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The Economic Rehabilitation of North Korea: Prospects after Kim Jong-il

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Abstract

Despite having signed or agreed to four formal weapon denuclearization agreements, the Kim Jong-il family regime in Pyongyang shows no fundamental willingness to give up its nuclear weapons. Therefore this article looks past the denuclearization issue, and examines the potential for a future rehabilitation of North Korea's economy in a post-Kim era. Four economic sectors or challenges are analyzed within the context of badly needed North Korean macroeconomic reform: energy utilization and the potential for a new natural gas arrangement with Russia; personal income growth tied to major labor reorientations focused on manufacturing for export; expanding capitalist projects like the Kaesong Industrial Complex; and expanding DPRK foreign trade with South Korea, China, Russia and other countries. This paper's thesis is that once the Kim family legacy of autarchy, corruption, and militarism can be buried, and if a reformist North Korean regime comes forward and institutionalizes state-directed capitalism (as occurred in China and Vietnam), North Korea already has the clear potential to economically develop, shed its tragic legacy, and be welcomed by the international community.

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