Reviewing economic policy in 2012-2013

Picture: One of the new tourism zones we visited with the local administrators last November while running economics and business workshops in the provinces

In 2012, reports emerged that North Korea was preparing for changes to its agricultural policy. While the exact details were disputed, the basic outline was that the State would share agricultural outputs with farmers, and farmers would be allow to sell their share of the output. In addition, the size of the collective would be reduced, potentially to the size of a household. Alongside these rumors were many others regarding changes to the management of state-owned enterprises and to the financial system, mostly under the rubric of what was termed a “new economic management system in our style.” In April last year, Pak Pong Ju, who initiated economic policy changes in 2002-2006, was brought back for his second-term as Premier after a long absence from the political scene dating to 2010.

When the news about the agricultural policy changes was not announced publicly by North Korea in late 2012, and the policy was itself quietly changed from a nationwide initiative to several pilot projects, many pundits, the media and the “commentariat” (term courtesy of David Chance) proclaimed the death of “economic reforms” in North Korea, and started to condemn the new leadership of the country as being rigid on the economy.

I thought at that time that inflation might have spooked policymakers, resulting in a delayed rollout of the agricultural policy. Korea Institute for National Unification scholar Park Hyeong Jung has recently published a solid article on this issue, and more broadly on North Korea’s economic policy experimentations over the last year and the challenges that have derailed or delayed some of the experiments. It is comprehensive, empirical, and insightful. Strongly recommend!

Worth reading too is Stephen Haggard’s take on the paper. See part I and part II.