I just got done reading Stephan Haggard and Kent Boydston’s look at a recent North Korean propaganda video, touting the benefits of investing in these Special Economic Zone (SEZ)s: Lower taxes, easier restrictions, blah, blah, blah… The usual SEZ affair.
I think the US should try to divert China’s attention on the South China Seas, by setting aside its sanctions and financial restrictions, and reinvigorate 신의주(新義州/SinUiJu) to facilitate trade. Definately not practical, but Sino-American relations hilarity would be fun to watch.
But seriously, if we really want to reintegrate North Korea to become a team-player in the international community, or if the goal is to help regular North Koreans have better lives by improving their economy 北京共識 (“Beijing Consensus”i.e. the China Economic Model), it’s going to have a lot of issues (Remember XiYang’s attempts to invest in North Korean? Yeah, that ended with their workers getting kicked out, and all investments being lost to local authorities).
Actually, in China’s initial opening to the rest of the world, many foreign investors have had the same issues. According to business laws, it’s written one way, but the selective enforcement by authorities proves to be an issue. To grease the wheels, this leads to bribery, and when a new official comes on board to crack down on such activity (either because he wants to increase his own business influence, or maybe he actually wants to do his job). This change is exactly what keeps Dan Harris at the http://www.chinalawblog.com in business, and honestly, I’m pretty sure Sean Hayes of http://www.thekoreanlawblog.com can tell you that foreign investment in “capitalist” South Korea had some of the same issues with protectionism, and selective enforcement of the law.
So why should anyone invest in North Korea? Well, why should anyone invest outside their own country, for that matter. By rubbing out these issues sooner, it will pave the way for future generations to invest in the country more easily. Once the North Koreans get used to dealing with international business, they will have less of an incentive to make deals in the shadows, if they can make money openly under the sunlight.