With the United Nations imposing yet another round of sanctions on North Korea for its nuclear provocations, it's worth asking why such penalties have been failing for more than a decade. One reason is that the North Korean economy is improving more than is commonly understood--and that will make altering its behavior through trade barriers significantly harder.
The current approach to sanctions is partly based on the assumption that North Korea's economy is a socialist nightmare, but that's no longer really true. Although the country is still poor, its gross domestic product grew by an estimated 3.9 percent in 2016 to about $28.5 billion, the fastest pace in 17 years. Wages have risen quickly, and per-capita GDP is now on par with Rwanda, an African economic exemplar.
This progress is partly due to continued trade with China, which remains reluctant to crack down on its neighbor despite calls for tighter sanctions.
Meanwhile, economic reforms made in 2011 have begun to take hold, allowing factory managers to set salaries, find their own suppliers, and hire and fire employees. Farming collectives have been replaced by a family-based management system, which has led to far greater harvests. The government has even come to tolerate limited private enterprise.
The results are striking. Street vendors, once rare, are now a common sight in Pyongyang. Some neighborhoods have new luxury high-rises, modern supermarkets, fashionable shops and streets busy with Mercedes-Benzes and BMWs. Although the government denies having abandoned the old socialist system, the evidence is undeniable: By some estimates, the private sector now accounts for up to half of GDP.
Meanwhile, given the country's still-widespread impoverishment, simple improvements in agriculture and natural-disaster management are enough to yield significant new growth.
For North Koreans, rising living standards are obviously good. The problem is that the economy still has plenty of room to grow before further progress will require the removal of trade barriers. That means it could be years before new sanctions would hurt enough to cause a significant change in behavior. Until then, the nation's ideology of self-reliance, known as juche, seems almost plausible.
Hidebound apparatchiks may object to further reforms, a wealthier public may question the legitimacy of Communist rule in an increasingly capitalist state, and market bubbles could prove destabilizing. But faced with excruciating pressure and scant resources, North Korea has nevertheless been steadily achieving its goals for years. Further economic growth is likely to only help.
Editorial on 09/18/2017