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North Korea: Building the Institutions to Raise Living Standards

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  • Paul Hare

Abstract

This paper examines the nature of the economic failure that has brought North Korea such low living standards, and considers how the economic system might be reformed to facilitate a return to overall growth in both aggregate income (GDP) and general living standards. The focus is on institutional aspects of the needed reforms, emphasising the importance of building on existing institutions and practices wherever possible, rather than starting from scratch from a tabula rasa . Food supplies, the large military establishment, and the astonishing failure to adapt to the trade shock resulting from the collapse of the USSR are reviewed in detail, and potential lessons are explored from EU enlargement, German reunification and the very messy Russian transition. In proposing reforms, the paper is pragmatic and flexible, prioritising measures to improve food supplies while also emphasising a wide range of local, experimental and decentralised reforms that surely have greater chance of success than a top-down approach.

Suggested Citation

  • Paul Hare, 2012. "North Korea: Building the Institutions to Raise Living Standards," International Economic Journal, Taylor & Francis Journals, vol. 26(3), pages 487-509, September.
    • Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:487-509
    DOI: 10.1080/10168737.2012.707876
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    8. Wendy Carlin, 2011. "Good Institutions are not Enough: Ongoing Challenges of Eastern German Development," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(01), pages 28-34, May.
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    Cited by:

    1. Mai, Nhat Chi, 2020. "North Korean Decisionmaking," OSF Preprints e6gsh, Center for Open Science.

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