A MOST ENTERPRISING COUNTRY: North Korea in the Global Economy | By Justin V. Hastings
Ithaca; London: Cornell University Press, 2016. xviii, 216 pp. (Graphs, figures.) US$29.95, cloth. ISBN 978-1-5017-0490-1.
The Bank of Korea (BOK) estimated that North Korea’s annual growth rate was -1.1% in 2015, and 3.9% in 2016. (Note that the credibility of BOK statistics on North Korea is still a matter of debate). For the same period, the Hyundai Research Institute estimated North Korea’s per capita GDP to have increased by 8.9%.
Recent statistics show that the North Korean economy is improving despite strong international sanctions. For a long time, people thought of North Korea as enigmatic. Now yet another puzzle presents itself: that of North Korea’s survival and development. Here, we ask a simple question: How is North Korea able to survive, and even achieve economic growth, in the middle of an alleged domestic economic collapse and a hostile international environment?
A Most Enterprising Country provides an answer to this latest puzzle. The book’s title is full of irony. Can North Korea, the last Stalinist state, which still maintains a socialist planned economic system, be “enterprising?” By analyzing changes in the North Korean economy from the 1990s to around 2015, the author argues that North Korea is not a socialist state (as conventionally understood) and that it does not have a socialist planned system. Hastings, a senior lecturer in international relations and comparative politics at the University of Sydney with an interest in East Asian political economy, including trade and smuggling activities, traces North Korean trade since the 1990s. He argues that North Korea has survived through foreign trade. North Korea’s private, state, and hybrid enterprises have constructed global foreign trade networks. There exists a hierarchical network in the domestic economy, a food chain that blurs the licit and illicit, the formal and informal. State and private enterprises in this global foreign trade network are surviving despite the hostile international environment. Hastings points to this creativity and adaptability of the North Korean economic system. At the same time, since state elites—from the Kim family, high-ranking and local elites, to trade agents—are intertwined in this hierarchical bribe chain, they have no incentive to challenge the system. Private agents, i.e. traders, can access state resources through these networks, and take advantage of them. Another keyword he suggests for understanding North Korea is the market. The market is where North Korean elites make, share, and distribute their profits. The idea leading the market is pragmatism.
Thus, Hastings depicts North Korea as most enterprising. However, he predicts that this system faces inevitable change, though not necessarily collapse. He has stated as much to the South China Morning Post (September 24, 2017), arguing that harsh economic sanctions have little impact on North Korea’s foreign policy.
Hasting’s research is based on literature as well as interviews with North Korean defectors and Chinese businesspeople who trade with North Korea. His arguments are interesting enough. However, three points are worth mentioning. The first is the relation between foreign trade and economic growth. Until recently, many researchers have suggested that the market drives the entire North Korean economy. However, whether the market can explain current North Korean economic growth is debatable. Currently, statistics indicate North Korean economic growth to be far beyond simply surviving and muddling through. As Hasting shows, we can find the answer to this puzzle in both trade and the market. Trade alone cannot explain North Korea’s recent economic growth since trade alone does not include domestic North Korean economic structures.
Second, the author describes North Korean trade networks at the global level beyond China and their hub-and-spokes structure. This approach is simultaneously both fresh and stale. Stale since, as seen in the text, the global networks of North Korea were established a long time ago and their management has been blurring political and economic boundaries ever since. (See also, Daniel Tudor and James Pearson, North Korea Confidential, Tuttle, 2015). Of course, recent global networks are different from the old in that they are dominated by economic motives, not by ideological and political ones, and in that they’ve been expanded to include capitalist countries. But what is new in terms of the structure itself? In Hastings, it is hard to discern a critical difference or change between the old and new networks.
Third, what is the impact of policy changes in North Korea? During the Seventh Party Congress in 2016, North Korea emphasized the need to diversify its trading partners. North Korea fears dependence on China, which accounts for 90 percent of its foreign trade, and would like to find new trading partners to reduce that dependency. This could encourage North Korean traders’ creativity and adaptability in a various ways. What will change and what will not is an important question to be answered in the future.
Currently, North Korea confronts a series of UN sanctions, the US’s special sanctions, and China’s accommodation of international sanctions. As Hastings comments, “a complete Chinese shutdown of trade and barricading of the border would probably bring the country to its knees” (South China Morning Post, September 24, 2017). But will China take that path? Even now, at the peak of international sanctions, trucks are stuck in traffic jams in Dandong, the most important nexus of Sino-North Korean trade, as they cross to Shinuiju on the North Korean side of the border.
The real value of this book’s insights will be tested as we see whether such a situation is sustainable into the future. Although, as the author says, we should not “mistake to think” that economic sanctions will cause the collapse of North Korea.
This book provides one answer to the question of North Korea’s survival and economic growth in circumstances of the most severe sanctions against it (a total of 12 sanctions since the 1990s). Policy-makers, scholars, students, and anyone interested in North Korea’s future should read this book. It delivers insights and valuable lessons on North Korea’s economy and foreign trade.
YoungChul Chung
Sogang University, Seoul, South Korea
Sogang University, Seoul, South Korea
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