(Besides, of course, the people living in North Korea)
North Korea’s supreme leader Kim Jong Un has not been seen in public for a month. There are increasing rumors that Kim is no longer in control of the country, with a former North Korean government official telling Vice News of a palace coup and opposing factions: “On one hand, it’s people who want to maintain a regime monopoly…On the other hand, it’s not like people are fighting against the regime, but in a policy sense they want to take advantage to get influence. It’s not actually consciously civil war, but there are these two incompatible forces at play.”
A group of high-ranking North Korean officials has visited South Korea at this crucial political junction. The two sides agreed to restart high-level talks either later this month or sometime in November. The first significant inter-Korean talks in many years follow a major reduction in Chinese energy aid to North Korea, and Beijing’s intensifying overtures to the government in South Korea.
Regardless of the geopolitical maneuvering, one thing is certain – the only direction North Korea’s economy can go is up. Average per capita income is estimated to be around $1,000 – $2,000 per year. The North Korean education system has brought about near universal literacy, and alongside intense propaganda, education in math and sciences is fairly comprehensive for the political elite in Pyongyang. North Korea also boasts trillions of dollars of largely untapped mineral resources.
In fact, North Korea has already started some degree of economic reforms. Emulating the Chinese model of Deng Xiaoping, North Korea has set up a “special economic zone” in the northeast city of Rason near the border with China and Russia. There is also the Kaesong Industrial Complex, were South Korean companies employ up to 55,000 North Koreans making goods for export (expect when North Korean officials shut it down for political reasons). This summer the North Korean government announced the opening of six new special economic zones.
Who is poised to reap the benefits of mineral-rich, low-wage North Korea in the event of a major thaw, or a possible sudden opening? Obviously some of the biggest potential beneficiaries (besides the North Korean people themselves) would be Korean conglomerates. Hyundai is heavily involved in the Kaesong Industrial Complex, as is plastics producer Jaeyong Solutec, and Shinwon Corporation , an apparel manufacturer. Many Chinese companies and entrepreneurs are also on the ground in North Korea, as well as a few Russian businesses.
North Korea’s huge potential comes with significant risk. John Langdon, who studies at the Johns Hopkins School of Advanced International Studies, recent wrote a case study detailing the problems faced by Chinese companies operating in North Korea, including corruption, lack of infrastructure, and insufficient rule of law. Despite these challenges, there is potential for immense opportunities in the event of systematic political and economic changes in North Korea.