Studies Review 2007, no. 8
Electronic file: http://koreaweb.ws/ks/ksr/ksr07-08.htm