Vietnam's Doi Moi as a economic model recommendation for North Korea

1. Designing Economic
Reforms: The case of
North Korea and
Vietnam
Presented by Group 5

2. Agenda
 Introduction
 Current North Korean economic developments
 North Korea and Vietnam’s Doi Moi
 North Korea looks to Southeast Asia
 Comparing economic reforms in North Korea and Vietnam
 Conclusion

3. Introduction
 North Korea
 Two tests of Kwangmyongsong rocket in 2012
 Nuclear test in February 2013
 Rhetorical vitriol against the U.S and ROK leaders
 Adopting a new style of
economic reform
 Relations towards the ASEAN
 Vietnam
 Successful Doi Moi economic model
since late 1980s
 Shared same background

4. Current North Korean Economic
Development (1)
 Early 1990s: famine and Pyongyang’s isolation
 1994-1996: emphasized light industry
 1997: emphasis on heavy industries with military applications:
coal, steel production, electricity and railways
 2000-2001: positive references to China’s economic
modernization.
 Economic reform (parts of):
 Rajin-Sonbong Special
Economic Zone (SEZ)
 Mount Kumgang Tourism
Project
 Kaesong Industrial
Complex (under Sunshine Policy)

5. Current North Korean Economic
Development (2)
 2001～: concentrated on internal reforms
 Extreme diplomatic isolation
 2002: ‘July First’ phase of economic reforms
 Incentive system for improving agricultural output to overcome food
shortages
 1998-2008: Inter-Korean economic
cooperation (until Lee Myung Bak’s)
 2009: economic chaos
 Drastic devaluation of the DPRK Won
 Execution of Pak Nam-gi,
Director of the Planning and Finance Dept.

6. Current North Korean Economic
Development (3)
 2012, April: Adoption of Byongjin (Parallel Track)
 Economic reform
 Development of a nuclear weapons program
 2012: ‘June 28’ Policy – intentions to avoid over-reliance on
external influences
 Autonomy for factories and cooperative farms in production decisions
 While remaining under the supervision of the central government
 Allowing the usage of foreign currency
 Different economic rules in the SEZ
 ‘Communist Party rule, plus coexistence of a plan and market, plus
state-ownership of means of production’

7. North Korea and Vietnam’s Doi Moi
 NK’s desire to reduce dependence on China or ROK  explore
new economic relations to SeA countries.
 Vietnam’s Doi Moi model has the most potential for adaptation
Before Doi Moi:
 Hanoi had imposed Stalinist-style centralized economic planning based
on collective farms in order to integrate the country
 Result was food shortages and severe economic deterioration
 Historical legacy of antagonism and rivalry between China and Vietnam
 Virtual absence of foreign support as well as investments and aid

8. North Korea and Vietnam’s Doi Moi
 Vietnam’s Doi Moi:
 “Socialist-oriented free market economy
 Allotting small plots of land to households
 Decentralization of the decision-making process
 Incentive-based system for rewarding productivity
 Ensuring that political authority of central government was not affected
 Gradual introduction of free market forces
 Doi Moi’s
 alleviating food shortages
 Removal of ideological constraints of economic development
 Utilization of free market forces
 Encouragement of foreign direct investment

9. North Korea looks to Southeast Asia
 North Korean leadership’s obsession with
regime survival
 Achieve spectacular economic growth
 In spite of severe diplomatic isolation
 Retain firm authoritarian control the country
 Previous attempts to borrow elements from
the Chinese model of economic reform
 Good relations with ASEAN members
 Vietnam: no trade yet
 Shared communist background
 Efforts in fostering bilateral economic
cooperation

12. Conclusion
 Doi Moi’s adaption: possible framework but hard to undertake
 Vietnamese leadership is one that has generally been guided by
pragmatism, rather than ideology
 Long-term program of economic reform:
 Denuclearization – foundation to international relations & foreign
investment
 The opening up of
the North Korea economy