Is North Korea finally embracing reforms?

North Korea’s recent agricultural reforms have excited a few observers of the country. Some of the reforms proposed were more drastic than many have expected, and others raised hopes for a more open economy and greater engagement with the international society. However, evidence shows that it might be too early to get excited.

Previously, North Korea’s economy had been strictly in line with the Party’s centralization plan. However, since Kim Jong-Un came into power, he has enacted several economic reforms. The June 28 Measures of 2012 allowed farmers to keep 30% of their production plus any surplus over the quota and downsized the group in charge of a distributed parcel of land from 20 to 4-6 people. In 2014, the May 30 Measures increased the farmers’ portion to 60 percent and introduced a family-based land management system. Farmers can use their portions for free purposes, including selling for cash or storing for future use. In the industrial sector, Kim also enacted the December 1 Measures in 2012 that allowed greater leniency. The newly adopted self-supporting system allows enterprises to plan their own production goals, sales of products and distribution of income. Companies can set the wages for workers according to their contribution and hours of work, although the number of companies subject to the new system is still limited.

The reforms have shown some substantial improvement in agricultural productivity. From 2011 to 2013, North Korea’s nominal GDP per capita increased from 770 to 854 USD. The UN Food and Agriculture Organization reported that crops production also increased by 5% from 2012 to 2013. Although a formal survey of 2014 production has yet to be conducted, Chosun Shinbo, the news agency representing North Korean residents in Japan, reported that the food crop production in 2014 grew by 50 thousand tons from the previous year. Considering the adverse climate condition that hit the country with unusually high temperature and drought, the growth may carry more weight than its nominal values. Both observers and North Korean representatives cite permission of production for individual profit and cooperation with families and friends as the main reasons for greater productivity. Hundai Research Institute of South Korea expected that, if successfully implemented, the reforms would boost the GDP by 7%.

Experts assessed the reforms as Kim’s measure to consolidate power. Andrei Lankov, a historian of North Korea, pointed at the development of an unofficial economy that slips through the government’s control and the distrust towards the Party’s ideology as key threats to the regime. Considering that economic failures and public disillusion with the government have historically precipitated collapse of communist regimes, it is urgent to improve civilian living and recover the impaired legitimacy. Chosun Shinbo reported that the new measures are in line with the “history of adjusting the economic principles and structures to the changing reality.” According to the agency, the North Korean government is aiming at building a flexible collectivism, which allegedly fosters creativity and proactivity under a coherent leadership of the Party.

Meanwhile, there is evidence that questions prospect of the reforms. Corruption is preventing fair distribution of land to households, and the government is taking parts of farmers’ portions away as the fee for facilities and fertilizers. Also, after enacting the reforms, the government reinforced the mobilization of civilians, requiring them to attend more educational sessions and organizational activities. The UNFAO reported that the increase in food crop production failed to improve the food security condition of most households.

Also, it is hard to expect the reforms to have a direct positive impact on diplomacy. While announcing that it will continue to foster a vibrant economy, the North Korean government maintained that it will not give up its nuclear weapons. Especially because North Korea has recently linked its nuclear program and economic development under the name of “dual-development plan,” suspension of the nuclear program might cost the government loss of legitimacy as well.

If the reform proves to be counterproductive in the next few years, it is possible that the government faces even greater discontent. As Lankov and the Hundai Research Institute say, it is important to express support for positive changes at the international level. However, a comprehensive observation of the recent performance requires caution at the same time.