Trump said it at his meeting with Kim.
From what I have read, the mountains in North Korea have a huge amount of natural resources/energy but they haven’t been able to tap into it because they don’t have the technology and the govt won’t allow it.
I think this is better suited to Great Debates.
Colibri
General Questions Moderator
Back when the country split, North Korea was the more industrialized and thus the more prosperous part. The South was more agriculturalized. The South had modernized its economy; the North (obviously) has not, and even their agriculture fails miserably. So yes, in theory they could develop into a powerhouse comparable to the South, but not under the government as it exists.
That’s not to say that if they become free tomorrow, things will improve faster than fifty years or so. And foreign aid won’t do the trick - they need to make it possible for outside investors to make money. So they will need to go the sweatshop route. Cheap labor is probably all they have to offer, and it will have to be pretty cheap. Malnutrition and fake education about Dear Leader has not prepared their workforce to produce much. Even if they emphasize mining and such, the ore-diggers are going to have to work for cheap to compete with more modern countries.
Regards,
Shodan
The perception is that everyone in North Korea is dirt-poor and starving, subsisting on grass and whatever wildlife they can capture and kill. That’s not true any more, and this recent article from The New York Times Magazine (paywall warning) talks about how some in North Korea are setting up private businesses, which started with open air markets (called jangmadang) in the last days of the rule of the current Kim’s father. Now, there are people there who can afford luxury goods and many earn much more in side businesses than they do in their official jobs. I found it interesting. It seems to me that none of the remaining socialist or Marxist countries (Cuba, China, North Korea. Are there others?) rely entirely on state control but instead have capitalist enterprises in the economy.
The problem is that the government is hostile to private enterprise economic development. it’s not just ideological. With this development, some people get rich - and therefore can bribe and buy officials, influence government, and possibly prevent the government from exercising the control they need to stay totalitarian. It’s still a lethal society at the top - witness the (likely exaggerated) stories about vicious purges by the Kims, especially recently. He eliminated his brother to be sure there was no “legitimate” figurehead for rivals to promote. Someone tried to blow up his father’s train on the way back from China a decade or more ago. Half the effort of the secret police is to prevent mid and higher level officials from being able to get together a critical mass to attempt an overthrow.
And there’s the serious risk that they guard against, that a richer more open society will start to demand more, resulting in a spring much like the month the Berlin wall fell, or the Arab Spring, or Tien Amen. If people can visit the South, or the Southerners come to visit them, the illusion that it is better or no worse than the rest of the world will evaporate. Whatever happens, a regime this nasty is not going to survive when people have more options, and the leadership know it.
Well, they don’t have ‘unlimited economic potential’, but they do have quite a bit…assuming they could ever get rid of their current government. The problem is, they will almost have to build everything from scratch, as they have across the board systemic issues. They don’t have a very good or reliable (or wide spread) electricity network, for instance. They don’t have the road network or the logistics in place to support large scale mining operations, if they are going to tap into their natural resources. Just those two things are going to take time and lots and lots of capital to rectify…and who, exactly, is going to invest that sort of capital in North Korea? Even China doesn’t sink a ton of it’s money into the country…no on the scale needed. If even they think it’s a bad long term investment (after investing in some of the white elephants and bad deals they have in recent years), then it’s going to be tough to find someone else with deep enough pockets and who is willing.
Somehow China has managed to make it work. They have private enterprise, capitalism and people getting really, really rich, but not agitating for an end to the authoritarian government. I think some in America thought that as capitalism took hold in China, the people would throw off their Communist leaders. But for some reason, they have not.
Perhaps that’s the model that Kim is aiming for? (Assuming he’s planning this, and not just stumbling into it.)
Well, except that the CCP is barely holding things together. It’s why they have gone to such ridiculous levels of surveillance of their population, instituted their social credit system and all the other things they have and are doing to try and keep a lid on. And they are, basically, one real recession away from the edge, with people becoming increasingly disillusioned with the CCP. As for the rich, they are trying, by hook and by crook to get their assets (and themselves and their families) out, if they can. Again, it’s why the CCP has instituted their ridiculous levels of monetary transfer…you have to jump through a bunch of hoops to get private capital and currency out of China, to exchange RMB for foreign currency, etc etc.
The problem is, if you give a little bit of freedom you need to in order to have even a minimum of capitalism to grow your economy it also loosens the restraints on your people. Even more than the Chinese, the North Koreans rely on that…they rely on an information black hole wrt their people (even today it’s not working all that well, even with all the draconian measures the NK government tries to do…or that the CCP tries to do in China). But Capitalism relies on information transfers, and at a certain point you can’t pick and choose. It’s a reason why the CCP is so interested in going beyond their borders, in trying to get foreign companies on board with censorship, in trying to change the narrative internationally by infiltrating (or buying) foreign press, by influencing foreign elections (see New Zealand or Australia as examples…even Canada). If they can change the narrative everywhere, well, they won’t have to worry about what their people think. But if they can’t…it’s a rather large issue. And in NK, it’s existential. Which is why they can’t even do what the Chinese tried, because while the CCP has been able to keep the lid on (so far), there is no way the NKs could if they opened up that much.
Well, they’ve got things other countries would love - like coastline, ports, natural resources, prosperous neighbors, and nearby trade routes.
Their potential is certainly greater than - say - Rwanda or Chad.
I’ve read that North Korea’s counterfeiting operations are really sophisticated, able to make really high-quality counterfeit hundred-dollar bills and high-quality meth or Viagra. So the capability is there.
And beaches! Renowned expert Donald J. Trump has spoken glowingly of the massive potential for beachfront property!
"They (North Korea) have great beaches. You see that whenever they’re exploding their cannons into the ocean. I said, ‘Boy look at that view. Wouldn’t that make a great condo?’ "
I think it’s just a bow to economic realities. Complete central control of economies is such a massively inefficient system. Even a little bit of opportunity to personally profit due to private enterprise creates a huge improvement in production.
When Cuba goes from taking 100% of the tobacco crop to just taking 90%, all of a sudden there’s a reason to actually improve yields.
That’s not really the argument against centralization. Rather, the argument against centralization is that humans aren’t smarter than the market. Therefore, they shouldn’t be making decisions that interfere with the market, except for those decisions that made to protect against the problems that a market can cause. Over the long term, human brains can’t outsmart the collective brain – this is why active fund managers can outwit index funds for maybe 2-4 years, but not over 6-10. This is why the House always wins.
Humans aren’t good at deciding on a macroeconomic level how to create wealth, but humans can decide how to redistribute wealth that has already been created.
A large, low cost, low skilled labor force sitting next to S Korea and China, both of which are looking for low cost labor. In many ways it is the China model from the 1980’s. At least for a decade or two, N Korea could easily have double digit GDP growth (off of a low base) just based on textiles and cheap electronics
That is relative statement of course. They have reformed the economy to the point where people aren’t starving in the their 100s of thousands. But by the standards of pretty much anywhere else in the world North Korea is VERY poor.
Though in answer to the OP, the “unlimited economic potential” is an arm wavy “warm and fuzzy” political phrase not tied to any economic reality. But there is a lot of economic potential in the North, that was where the lion’s share of the industrial resources of Korea were before partition after WW2.
Moreover, in an authoritarian country like North Korea, the regime will always have its hand in the market. The danger that a free market poses to a dictatorship is that it can produce wealth and power independent of the regime, which could then be used to seduce any opposition someone like Kim might have. Any business licenses, any wealth derived from such activity…that’s something that Kim observes by the minute.
That is also true, but both effects exist. A centrally controlled economy is less effective than a free one, but a centrally controlled economy with 100% tax rates on individual producers is also less effective than a centrally controlled economy with 90% tax rates.
Cuba, at least, has made the latter change to improve their economy. As a whole, it still sucks. But there are improvements at the margins.
South Korea already outsources some factory work to North Korea.
This is why I try to avoid products made in South Korea. I don’t like buying products made with slave labor,
North Korea has a couple of hundred thousand slave laborers working throughout the world.
I think they should need to make significant progress on the human rights front before they can become an economic powerhouse. But I’m not sure enough people care if big profits are involved. Which is really sad.
This year they will be rationed a whole 300 grams of food per day!