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An issue with the study of North Korea is a tendency to treat the country as sui generis and as a consequence ignore insights that can be derived from the experiences of other countries. A couple of years ago I wrote a post on how the burgeoning literature on “the resource curse”—the tendency of countries in which natural resources, particularly oil, gas, and mining, are central to the economy, to exhibit less than stellar economic and political performance, might inform one’s thinking on North Korea’s future. Ariel BenYishay and Pauline Grosjean have an interesting article forthcoming in the Journal of Comparative Economics on this topic that might provide some insight into North Korea’s economic future.
BenYishay and Grosjean examine the role of initial endowments—both institutional and resource—on the post-transition performance of 27 countries in Eastern Europe and the former Soviet Union. They are particularly interested in the role of colonial legacies, examining the influence of the Russian, Ottoman, Austro-Hungarian, and Prussian empires, as well as the role of natural resources. They find that “a large resources sector at the start of transition underperformed other countries in terms of speed and the depth of economic reforms. The effect is particularly strong for privatization, enterprise restructuring, and competition policy.” They uncover some micro-level evidence as well: “Within country, Ottoman and Russian provinces that had a large natural resource sector in 1989 [the start of transition] have a lower share of entrepreneurs and of small and medium sized enterprises today and also experience endemic corruption.”
The implications for North Korea would seem mixed: although it may be politically incorrect to make this observation, if Taiwan and South Korea are examples, then it may be that the institutional legacy of Japanese colonialism may not be so bad. Yet the growing centrality of the mining sector, associated rent-seeking, and personalist leadership all point toward the sort of corrupt, familial resource-financed autocracies evident in parts of Central Asia today, as models for North Korea—even in a “reform” scenario.
