Evaluation of Economic Transition Outcomes of CLMV Countries in Southeast Asia and Its Implications for North Korea

Economic transition can be divided into two prototypes; one is the market economy epitomized by the United States, and the other is state capitalistic transition (or East Asian transition), represented by China. This study proceeded in two stages of designing transition indicators suited to evaluate the degree of CLMV’s economic transition. First, we rearranged all the categories and sectors between 1997 and 2010. Inclusive growth and sustainable growth components are excluded as the observed period of Southeast Asia was not a time when CLMVs focus was on any of these components. The EBRD indicators in the observed period show a clear map of a transition economy whether its institutional transition to market economy is well established. Next, we matched the major components of the Washington Consensus to its policy targets. As a result, 84 reconstructed transition indicators are created out of original transitional indicators from the EBRD (1997‒2010) and corresponding components of the Washington Consensus. The results of evaluation of CLMV countries with the yardstick of 84 indicators and their distinct characteristics are presented in this study. There are a couple of lessons to be learned from these examples of transition in CLMV countries. One is the need to target a certain area first in the process of economic transition rather than aiming for transition in every sector equally. If an administration wishes to achieve fast economic growth and development, it is best to place export- and foreign direct investment-oriented policies at the top of the list and set aside the rest of related policies for the time being. The other is that it is crucial to maintain political stability within the nation and a stable bilateral relationship with the United States. The research outcomes of this study will be the very foundation to set the direction of North Korea’s transition and prioritize agendas at each stage of transition. This study differentiates itself from previous studies of transition as it evaluated Cambodia, Lao PDR, Myanmar and Vietnam to develop an analytic framework based on quantitative measures. In addition, this study made a novel attempt to investigate transition of CLMV countries in Southeast Asia from the perspective of state capitalism shaped by China. This would contribute to extending the horizon of studies of transition economies.