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World Economy Brief

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Changes in the North Korean Economy and New Strategies of Inter-Korean Cooperation after UNSCR 2270

North Korea’s economy faces difficulties as the overall economy changed to a “high-cost economy” after UNSCR 2270. As the sanctions continued, the policy to endure the sanctions is being emphasized rather than one that focuses on the socialist economic development emphasized by Chairman Kim Jong-un. Productivity improvement and science and technology development are becoming more neglected as the North Korean economy changes to a structure that withstands sanctions. If the current phase is prolonged, there is a possibility that the whole economy will lose its growth engine as the entire economy changes into a high-cost “looting economy.” Then, despite the relatively consistent reform policy, it would be difficult for the reform and opening policy to produce results.

North Korea is trying to improve the environment for foreign investment by offering incentives, but this policy cannot be realized without lifting sanctions. It is difficult to attract foreign capital in the early stages of opening since the North Korean economy has a weak manufacturing base. It will also be difficult for North Korea to accept radical reform programs in order to gain financing from international organizations. Under these circumstances, South Korea should play a role in promoting North Korea’s reform and opening policies. 

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