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The quantitative growth in North Korea's trade : Is it enough?

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The Quantitative Growth in North Korea's Trade : Is it Enough?*
Kyoochul Kim, Fellow at KDI
“Despite international sanctions, North Korea’s trade has exhibited quantitative growth. However, the sanctions have also limited North Korea’s trade partners to China. The surging demand for anthracite in China has skewed North Korea’s trade structure, leaving it vulnerable to external shocks and possibly distorting the allocation of resources and diminishing the capital investment in other industries. In response, the South Korean government must make efforts to seek new measures for economic cooperation to encourage North Korea to foster other industries that have comparative advantage. In addition, assistance must be made available to enable North Korea to establish a balanced trade structure by diversifying its trade partners and trade portfolio.”
Ⅰ. Introduction
Marking just $2.15 billion in 1996, North Korea’s trade volume1) soared to $6.06 billion in 2016 after peaking at $8.01 billion in 2013. The pace of growth has been consistent despite a slight retreat due to the recent impact of international sanctions. Generally, a correlation exists between a country’s overseas trade and economic growth. That is, a growth in trade leads to a growth in the economy. However, the opposite is true for North Korea as trade growth has been quantitative but not qualitative. Accordingly,
* Based on Kim, Kyoochul, “A Study of Structur


Full Text
Title The quantitative growth in North Korea's trade
Similar Titles
Sub Title

Is it enough?

Material Type Articles
Author(English)

Kim, Kyoochul

Publisher

Sejong : Korea Development Institute

Date 2018-09
Series Title; No KDI FOCUS / No. 93, eng.
Pages 9
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Government and Law < International Politics
Holding 한국개발연구원; KDI국제정책대학원
License

Abstract

Despite international sanctions, North Korea’s trade has exhibited quantitative growth. However, the sanctions have also limited North Korea’s trade partners to China. The surging demand for anthracite in China has skewed North Korea’s trade structure, leaving it vulnerable to external shocks and possibly distorting the allocation of resources and diminishing the capital investment in other industries. In response, the South Korean government must make efforts to seek new measures for economic cooperation to encourage North Korea to foster other industries that have comparative advantage. In addition, assistance must be made available to enable North Korea to establish a balanced trade structure by diversifying its trade partners and trade portfolio.

- North Korea’s trade has grown in quantity since the 2000s.

- North Korea’s economic growth was unable to catch up with the growth in trade due to the qualitative decline.

- North Korea’s trade has been heavily dependent on China from the mid-2000s.

- From 2008, North Korea’s top export item has been anthracite and its export volume has expanded sharply.

- The spike in North Korea’s anthracite exports from the late 2000s was driven by demand factors including an increase in the demand for fossil fuels on China’s economic development and also supply factors including the difficulties in earning foreign currency.

- National income and economic growth are determined by qualitative aspects such as what items are being exported.

- The trends in North Korea’s physical and human capital investment helps to evaluate the quality of its export and to project the sustainability of its long-term economic growth.

- An anthracite-dependent export structure would reduce the investment in physical and human capital, possibly leading to longterm economic stagnation.

- Vietnam’s exports have grown in both quantity and quality, since consistently expanding its export of hightech products, contrary to North Korea whose trade quality has weakened.

- North Korea’s China- and anthracite-dependent trade structure is vulnerable to external shocks as well as reducing human and physical capital investment, diminishing long-term growth.

- The South Korean government needs to act as a bridge between North Korea and the world, helping North Korea discard the existing trade structure and transform itself into a normal member of the global economy.

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