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Other Research KOR KDI Review of the North Korean Economy, September 2024

The September issue features eight articles on recent trends and future challenges in North Korean economic research, along with a retrospective on Dr. Lee Seok’s 20-year contributions, who retired in August 2024 as editor-in-chief of the KDI Review of the North Korean Economy and head of the research division. North Korean economic studies currently face significant challenges, including strained inter-Korean relations, North Korea's isolationist policies, and waning domestic interest. The research focuses on three core areas: North Korea’s domestic economy, inter-Korean cooperation, and reunification readiness. The increasing use of big data and recent data disclosures from the Ministry of Unification have been positively received. Scholars are encouraged to investigate the regime’s structural changes and their wider implications, while also adopting a global perspective on policy. Although satellite-based research is expected to expand, careful interpretation remains crucial. The foremost challenge is securing reliable data, particularly given the suspension of economic cooperation, pandemic-related border closures, and China’s anti-espionage law. Ongoing efforts to gather and validate data, along with international collaboration, are vital for deepening analysis and sharing insights into North Korea’s economy.

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Other Research KOR KDI Review of the North Korean Economy, August 2024

The August issue addresses the challenges and improvement directions for policies supporting North Korean defectors. While these policies have seen continuous modifications, they now face new demands for qualitative changes. The government has established 'North Korean Defectors' Day' and reaffirmed its commitment, yet criticisms persist regarding the lack of tailored support, indicating improved policy efficiency. The city of Seoul has expanded its support, with around 20% of defectors residing there. The settlement status of these defectors is analyzed through demographics, economic activity, and social integration, offering policy insights. Economic hardship remains prevalent among defectors, underscoring the need for effective economic education. KDI's economic education program aims to enhance defectors' economic independence. There's a clear need for both quantitative and qualitative improvements in this education, requiring systematic and well-designed approaches to better support defectors' social integration and economic stability in South Korea.

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Other Research KOR KDI Review of the North Korean Economy, July 2024

The July issue analyzes North Korea's current economic situation and its development potential. As of 2024, the North Korean economy faces a critical juncture, with rapid growth possible if denuclearization and reforms are implemented. However, North Korea's continued confrontational stance has resulted in prolonged economic stagnation. The review examines economic reform cases in China and Vietnam. China's reforms since 1978 have led to a twelvefold GDP increase and an eightfold per capita GDP increase. Vietnam's Doi Moi policy, initiated in 1986, has achieved a 6.2% average annual GDP growth over three decades, transitioning it to a middle-income country. Internal developments in North Korea show a growing prevalence of informal economic activities. Small-scale asset privatization and evolving market-centered relationships among economic actors are observed, suggesting potential for positive changes in the civilian economy upon reform implementation. The review also highlights North Korea's tourism resources as a potential economic driver. Case studies of Vietnam and Cuba demonstrate tourism's significant contribution to economic progress in transitioning economies. This issue illuminates North Korea's potential for change, emphasizing the necessity of resolving the nuclear issue and implementing economic reforms. It presents analyses and projections of North Korea's future transformation, outlining a blueprint for economic cooperation on the Korean Peninsula.

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Policy Study KOR Empirical Analysis of Political and Economic Relations between the Korean Peninsula and Surrounding Countries: Focusing on Country Relations Index Using Big Data

Recently, tensions between the US and China have been escalating across various sectors, concurrently with rapid shifts in the international arena due to conflicts such as the Russia-Ukraine war and the Israel-Hamas conflict. The Korean Peninsula is also entwined in the fabric of these dynamics. The Taiwan issue, one facet of the US-China rivalry, is linked to the strategic presence of US forces in South Korea, and semiconductors, South Korea's key industry, are among the most affected by the intensifying tensions between the US and China. North Korea's economic and military ties with Russia, as evidenced by North Korea's supply of conventional weapons and materials to Russia in defiance of international sanctions, are strengthening. Given the complex and grave political and economic environment surrounding the peninsula, evidence-based policymaking grounded in objective data becomes indispensable.

This study utilizes Google's Global Database of Events, Language, and Tone (GDELT) to analyze country relations around the Korean Peninsula. The data provided by GDELT quantitatively measures qualitative variables of inter-country relationships, utilizing machine learning and other state-of-the-art technologies to extend traditional event data methodologies to a vast collection of news articles gathered worldwide by Google. However, despite its strength as one of the most comprehensive and objective event datasets available, it is important to acknowledge and address the limitations such as the reliability and scope of news sources and potential errors in event identification and classification.

Using trade data and GDELT, this study examines the economic and political dynamics between the US and China for time-series econometric analysis―what drives the US-China conflict, which country triggers cooperation and conflict, how the other country responds, and whether these outcomes vary over time. This analysis reveals that before President Xi Jinping's tenure, US-China relations were primarily influenced by trade, with a notable positive correlation between increased trade and more favorable relations. During this period, their interactions appeared to have no significant impact on each other. However, since the beginning of Xi's presidency, China has actively responded to US diplomatic protests and corrective measures. Empirical analysis supports this move, which aligns with China's strategy to assert itself as a global power through expanded political and military influence, underpinned by its economic growth. The shift towards mutual diplomatic and security issues over economic variables in influencing US-China relations indicates that future tensions are likely to arise from areas such as Taiwan rather than trade.

The study further explores inter-Korean relations and the dynamics among countries surrounding the Korean Peninsula, investigating how the US-China power dynamic, bilateral relations, and interactions among neighboring countries influence the two Koreas. Findings indicate that the US-China power dynamic and relations have a significant correlation with South and North Korea's external relations with these superpowers but exert minimal impact on the peninsula's international relations. This suggests that the US-China relationship is a major factor in shaping the external relations of both Koreas without directly affecting the internal tension or peace. However, it is important to acknowledge that the recent escalation in US-China tensions, if it has fundamentally changed the geopolitical context surrounding the Korean Peninsula, might render predictions based on historical data incomplete.

This study showcases an analysis of inter-state relations using quantified objective data. The data, methodology, and findings presented are expected to serve as reference materials for formulating future foreign policies.

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Other Research KOR KDI Review of the North Korean Economy, June 2024

In June 2024, a North Korea-Russia summit marked Putin's first Pyongyang visit in 24 years. The June issue examines its implications for bilateral relations and North Korea's economy. The nations signed a "comprehensive strategic partnership" treaty, elevating their relationship to a de facto alliance. North Korea aims to address energy and food issues, modernize its military industry, and boost economic self-reliance, while Russia seeks to integrate North Korea into its defense industry supply chain. The countries agreed to strengthen collaboration in transportation, logistics, energy, and military sectors. Short-term plans include increased refined oil supplies, with long-term prospects covering labor dispatch, infrastructure development, and energy and fisheries cooperation. Additionally, they aim to reshape Northeast Asia's global supply chains by improving transportation infrastructure and resuming air routes. However, Russia's financial constraints may limit large-scale aid, and North Korea still struggles to attract foreign capital. China's lukewarm response to this rapprochement suggests potential shifts in North Korea-China-Russia relations. This alignment is interpreted as a strategy to neutralize international sanctions and solidify North Korea's economic foundation for regime maintenance. It is expected to significantly impact the Korean Peninsula and Northeast Asian geopolitics.

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Other Research KOR KDI Review of the North Korean Economy, May 2024

The May issue analyzes several pivotal topics concerning the Korean Peninsula in 2024: North Korea's policy shifts, the U.S. presidential election and its implications for the region, cyber security strategies, and the evolution of state-run shops in Pyongyang under the Kim Jong-un regime. North Korea is advancing its nuclear and missile capabilities while bolstering ties with Russia and China. Domestically, it exhibits notable changes, such as excluding South Korea from its reunification agenda. The U.S. policy towards the Korean Peninsula remains contingent on the presidential election results. Nonetheless, South Korea should enhance the continuity and stability of its alliance with the U.S., diversify its security cooperation framework, and maintain a consistent stance towards North Korea, with an emphasis on crisis management. In terms of U.S.-ROK cyber security cooperation, it is essential to fortify information sharing systems, foster collaboration among public, private, and academic sectors, and explore partnerships with allies like Japan. Pyongyang's state-run shops under Kim Jong-un are integrating market principles and employing modernization strategies to distinguish themselves from traditional markets, indicating economic reforms aimed at reinforcing regime stability. Furthermore, this issue offers a foundational analysis of North Korea's state-run shops using research methods such as a quantitative analysis of the Rodong Sinmun, qualitative analysis of North Korean literature, and interviews with North Korean defectors.

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Other Research KOR KDI Review of the North Korean Economy, April 2024

The April issue delves into the possibilities and limitations of employing satellite data, particularly nitrogen dioxide concentration, in the analysis of the North Korean economy, given the paucity of dependable data. Researchers meticulously compiled and scrutinized data on North Korea's nitrogen dioxide concentration by county and district from May 2018 to February 2024. The analysis unveiled that the concentration remained relatively stable from 2019 to 2021, experienced a substantial decline in 2022, and persisted in its downward trajectory until February 2024. These data proffer the merits of high timeliness due to frequent updates and the capacity to examine an array of regions within North Korea. However, they also possess certain drawbacks, such as pronounced seasonality and susceptibility to extraneous environmental influences. Nevertheless, they herald new possibilities for the economic dissection of North Korea. As part of the effort to discover new data, the issue introduces three pivotal data satellite observation platforms (Copernicus Sentinel-5P Mapping Portal, National Institute of Environmental Research's Environmental Satellite Center, and Global Nitrogen Dioxide Monitoring Home Page) that allow anyone to access and utilize nitrogen dioxide concentration data for analysis.

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Other Research KOR KDI Review of the North Korean Economy, March 2024

The March issue analyzes North Korea's tariff and non-tariff regulations, identifying areas requiring reform for international integration. Through examining North Korea's 2005 tariff schedule, the study grasps its tariff policies and stance and proposes a staged approach to free trade agreements should it open up, recommending: Korea-DPRK CEPA → Korea-China-Japan FTA → Northeast Asia FTA → WTO accession. An assessment of consumer goods production and distribution under Kim Jong-un cites the provincial industry-centered production and coexistence of planned/market distribution systems as fundamental causes of pervasive consumer goods shortages. These ineffectual policies are projected to keep backtracking economic policy reforms. The 2023 4th year "Mid-to-Long-Term Roadmap for Agricultural Integration on the Korean Peninsula in the Peace Era" discusses tasks and policy measures for full-fledged economic/agricultural integration, expected to usefully inform the government's unification and North Korea policies. North Korea’s surging merchant fleet since 2020 is viewed as a strategic response to overcome economic woes and achieve self-sufficiency. Given maritime trade’s importance, this trend warrants close monitoring of its maritime economic activities. Embracing a cross-cutting approach to inter-Korean cooperation, anchored in the UN SDGs, could bolster sustainability and fairness. This approach has the potential to mitigate adverse ramifications, ensure an equitable distribution of benefits and burdens, and facilitate scientific collaboration that meets global standards of excellence.

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Other Research KOR KDI Review of the North Korean Economy, February 2024

The February 2024 issue of the North Korea Economic Review provides a detailed analysis of North Korea's shifts in political, economic, and military strategies, particularly emphasizing the stronger relationship with China and changing views on unification in South Korea. It notes North Korea's increased military focus on South Korea and proactive foreign policies to broaden its global presence amidst US-China tensions. The review also mentions the reduced expectations for unification in South Korea and how this impacts policies towards North Korea. Moreover, it discusses the deepening strategic partnership between China and North Korea in the context of US-China competition, predicting significant effects on the Korean Peninsula and regional security. Through this in-depth analysis, the Review offers insightful forecasts on the future of the Korean Peninsula, North Korea's domestic and international political strategies, and its role in the international community, providing key insights for policymakers and academics. It underscores the necessity for more comprehensive geopolitical analysis reflecting the intricate international circumstances and domestic political changes, reaffirming the significance of North Korean studies.

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Other Research KOR KDI Review of the North Korean Economy, January 2024

The January issue provides a multifaceted evaluation and prognosis of North Korea's economic state, utilizing novel data sources such as orbital satellite data. The article offers a unique vantage point, quantifying the country's atmospheric pollution and nocturnal luminosity, thus presenting an alternative to conventional economic metrics. Interpretations of North Korea's macroeconomy in 2023 are mixed, encompassing both positive and negative perspectives, and the outlook for 2024 remains highly uncertain. In the aftermath of COVID-19, North Korea's international trade exhibits a recuperative trend, albeit amidst ongoing uncertainties. The industrial sector is deemed to have either expanded or at least sustained its previous year's performance. Centralized policies have significantly increased productivity in the food and agriculture sectors, with market prices and currency exchange rates stabilizing to previous levels. The energy sector remains stagnant, mirroring past trends, while the transportation and logistics realms, though challenging to quantify, are presumed to have experienced growth. The issue also discusses the potential short-term economic uplift for North Korea stemming from its significant military supplies to Russia, within the context of their bilateral military collaboration. In the absence of official domestic statistics, the issue employs data from external sources to appraise North Korea's economic dynamics.

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