North Korea and Vietnam have a lot in common including their Communist roots and a history of conflict with the US. Could the former learn lessons from the latter’s development?
Vietnamese Prime Minister Nguyen Xuan Phuc has welcomed the US and North Korea’s decision to hold the next Trump-Kim summit in Hanoi. He said it was a reflection of the country’s commitment to security and safety, but also that it is an indicator that “Vietnam’s development model is going in the right direction.”
It was no accident that Vietnam was selected as the host nation. The country in the middle of the 20th century bore striking similarities to the Democratic People’s Republic of Korea (DPRK). Both were staunch Communist countries that engaged in conflicts involving the United States. For a time, they even enjoyed close bilateral relations.
Now, there are major differences. Vietnam drastically changed in the post-war years. The country embraced economic reforms, built stronger relations with the international community, and demilitarised. Eventually, it reaped the rewards. Gross domestic product (GDP) grew from US$6.3 billion in 1989 to US$223.9 billion in 2017.
North Korea, on the other hand, turned inwards, grew hostile to outsiders and pursued an aggressive foreign policy. As a result, it remains isolated and impoverished.
There are significant similarities between Korea now and Vietnam then
The different paths the two countries took after the events of the mid-20th century have resulted in an obvious comparison: for Vietnam then, read North Korea now. The similarities are clear. Vietnam emerged from the conflict having to come to terms with a struggling economy, over-dependence on China, and limited support from the West.
North Korea is in much the same position now that Vietnam was back then. Although data is hard to verify, the Borgen Report claims that almost 40% of its citizens live in extreme poverty. Its annual GDP stands at 2% of South Korea’s. However, just as Vietnam did in the years after the war, North Korea has committed to limited economic reform as well as a willingness to move closer to other countries.
Vietnam’s journey offers lessons for the DPRK
Vietnam applied a two-stage process to economic reforms. First, it liberalised its markets, starting with agriculture. Then it opened up to world markets to invite foreign investment.
That was a move that helped Vietnam gain acceptance to global institutions. The contrast with North Korea’s relentless pursuit of its nuclear ambitions is stark.
Furthermore, Vietnam’s economic reforms and demilitarisation put it in position to join ASEAN in 1995, strike a trade deal with the US in 2000 and join the World Trade Organisation in 2007.
What direction is North Korea going in?
Under Kim, North Korea has committed to some economic reforms. Special Economic Zones have been introduced. Factories expanded their product ranges. GDP grew by 3.9% in 2016 only to take a hit in 2017. Sanctions on the country limit growth potential.
“North Korea is embracing markets to an unprecedented degree, but there are still some key limitations,” explained Andray Abrahamian, an expert on Korea at Stanford University’s Asia Pacific Research Centre.
He added the country must reform its property ownership and land use regulations. North Korea must be far more willing to accept foreign investment. Economic reforms are not being carried out alongside political liberalisation – as was the case in Vietnam.
North Korea is seeking to strengthen its connections with the wider world, just as Vietnam did. This is encouraging; Kim’s meetings with his South Korean and American counterparts broke the mould. Reunification with South Korea remains on the table, and North Korea has been taking advice from German economists.
Stability lies in normalised foreign relations
North Korea’s attempts to achieve growth are laudable. If Kim makes good on comments to focus on the economy in 2019, the country will continue to push forward in this area.
However, there is no easy solution. Kim has not yet outlined any specific policies. Progress depends on far more than merely copying what worked for Vietnam – or any other country.
Vietnam is a relevant starting point, but there are certain things which Vietnam had in its favour which North Korea does not. It lacks agricultural and manufacturing infrastructure. It does not have high numbers of expats who can help foster links with other countries.
Vietnam reached out to the US but at the same time retains close links with China, Japan and India, as well as the rest of Southeast Asia. One challenge for North Korea is to try to emulate that and normalise with countries such as China, Japan, Russia, Japan, South Korea and the US.
“Anchoring economic development and balanced external economic relations in a shared multilateral framework would provide the coherence and stability that North Korea will need to find its new place in the international community,” wrote Bradley Babson, a member of the Advisory Council of the Korea Institute of America.
It took Vietnam decades to find its place in the international community as a major regional player. This could be just the start for North Korea as it embarks on a similar journey. Those with influence in the country could do far worse than study what happened in Vietnam.