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A strategic assisted buyback scheme of North Korean debt

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  • A strategic assisted buyback scheme of North Korean debt
  • Lee, Shi-Yong
  • Chung-Ang University(Economic Research Institute)


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Title A strategic assisted buyback scheme of North Korean debt
Similar Titles
Material Type Articles
Author(English)

Lee, Shi-Yong

Publisher

[Seoul]:Chung-Ang University(Economic Research Institute)

Date 1998-12
Journal Title; Vol./Issue Journal of Economic Development:vol. 23(no. 2)
Subject Country North Korea(Asia and Pacific)
South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Economic Conditions
Holding Chung-Ang University

Abstract

This paper considers a strategic assisted buyback scheme that could result in a large benefits for both North and South Koreas at a relatively small cost. We claim that the implementation of this scheme by the South could lead to large benefits in the form of foreign capital inflowing into North Korea. Hence, the assisted buyback scheme can be mutually beneficial under a certain condition. The probability of collapse of the current North Korean regime that supports the mutually beneficial buyback tends to expand as the North Korea’s benefit-cost from reforms expands. Furthermore, as the probability of collapse increases, the probability of reform success increases. This indicates that crises may be necessary to induce the North to undertake reforms.