North Korea after the nuclear crisis: the future of the economic reforms

A few years ago North Korea took the first steps to reform its economic system. These reforms have been characterised by the introduction of some basic monetisation into the economy and reduction of the role of government in setting prices and controlling the distribution system. The changes in North Korea's economic management and operational measures showed similarities to the processes other Asian transformation economies had gone through earlier. On the other hand the reforms may be seen as weak and insubstantial. After the nuclear crisis it must be asked whether North Korea has turned back into political isolation. A donor-based survival strategy, namely a combination of military threats and political advances to lure aid, and maybe even investment, to the country, was reactivated by the North Korean regime. Under the Six-Party Talks Agreement in February 2007 North Korea secured economic, energy and humanitarian assistance on a large scale. Therefore reversion or a slow-down of the reforms has to be feared.