This paper examines foreign direct investment (FDI) in North Korea (DPRK). Investment attraction is a matter of paramount importance for the past, present, future of the North Korean economy. Formerly, the North Korean regime regarded FDI as a means to offset its trade deficit. Currently, FDI is used as an indicator to gauge the effects of sanctions on the DPRK, given multiple sanctions imposed against it, including a ban on investment. First and foremost, investment from abroad is the most formidable tool for the North Korean economy to take off.

Against this backdrop, this study looks into FDI in North Korea with macro and microscopic perspectives. Macroscopically, a comparative analysis is made between total foreign investment in DPRK and foreign investment by country in DPRK. Microscopically, an analysis of FDI trends is conducted by reconstructing corporate and industrial statistics. The macro-and micro-analyses have yielded the following seven findings.

First, the trend analysis of total foreign direct investment in DPRK based on UNCTA statistics revealed that FDI began to increase in 2004 and fluctuated multiple times, showing large inflows in 2008 and 2014. Due to the insignificant amounts of FDI, initially, legal and institutional changes alone and a one-off corporate or national project, later on, were sufficient to rapidly increase foreign investment into the country.

Second, as for FDI by country in DPRK, this study examines China, Russia, and OECD members (37 countries), which accounted for 91% of total FDI in DPRK between 2007 and 2017. According to the analysis, China has always been a strong buttress for FDI in North Korea. It also shows that total FDI increased as Germany and Russia increased their contribution in 2008 and 2009 and 2011 and 2012. It also shows that total FDI increased as Germany in 2008 and 2009 and Russia in 2011 and 2012 increased their investment abroad.

Third, this study examines corporate and industrial investment in DPRK by compiling multiple previous studies and reconstructing the data. A total of 372 corporate samples from 2000 to 2015 were put together, with an estimated total investment amount of $3.5 billion and an average investment per enterprise of $14.67 million.

Fourth, an analysis of the motives of Chinese companies to invest in DPRK shows that despite risks associated with property rights, the short-term prospects of profitability seem to attract them to North Korea. Incentives at work include growth of DPRK's informal sectors, regulatory evasion and cost savings, securing monopoly rights, and more.

Fifth, the reconstructed data is used to understand the industrial features. It shows that the mining industry takes up a large portion of China's FDI in North Korea in terms of the number and amount of investment cases, accounting for 37% of the number of cases and 50% of the total amount. Per the analysis, five out of the top ten companies have invested in the mining sector, indicating that the mining industry led the investment in North Korea during the concerned period.

Sixth, this study analyzes the ripple effects of changing investment patterns using the input-output table and finds that China's mining-centered FDI in DPRK produced some impact but not much greater than its investment in light and heavy industries. Provided that FDI shifted from mining to light industry, the effect would have increased by 27% for the same amount.

Seventh, FDI stock from China took up 57% of total foreign investment in North Korea, and China's FDI flows reached an annual average of 46%. These figures are similar to corporate data based on the Open Source Center (OSC), which indicates investment by Chinese companies accounted for 58%; however, the number rises to 76% if it excludes those whose country of incorporation is unknown.

To sum up, this study examines country breakdowns of FDI in North Korea using mirror statistics to explain what caused trends shown in the data. Moreover, the analysis applies a micro perspective to complement macro data. By putting together data of 372 Chinese enterprises investing in North Korea, it could identify trends by industry and estimate the ripple effects of their investments. Yet this inquiry carries more significance in that analyzing and investigating available data help get ready for when the door to North Korea for foreign investment opens up. In this way, weak points of accessible data sets can be found together with ways to make up for such shortcomings. Above all, it is meaningful to discuss basic statistics, as the process may shed light on the right direction for FDI policy.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Analysis of Total and Country-Specific Foreign Direct Investment in North Korea
　Section 1 Total Foreign Investment in North Korea
　Section 2 Country-Specific Foreign Investment in North Korea
　Section 3 Conclusion

Chapter 3 Analysis of Corporate and Industry-Specific Foreign Direct Investment in North Korea
　Section 1 Corporate Foreign Investment in North Korea
　Section 2 Industry-Specific Foreign Investment in North Korea
　Section 3 Conclusion

Chapter 4 Evaluation and Implications
　Section 1 Comprehensive Evaluation
　Section 2 Policy Implications

References
Appendix
ABSTRACT