The view that North Korea should take Vietnam as a model for development has been gaining momentum. Among those who share this perspective is U.S. Secretary of State Mike Pompeo, who paid a visit to Hanoi in July and said that North Korea can emulate Vietnam’s economic development and achieve a similar economic miracle. It seems quite natural that North Korea would consider Vietnam an exemplary model, given that Vietnam achieved, without dissolution of the Communist Party, remarkable economic growth through a market-oriented opening and reform policy.
Nonetheless, North Korea faces a number of challenges and barriers that make it difficult for the country to follow in Vietnam’s footsteps. This is mainly due to the unique characteristics of North Korea’s political system, nuclearization, geopolitical dynamics, and the division of the Korean nation.
First, North Korea needs much faster economic development. In order to preserve Kim Jong Un’s legitimacy and to mitigate political and economic instability, it will be critical for North Korea to achieve rapid and sustainable economic growth at a rate of 10 percent annually during the initial 10 years of economic reform. Such a growth rates exceed the pace of development achieved by countries like South Korea, China, and Kazakhstan at the peaks of their economic growth. This target of 10 percent economic growth is, while daunting, a sufficiently achievable goal if the essential internal and external preconditions are met. The significance of Kim’s decision to denuclearize means shifting the state’s development paradigm from rigid militarism to economic development. Procrastinated development may cause acute social instability, which could further destabilize the inter-Korean relationship due to the increasing economic disparity. Due to the 22-fold income gap between North and South Korea, North Korean citizens may be further tempted to defect. Due to these risks, tangible economic achievement within a short period of time will be the only viable option for Pyongyang to quickly rebalance the country’s vision on long-term development.
Second, regarding the authority of the supreme ruler, North Korea and Vietnam possess fundamental differences. The legitimacy of the supreme leader in North Korea originates from the ruling system that Kim Il Sung designed to produce the fittest individual to realize and execute his Juche ideology. The successor who is chosen as the supreme ruler is not only transferred absolute ruling power, but also the innate power to choose the next successor thereafter. To date, only Kim Il Sung’s descendants have ruled North Korea.
In Vietnam, the executive system is organized according to the national constitution and declares the authoritative system in control of political economic activities to be the communist regime. The power structure is one of collective leadership and is decentralized, consisting of the secretary, national ruler, and the prime minister. The greatest figure of authority, the secretary, is elected through competition among the central committee members. The national ruler assumes charge of the military and foreign affairs while the prime minister is in charge of the overall economy.
This difference in ruling systems between North Korea and Vietnam means that the change resulting from market-oriented reform and opening will have different effects on the legitimacy of the authority of the supreme ruler. Not only will market-oriented reform and opening diminish the authority of the supreme leader in North Korea, it will also harm the legitimacy of the system itself, which is built around the supreme leader. Therefore, problems related to legitimacy are a challenge that only Kim Jong Un can resolve.
Third, as in Vietnam, economic modernization will not occur in North Korea without market-oriented reform and opening. However, North Korea would suffer greater regime instability compared to Vietnam with market-oriented reform and opening. Reform of the system depends on eliminating the fundamental hypocrisies and corruption that the socialist regime holds. On the other hand, market-oriented opening aims for integration with the world economy, and depends on foreign investment and transfer of technology, business know-how, foreign capital, and labor production as well as import and export systems. It will, in the short run, bring system instability. Privatization of national firms, which is a core step in market-oriented reform, inevitably brings forth bankruptcy. It takes a long time and produces many hurdles for privatized firms to gradually gain competence and make a profit.
The same risks apply to opening for integration with the world market. There are side-effects to opening. Even if we do not interpret “opening” as the basic right to information and knowledge through transparency with regard to political, economic, and public affairs, market-oriented opening will imply the likely disclosure of past human rights breaches and corruption to the public.
Fourth, unlike Vietnam, in order for North Korea to accept denuclearization and obtain economic modernization, it must construct a permanent peace treaty and give way for North-South cooperation. Simply put, North Korea cannot simply implement effective market-oriented reform and opening; economic modernization will prove ultimately impossible hostile North–South Korean relations persist. North Korea currently possesses a strong military consisting of 1.2 million soldiers and expends 25 percent of the total national GDP for military-related purposes. For economic development to advance, there must be a peace treaty between North and South Korea that both resolves military hostility and reallocates high military expenditures to fostering the import/export industries instead.
One thing to point out is that only if North Korea carries out reform of the system, hence changing the official ruling ideology, can the two Koreas agree upon a peace treaty and resolve the hostility between North Korea and the international community. In order for foreign policy to change, the ruling ideology, which regulates domestic policies, must first change. This reform of the system’s ruling ideology cannot occur without Kim taking bold actions.
If we consider the aforementioned hurdles and limitations of following the Vietnam model, there must be a deeper consideration of the pros and cons of the state’s situation by constructing an economic model which offers the most effective route to economic development. In order for North Korea to achieve the most rapid and dynamic economic growth in the world after denuclearization, the country will need an objective and rational strategic economic plan. In contrast to other socialist states, North Korea entails many comparative advantages to help catch up. For example, North Korea can secure development funds in return for giving up nuclear development. Furthermore, North Korea is surrounded by economically advanced countries like China, Japan, Russia, and South Korea that have achieved remarkable growth within a short period of time. In addition, North Korea is a country extremely rich in natural resources, including an enormous potential for tourism and fishery resources, being located in an advantageous geopolitical area to develop the logistics sector. Finally, North Korea is in a position to selectively adopt the positive experiences and knowledge of those countries that successfully transformed their economies from socialist to capitalist systems through opening and reform.
If Kim decides firmly to pursue denuclearization and proceed with policies of reform and opening, with the support and cooperation of the five stakeholder countries, North Korea has high potential to achieve historic, unprecedented, and miraculous economic growth.
Chan-Young Bang is President of KIMEP University in Almaty, Kazakhstan.