This study examines the relationship between North Korea’s proportion of exports to China and the quality of its export structure. Given that the increase in the former has been a major characteristic of North Korea’s exports for the past two decades, analyzing its effects is a prerequisite to understanding and predicting the long-term trends in the North Korean economy.

As the background for the empirical analyses, I first discuss the overall trend in North Korea's export structure after the Arduous March. Section 2 employs the export sophistication index by Hausmann (2007) to measure the qualitative changes in the composition of North Korean exports. The results show that the composition has deteriorated qualitatively since the Arduous March, and this trend is evident even when compared with less-developed countries whose income levels are comparable to that of North Korea. Section 3 examines the increasing dependence of North Korean exports on China. The proportion of exports to China soared from 5.9% in 1998 to 89.4% in 2017. By comparing the long-term trends in proportion of exports to China with other countries, I conclude that an increasing import demand from China, which has been a common environment to many developing countries, has been maximized the by unique conditions of the North Korean economy such as economic sanctions.

Section 4 examines the relationship between the proportion of exports to China and the qualitative composition of North Korean exports. Instrumental variable estimates indicate that an increase in the proportion of exports to China causes a qualitative decline in the composition of exports, and the effects are conditional on the unique properties of North Korea such as sanctions and other political environments. Finally, Section 5 discusses the implications on the long-term outlook for the North Korean economy and the South Korean government's North Korea policies.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Qualitative Changes in North Korea’s Export Composition
　Section 1 Concept of the Export Sophistication Index
　Section 2 Measurement and Trends of North Korea’s Export Sophistication Index

Chapter 3 Increasing Proportion of North Korean Exports to China
　Section 1 Causes of the Increase in North Korea’s Export Proportion to China
　Section 2 Time-Series Trends in North Korea’s Export Proportion to China

Chapter 4 Rising Export Proportion to China and the Qualitative Decline in North Korean Export Composition
　Section 1 Correlation Analysis
　Section 2 Empirical Analysis Model
　Section 3 Estimation Results
　Section 4 Changing Patterns in Exports to China

Chapter 5 Conclusion and Implications

References
ABSTRACT