Under the leadership of Kim Jong-un, the DPRK’s economy has quietly progressed in ways that would have been unthinkable during the rule of his father. The young leader is clearly a reformer as early forays into an economic model that strives for Deng Xiaoping style market socialism with Korean characteristics indicates. Moreover, whilst China seeks to promulgate win-win Belt and Road connectivity in the DPRK after a final settlement to the current peace process, Donald Trump is also keenly aware of the immense economic potential of the DPRK and what that could mean for American investors.
Yesterday, Donald Trump took to Twitter and announced that later in February, he will meet Kim Jong-un in Hanoi. Trump also stated the following:
“North Korea, under the leadership of Kim Jong Un, will become a great Economic Powerhouse. He may surprise some but he won’t surprise me, because I have gotten to know him & fully understand how capable he is. North Korea will become a different kind of Rocket – an Economic one!”
North Korea, under the leadership of Kim Jong Un, will become a great Economic Powerhouse. He may surprise some but he won’t surprise me, because I have gotten to know him & fully understand how capable he is. North Korea will become a different kind of Rocket – an Economic one!
— Donald J. Trump (@realDonaldTrump) February 9, 2019
In this sense, Donald Trump knows about the DPRK’s potential what few outside of the region realise.
There are many counter-intuitive advantages to a nation with an educated and vibrant workforce modernising its industry later than many other nations of a similar size. By the late 19th and early 20th century, German industry was in many respects far more advanced than its British, French or Belgian counterparts in spite of Germany only becoming a united nation long after the industrial revolutions in the aforementioned nations.
In the 20th century, Japan, China and South Korea’s industrial revolution reaped the benefits of learning from the mistakes of others and avoiding them when working on the full-scale modernisation of their respective economies. Today, while the DPRK (North Korea) has had a domestically significant industrial base for decades, much of its technology lags behind its neighbours. This short term disadvantage could however be turned into a long term benefit depending on the steps the government takes to modernise the nation’s industrial infrastructure.
Under the leadership of Kim Jong-un, the DPRK’s generally under-reported economic expansion, infrastructural boom and improvements to social infrastructure have made it clear that the country’s young leader has pursued reformist measures in the domestic sphere even before embarking on an historic peace process with South Korea and the United States. In spite of sanctions, the DPRK economy has widely expanded in recent years and the medium term goal of lifting sanctions in-line with the peace process has lead to Kim thinking about the next steps that should be taken to improve the material condition of the people.
One of the biggest breakthroughs in industry in the last decade has been the increased automation of factories through the use of robotics informed by artificial intelligence (AI). China is fast becoming a pioneer in both as the Made in China 2025 drive along with President Xi Jinping’s desire to pivot the country’s industrial base towards AI and away from manual labour looks to open up new avenues of entrepreneurialism as part of the wider Created in China project.
Crucially, unlike in neo-liberal economic systems where an increase in robotics tends to lead to unemployment in otherwise well paid industrial workforces, under the Chinese market-socialist model, the profits generated by the human hand or by a robotic hand will ultimately be re-invested into the same sources, namely public infrastructure, housing, education, health, culture and further industrial research and development.
In this respect, the Chinese model is well-equipped not only to effectively manage the coming AI/robotics revolution in industry but it is able to rapidly take advantage of this by opening up new opportunities for a workforce whose future vocations will be aided by the profits generated by machines. As Kim Jong-un has already introduced some rudimentary economic reforms which hint at an early stage pivot towards a Juche version of the Chinese Market Socialist model, it is only natural that Kim should look to the robotics/AI revolution as a means of modernising the DPRK’s industrial infrastructure and in so doing, pave the way for a radically different economic future for his nation.
Last year, during a tour of a factory in Sinuiju near the Chinese border, Kim Jong-un stated,
“It is important to completely eliminate manual labour and modernise production processes”
The clear implication behind this statement is that Kim looks to emulate China’s forward looking automated drive and duplicated it in his own nation. Seeing as the DPRK has a much smaller population than China, it is now conceivable that over the next decade, the DPRK’s industrial economy could become among the most highly automated in the world.
Without having to gradually modernise the country’s industrial infrastructure, the leadership in Pyongyang can instead set an agenda for a wholesale change in the country’s industrial development, one which aims at fully automating all existing and future factories based on the latest, most sustainable technologies. As a revitalised partnership with China looks set to expand as the current peace process continues, there is every possibility that the use of Chinese technology combined with home-grown research could help to make the DPRK a future economic pioneer – thus representing a radical departure from the current state of affairs where North Korean industry tends to lack the technological innovations present in South Korea, China and Japan.
The transformation of the DPRK’s economy will certainly not happen overnight, but by indicating a forward looking policy of modernisation through total automation, the DPRK can in the medium term, reap the benefits of being catapulted into the economic future through bypassing the stages of industrial development in which it has been left behind in the last several decades. By taking a proverbial great leap forward in respect of automation and artificial intelligence, the DPRK may soon be at the cusp of a new industrial revolution that will not only equal but potentially surpass that of nations which are today at the forefront of industrial technology and innovation.
As both China and the US President realise what the DPRK economy is capable of under the proper conditions of economic openness in a post-sanctions environment, Kim Jong-un may soon find himself at the centre of a geo-economic “bidding war” in respect of signing lucrative development contracts incorporating billions worth of foreign direct investment.
Crucially, it must be remembered that the US and China are the two global economies most able to readily fulfil such pledges for foreign direct investment into the DPRK. Because of this, Kim must privately decide whether he wants to take advantage of a Chinese partnership that offers the experience of imparting the lessons of its own rapid economic development since 1978, to a DPRK that almost certainly stands on the cusp of a similarly transformative economic era for the Korean people. Alternative, Kim could follow the model of South Korea and align a post-sanctions DPRK economy with a US style model of development with Korean characteristics. In many ways the best of all possible paths to DPRK prosperity would be for Kim to expand his Chinese partnership whilst simultaneously welcoming foreign direct investment from the US and its traditional partners, including South Korea.
Such a balancing act will not be easy given America’s proclivity to view economic relations through the prism of a zero-sum mentality. That being said, just as Kim is currently balancing his national interests, those of his traditional partners and those of his new partners in the context of the peace process, so too is there every possibility that he will be able to balance the various international engines that seek to boost the DPRK ‘economic rocket’ that as Donald Trump correctly predicted, will soon be taking off in a substantial way.