Not everybody would agree, but it seems increasingly likely that Kim Jong Un and his administration (whatever that means) are executing a careful set of market-oriented reforms. These reforms bear some similarities to what the Chinese leadership did in the 1970s, though they are significantly less radical in many regards.
The major ally of the United States in the Asia Paciﬁc, Japan, has undertaken repeated reforms since the end of the Cold War and especially since the collapse of its economic “bubble’ in the early 1990s. These have spanned the country’s electoral, administrative, educational, and security sectors. Although some of these changes have been potentially transformational, many have been largely transitional. Cautious incrementalism has largely won out over bold renewal.
SEOUL – North Korea’s system is failing. The country is facing severe energy constraints, and its economy has been stagnating since 1990, with annual per capita income, estimated at $1,800, amounting to slightly more than 5% of South Korea’s. Meanwhile, a food shortage has left 24 million North Koreans suffering from starvation, and more than 25 of every 1,000 infants die each year, compared to four in South Korea. In order to survive, the world’s most centralized and closed economy will have to open up.
A more dynamic and prosperous North Korea – together with peace and stability on the Korean Peninsula – would serve the interests not only of North Korea itself, but also of neighboring countries and the broader international community. After all, North Korea’s sudden collapse or a military conflict on the peninsula would undermine regional security, while burdening neighboring countries with millions of refugees and hundreds of billions of dollars in reconstruction costs.
After a decade of infatuation, investors have suddenly turned their backs on emerging markets. In the BRIC countries – Brazil, Russia, India and China – growth rates have quickly fallen and current-account balances have deteriorated. The surprise is not that the romance is over but that it could have lasted for so long.
From 2000 to 2008 the world went through one of the greatest commodity and credit booms of all times. Goldman Sachs preached that the BRICs were unstoppable (e.g. Wilson and Purushothaman 2003).
However, Genesis warns that after seven years of plenty, “seven years of famine will come and the famine will ravage the land”. Genesis appears to have described the combined commodity and credit cycle, from which the Brazil, Russia, India and China have benefited more than their due.
If the latest Arab awakening was about jobs and justice, then political reforms, unless accompanied with a levelling of the economic playing field, are unlikely to be sufficient on their own. The latent demographic pressures across the Arab world and the resulting youth unemployment have created an employment challenge that is both real and urgent. During the next decade an estimated 100 million jobs need to be created in the Middle East. The public sector, already bloated and inefficient, is unprepared to meet this employment challenge. Sooner or later, Arab policymakers will have to return to addressing a longstanding development challenge facing the region: economic diversification. In fact, the challenges of demography and diversification are intertwined. Without developing a robust private sector and without reducing the region’s dependence on natural resources, the gains that the Arab world has made in literacy and health cannot be translated into lasting economic prosperity.