Research Reports
Strategies for Agricultural Reform in North Korea and Inter-Korean Cooperation
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AuthorKwon, Taejin
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Publication Date2004.12.01
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Original
ABSTRACT
Strategies for Agricultural Reform in North Korea and Inter-Korean Cooperation
The purpose of this study is to come up with strategies to help the North Korean agriculture to make a soft landing for reform and open-policy. North Korea, which has a closed economy with centralized administration, has started opening the market as part of the economic reform on July 1, 2002. North Korea has reduced the food distribution and readjusted the price of various supplies and services to a realistic level based on the cost-concept, so that they are not provided at extremely low price. Workers’ wage had a sharp raise. Companies are introducing the cost-concept, therefore broadening the management’s sense of responsibility and autonomy. As a follow-up measure, it granted privileges to some areas and reorganized the farmer's market into a general market. In 2004, it introduced individual farming system to some collective farms. Considering the recent developments, it seems that North Korea will widen the reform and opening in every field of the economy.
Based on such assumption, this study is designed to set up a basic direction for reform such as decentralization, decollectivization, marketization, and privatization, and to present the agricultural strategy. To begin with, the reform of the agriculture can take place in three sectors including agricultural system, investment and financing, haman power and technology development. The system reform can be also divided into land ownership and utilization, farm management system and methods, agricultural marketing and pricing mechanism. Agricultural investment and finance can be divided into agricultural finance, financing system, and investment. Finally haman power and technology development can be divided into human power and development of agricultural technologies. When presenting the reform strategies, two types of changes should be considered: change within the system and fundamental change. Change within the system does not accompany structural change in system. However, fundamental change accompanies change in the system. The way to minimize the impact of reform is to use the case examples of the countries that have already experienced system transformation. Based on such examples, the agricultural productivity should be enhanced first through system reform, and then the reform should be completed by changing the distribution and price system.
For North Korea to carry forward the reform, there are several conditions in need, but the most important matter is to secure financial resources. Some 25 billion dollars need to be annually invested for North Korea to have a 7% of annual economic growth. It is impossible for the North to secure this amount of financial resources on its own, so that borrowing financial resources from the international monetary organizations is inevitable. To this end, North Korea should resolve the nuclear problem in advance and restore the trust of the international society. More than anything, the robust inter-Korean cooperation will help North Korea join the international monetary organizations, as well as develop its economy.
To speed up North Korea's reform and opening in the agricultural field, the type of assistance needs to be changed from humanitarian aid to development assistance. Moreover, trade of farm products and economic cooperation should be expanded. For this, getting rid of any institutional obstacles is the most important. It is essential to keep the agricultural policy of South Korea in harmony with its policy toward the North, while facilitating the trade and cooperation with North Korea.
Researchers: Tae-Jin Kwon et al.
E-mail Address: kwontj@krei.re.kr
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