Academic journal article North Korean Review

North Korea: From Failing towards Reforming State?

Academic journal article North Korean Review

North Korea: From Failing towards Reforming State?

Article excerpt


According to most criteria, North Korea would be classified as a failing state. More often than not the country's destiny has been predicted as collapse, chaos, and in the end, absorption by South Korea. However, so far the Kim Jong-il regime proved viable and cultivated the art to survive within a globalizing world without opening up. More recently, however, North Korean authorities appeared to revive an affinity towards South Korea's sunshine policy. What is more, the country even seemed to initiate some rudimentary and cautious market-oriented reforms. If these are signs for a policy change, they are definitely not straightforward and they come with considerable uncertainties and risks. Especially, North Korea's nuclear threat potential, its opaque international bargaining strategy, and its reliance on exports of military goods for hard currency revenues represent key obstacles.

And yet, the North Korean elite, South Korean authorities, and the rest of the world do have a vital interest in avoiding an apocalypse on the Korean peninsula. All parties may have an interest in the maintenance of a politically sovereign, economically reforming state in the North. This essay seeks to sketch a politically feasible and economically effective reform strategy for North Korea from a governance perspective. The main argument states that effective integration and economic transition of North Korea do not necessarily presuppose a fundamental regime change towards a Western-style democratic polity with best-practice market institutions, but crucially depend on the emergence of specific transitional institutions which lead to efficiency gains and enhance the incentive compatibility of ruling the country and pursuing the nation's welfare.

The paper is structured as follows: The next section investigates the question of whether or not North Korea is a failed state, the destiny of which is collapse and absorption by South Korea. Arguing that North Korea is not a failed, but at best a failing state, the next section addresses the follow-up question of what it may take from a governance perspective to become a reforming state. Subsequently, it will be argued that an appropriate governance structure, which aligns the incentives of political elites and private economic actors, needs to be based on Chinese-type transitional institutions in order to foster economic transition, development, and growth. Finally, such an approach should be reinforced by a strategy that helps to share the economic and social benefits of growth between all stakeholders.

North Korea-A Failed State?

Since the early 1990s the terms failed states and failing states have become catch phrases in academic debates and analyses as well as in policymaking circles and in journalism. As Maass and Mepham (2004: 5) point out: "State failure takes many different forms and goes under a variety of different labels. 'Failed states,' 'failing states,' 'states at risk of failure,' 'rogue states,' 'poor performers,' 'Low Income Countries under Stress (LICUS)'-these are just some of the descriptive terms that have been used to define and conceptualize it." Other related terms include "fragile states," "crisis states," or "states at risk of instability" (Woodward 2006).

Some analysts associate a failed state with an absence of government power and define it as a state "that loses the control of a territory or the monopoly of legitimate force, lacks the capacity to make collective decisions or deliver public services, presides over a society that relies on the black market, or fails to collect taxes" (Varga Llosa 2005: 1). Moreover, failed states may not only threaten regional, but also international security (Woodward 2006). Other observers such as Alvaro Varga Llosa (2005) argue that it is not the lack of state strength or government power, but rather an excess of government power which contributes to the emergence of a failed state.

Furthermore, the label "failed state" is sometimes used (or better: abused) for distinct political purposes in order to generate pressure on the respective authorities and opposition forces to undergo political transitions towards a certain politicoadministrative model which the critics appear to have in mind and which often shows striking similarities to a "best-practice model of Western-style democratic capitalism. …

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