Initial Conditions, Economic Performance, and Reform Prospects in North Korea

Abstract

This study aims to predict the possible changes in the North Korean economic system by examining 27 countries that have experienced economic transition since 1990. This study divides the 27 transition countries into three groups (i.e., outstanding, fine, and poor transition) through discriminant analysis based on the outcomes of economic reforms over the past two decades. The discriminant analysis reveals that North Korea can be classified into the poor transition group and is likely to follow the pattern of the Commonwealth of Independent States. Pyongyang must realize that transition from its rigid socialist economy to a market economy is the only way to escape from poverty.