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Can North Korea Be the Next Vietnam?

Jul 26, 2018 Lee Jong-Wha

In 1986, Vietnam initiated the “Đổi Mới,” a set of economic reforms that resulted in the creation of a market economy under the firm rule of the Communist Party. North Korea has what it needs to achieve a similar transformation, but it must embrace full denuclearization first.

SEOUL – After decades of deadlock, there seems finally to be some diplomatic movement on the Korean Peninsula. The June summit between Kim Jong-un and Donald Trump – the first between a North Korean leader and a sitting US president – produced a joint statement in which Kim agreed to complete denuclearization of the Korean Peninsula, in exchange for security guarantees from Trump.

Of course, while some cheer the development, others remind us of the North’s long history of broken promises. But even if Kim’s pledge was sincere, his regime will benefit from such guarantees – and from an end to crippling international sanctions – only if it can manage to repair North Korea’s broken economy. Could it use Vietnam’s experience as a model?

In 1986, Vietnam initiated the Đổi Mới policy, a set of economic reforms that, much like Deng Xiaoping’s reforms in China, aimed to create a market economy under the firm rule of the Communist Party. The government disbanded agricultural cooperatives, removed price controls on agricultural goods, and allowed farmers to own land. It also privatized many companies, eased foreign investment regulations, created a more supportive environment for private business, established export-processing zones, and promoted labor-intensive manufacturing industries.

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Lee Jong-Wha

Writing for PS since 2012
35 Commentaries

Lee Jong-Wha, Professor of Economics and Director of the Asiatic Research Institute at Korea University, served as Chief Economist and Head of the Office of Regional Economic Integration at the Asian Development Bank and was a senior adviser for international economic affairs to former President Lee Myung-bak of South Korea. His most recent book, co-authored with Harvard’s Robert J. Barro, is Education Matters: Global Schooling Gains from the 19th to the 21st Century.

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j. von Hettlingen Jul 28, 2018

Lee Jong-Wha wonders whether North Korea can be the “next” Vietnam. Such a decision, like all “essential” decisions, can only be made by one single person, Kim Jong-un, who is an “unpredictable tyrant” and scion of a dynasty founded by his grandfather in 1948. North Korea’s history is dominated by Kim Il-sung, who shaped the country’s political affairs for almost half a century, since it emerged amid the chaos following the end of World War II. For decades North Korea has been one of the world's most secretive societies. It is one of the few countries still under nominally communist rule. Decades of this rigid state-controlled system have led to stagnation and a leadership dependent on the personality cult.
While Kim at the inter-Korean summit on April 27, allegedly „expressed an interest in following Vietnam’s economic-reform model,” it all depends on whether he is willing to “embrace full denuclearization first.” Kim has continued his father’s policy of sending mixed signals to the rest of the world about his nuclear programme, and his ambitions had exacerbated North Korea’s rigidly maintained isolation from the rest of the world.
It is unsurprising that Kim seeks to emulate Vietnam, because it was a divided country that became unified in 1975 when the Communist north seized the south after three decades of bitters wars, in which the Communists fought first against the colonial power France, then against South Vietnam and its US backers. In its latter stages, the conflict held the attention of the world. The US joined the war in order to stem the "domino effect" of successive countries falling to Communism.
Although Vietnam is – like North Korea – a one-party Communist state, it is ruled by a collective leadership, that sticks to the party line. The Communist Party holds the real power and appoints a secretary-general. The president holds merely a ceremonial post, and the prime minister is elected by parliament. Nevertheless Vietnam has thrived as a market economy over the last 30 years.
Inspired by Deng Xiaoping’s formula, which catapulted China to the world’s second largest economy in 2010, Vietnam’s economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid growth and development and transformed the country from one of the world’s poorest nations to a lower middle-income country. Having one of south-east Asia's fastest-growing economies it has set its sights on becoming a developed nation by 2020.
The author points out the challenges North Korea faces under Kim, which are the same as those it had to cope with during his father's reign - a moribund economy, international isolation and widespread poverty. Up to three million people may have died of starvation during the devastating famine between 1994-1998. Stringent sanctions – endorsed by long-time ally, China – have eroded economic performance, with total exports plummeting “by 37%.”
But the upside is that the North “possesses relatively good economic fundamentals, thanks to well-educated workers, abundant natural resources, and geographic advantages like natural seaports. With comprehensive market reforms that enable large-scale foreign investment and technological adoption, replicating Vietnam’s economic ‘miracle’ would be feasible.”
The author seems to see no role for Beijing to play in a denuclearised North Korea. Instead he focuses on what Seoul will be doing to help Kim move forward. He sought to implement his “signature domestic policy, byungjin,” which “entailed pursuing the nuclear program and economic growth in parallel – a shift from his father’s songun (military first) policy. As part of that effort, he has granted more autonomy to farms and factories and opened some markets.”
However, in April, Kim “announced the end of byungjin, saying at a Workers’ Party meeting that it was time to focus the country’s resources on rebuilding the economy. But the extent of that commitment remains unclear, not least because there is no reliable information about the country’s economic situation.” In the absence of trust in the US, especially under Trump, Kim will not give up his nuclear weapons.
The US will equally insist on “a prerequisite for easing the economic sanctions” on North Korea. “Once sanctions are relaxed, the two Koreas can strengthen cooperation on humanitarian, health, and environmental issues, and discuss re-opening the Kaesong industrial complex.” Seoul is hell-bent on helping Pyongyang denuclearise, as it fears the threat the North would pose to its security. Even if the North is being brought in from the cold, it will take decades to ditch its image as a“systematic, widespread, and gross” human-rights abuser.
- Soo Shin Jul 29, 2018
  
  Is the point of von Hettlingen's comments about human rights abuses? The North Korean regime's human rights abuses are appalling indeed and should not in anyway be excused as should be the case for so many other countries in the world such as Turkey, Syria, Myanmar, Saudi Arabia to name a few. Do you know how many innocent black men have been executed or incarcerated for life in the history of the US? Extrapolate from the those recently (in the last 20 years due to scientific advances) found wrongfully imprisoned combined with America's history of slavery and people of a city (called Flint) being poisoned through its water supply, I dare say the extent and duration of cruelty even in a country like the US should be on the same platform together with North Korea's to be examined.
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