The latest package of U.N. sanctions on North Korea could lead to accelerating economic reforms in the communist nation, an American expert said Monday.
Bradley O. Babson, a former World Bank official with expertise on Korea and Northeast Asia economic cooperation, made the assessment in an article carried by the website 38 North, noting the sanctions’ ban on the North’s exports of mineral resources.
“The resolution could create new incentives to reduce the DPRK’s heavy reliance on coal, iron and other minerals for export earnings. This dependence on unprocessed natural resources has reduced incentives to invest in human resources and value-added manufacturing,” Babson said in the article.
The new sanctions may also create more opportunity for state enterprises and private entrepreneurs to expand the role of market-based economic activity, he said, adding that more flexible labor practices may also allow a greater role for market mechanisms in allocating workers, potentially increasing efficiency and contributing to both domestic demand and international competitiveness in non-sanctioned economic activities.
“Beyond their possible political impact, the sanctions may significantly affect the evolution of North Korea’s economic system, with its current mix of state-controlled and market-influenced components,” the expert said.
“One may expect North Korea to drift toward deeper economic isolation and domestic social distress. But there may be positive impacts on the economic system as well by changing the incentives environment for economic behaviors of both state and non-state actors and motivating an acceleration of economic reforms,” he said. (Yonhap)
