If North Korea is to develop its economy without any changes on the rigid political system of today, what policy choices the regime should make and what path it would be on as a result? These questions are precisely what this study attempts to answer.

Several, various studies have discussed so far what efforts the regime needs to take in order to escape its economic slump. However, most of these discussions were developed assuming that the North Korean economy would be integrated by absorption into the South Korean economy after the regime’s collapse. Only a few have been able to present comprehensive answers to this question: if North Korea tries to initiate an economic development strategy with its political entity intact, what type or form of strategy would be implemented? So, it can be said that the attempt itself to answer this question is what makes this study distinctive and significant. From a broader perspective, it is necessary to recognize that it can’t be a plausible approach to seek North Korean economic policy based on the reunification scenario most desired by the one side alone: South Korea, in this case. This is not different from a soccer coach sending out players on the field with a strategy that he planned against an imaginary opponent with no objective evaluation of its ability. Therefore, a proper approach would be to first canvass all possible roads ahead of the North Korean economy and then to think up respective plans for each road so that in any scenario South Korea could turn the situation favorable to itself. In this context is where this study emerges.

The work of analyzing North Korean economic development strategy was implemented with largely three elements under consideration. First, common characteristics of less-developed countries, rather than uniqueness of the North Korean economy, were adopted for review. This was intended to avoid being blinded by North Korea’s current economic conditions or distinctive aspects different from other countries. Instead, this study took the perspective of what policies other countries at a similar income level would generally take in order to pursue their economic development, and with that it examined necessary policies and their subsequent effects thoroughly. Second, the analysis tried to explore relevant issues through empirical basis whenever possible, which means reflecting confirmed key facts through economic development studies as comprehensively as possible, not to mention information on the North Korean economy. Third, the analysis also pondered in what way North Korea’s economic development would move forward and interact with the South Korean economy. The scope of interaction goes beyond the framework of how much aids the South Korean Economy will need to provide to help develop the North Korean economy and it embraces what evolutionary progress the two Koreas will be able to achieve in the process of bilateral exchanges of human and material resources. Key conclusions drawn from the analysis based on above perspectives can be summarized as follows.
What is most important for North Korea to escape current situation and to accomplish economic development is to open its doors. The economic openness primarily means external openness, but without internal openness working in tandem, the outcome of economic openness would end up with no substantial effects. Therefore, the concept of openness needs to be understood to include internal openness. The key part in internal openness is to enable free exchanges of human and material resources without geological or sectoral limitations. In North Korea today, simply by allowing rural population with free access to urban area, its productivity would soar significantly. Furthermore, expanding transportation system would also heighten the transfer of goods and resources, subsequently producing huge meaningful effects. If this continues and triggers more active transfer of resources through financial development, the road ahead would be perfectly bright. Without all these supportive outcomes of internal openness, seeking external openness, commonly through a special zone, would have only very limited effects.
When the North Korean economy initiates external openness in tandem with internal openness, the size of North Korea’s trade will expectedly grow remarkably in the medium- and long-term periods. According to the estimation based on the gravity model, it is expected that North Korea’s trade would rise five times and its trade volume with South Korea would also expand at a similar rate. Reflecting on the growth experience of South Korea since the 1960s and the rise of China and Vietnam, there is no doubt that a rise in trade will not only have effects of upgrading public welfare, but also serve as a driving force that enables a sustainable economic growth.
Through this economic openness, products that North Korea could trade with the world as well as its neighboring countries would be labor-intensive light-industry goods. This means that North Korea is truly on the path to industrialization. Throughout the long history of the world economy, almost no country has maintained a sustainable economic growth without industrialization. It has been often argued that it would be better to develop the North Korean economy by using its underground resources or through agriculture or to pursue an industrial division of labor between South and North Koreas; manufacturing-agriculture or manufacturing-mining. However, this argument is hardly realistic.

Unless the trade is made by the South Korean government through supporting the North Korean economy under highly constrained conditions, it is not realistic at all to assume that North Korea, as a member of the international community, would have any comparative advantage in the global market for agricultural or mining industries, when it tries to participate in production and sales. The very comparative edge that North Korea could cling to is high-quality low-income labors, and they are the fundamental factor that North Korean should use to consolidate its economic development.

It is very clear that the North Korean economy in this scenario will be able to achieve higher income growth. In particular, with simultaneous assistance from the South Korean economy, North Korea will be able to achieve a much faster and stable growth. Of course, it will still take quite some time since the income gap between the two Koreas is extremely huge for now. Efforts to prepare for such difference will be needed.

Admittedly, some arguments in this study are not well-grounded for the reason of limited resources and data. Other arguments drawn from highly limited information are mostly not very new, since many of them have failed to reach beyond existing ones. Nevertheless, this study is significant enough in the sense that it sketched out a framework that seeks ways to develop the North Korean economy through the perspective of economic development, not through the strategy for economic integration in the post-unification era. It is hoped that this study will help trigger more active discussions, and therefore make some meaningful contributions to putting North Korea’s economy, society and political system on the track of a normal country.

요 약

제1장 무역, 북한경제개발, 그리고 한국경제
　제1절 서 론
　제2절 기존 연구 검토
　제3절 헥셔-올린 모형의 기본명제
　제4절 북한 개방 시 남북한 교역 증가효과
　제5절 요소소득에 미치는 영향
　제6절 생산요소의 이동
　제7절 결 론
참고문헌


제2장 북한산업의 발전 잠재력과 정책과제
　제1절 서 론
　제2절 북한의 산업발전 잠재력
　제3절 경제특구 개발과 수출산업 육성
　제4절 북한 국내산업 발전을 위한 개혁전략
　제5절 남북경협에 대한 시사점
참고문헌

제3장 북한 농업 실태와 중장기 농업개발 방향
　제1절 북한의 농업정책
　제2절 북한의 경제 및 농업 실태와 과제
　제3절 선도적 농업개발 프로그램: 특구 배후지 농업개발
　제4절 북한의 장기 농업개혁 및 개발 추진방안
참고문헌
부록

제4장 북한의 경제발전과 기반시설 개발과제
　제1절 서 론
　제2절 지역발전의 이론과 사례
　제3절 북한의 국토공간 변화 전망
　제4절 기반시설 개발의 추진과제
　제5절 결 론
참고문헌

제5장 남북한 경제통합에 따른 성장수렴 경로 분석
　제1절 서 론
　제2절 모형 설정
　제3절 통일에 따른 이행동학과 성장수렴
　제4절 모수 설정 및 수치적 방법론
　제5절 수치적 분석 결과
　제6절 해외차입하에서의 이행경로
　제7절 결 론
참고문헌

제6장 결 론

ABSTRACT