Is North Korea loosening grip on state-owned enterprises?
Reforms credited for economic rebound
A post-2000 economic recovery in North Korea has continued largely unabated in spite of intensifying international sanctions and the distractions of Pyongyang’s nuclear face off with the US, according to Peter Ward, an analyst writing for 38 North.
Ward says in a recent post for the website dedicated to analysis of North Korean affairs that the rebound is the result of radical changes in the management of the country’s state-owned enterprises (SOEs).
“While the regime seems to be doing everything it can to keep up Stalinist appearances and Kim Jong-un probably believes that he cannot abandon socialist rhetoric without risking his legitimacy, in reality, markets increasingly play a central role in the lives of ordinary North Koreans,” Ward wrote. “As such, the regime has been adapting to this new reality and moving to co-opt market forces by side-lining the Party in economic management.”
Ward says the clearest example of this shift in management policy is North Korea’s 2014 amended Enterprise Act, which came to light earlier this year, granting SOE managers broad rights to engage in foreign trade and joint ventures and accept investment from domestic private investors.
“Institutionalizing market forces seems to be helping to create a better investment climate, and thus spurring growth,” the analyst said.