Top Stories
Top Stories
Asia Politics

North Korea may choose to follow Vietnam's economic model as it looks to open up

Key Points
  • As Hanoi prepares to host the second U.S.-North Korea summit later this month, experts say North Korea may be gearing up to study Vietnam's model of economic development.
  • Vietnam's Foreign Minister Pham Binh Minh went to Pyongyang on Tuesday following North Korean Foreign Minister Ri Yong Ho's visit to Hanoi last year.
  • Vietnam's ability to retain one-party rule, strict censorship, minimal dissent and a top-down system of control after integrating into the global economy is seen as an attractive prospect for the North.
North Korean leader Kim Jong Un visits a Samjiyon County farm in this undated photo released by North Korea's Korean Central News Agency. 
KCNA | Reuters 

As North Korea signals a willingness to open up its highly centralized, socialist economy, Vietnam's model of development is being widely suggested as a blueprint for Pyongyang to emulate.

Hanoi's ability to retain one-party rule, strict censorship, minimal dissent and a top-down system of control after integrating into the global economy is an attractive prospect for North Korea, according to analysts. If Pyongyang were to ever transition into a market economy, it will likely continue to prioritize regime stability — loosening restrictions on areas such as currency and migration could be politically destabilizing for Kim Jong Un's rule.

To gauge lessons for its own future, North Korea has long studied communist governments such as China and Vietnam, countries with state-managed growth that have integrated into the world economy. As Hanoi prepares to host the second U.S.-North Korea summit in late February, experts believe Kim may be more inclined toward Vietnamese-style liberalization.

Vietnam's Foreign Minister Pham Binh Minh traveled to Pyongyang on Tuesday following North Korean Foreign Minister Ri Yong Ho's visit to Hanoi last year. That trip was reportedly aimed at studying Vietnam's reforms, according to Yonhap News Agency. Such visits hark back to earlier years such as 2012, when a North Korean delegation visited the Vietnamese province of Thai Binh to examine rural development.

VIDEO2:5702:57
Vietnam is a hot favorite as a beneficiary of the US-China trade war, says Bank of Singapore

Just last month, Vietnam's parliamentary chairwoman Nguyen Thi Kim Ngan said her country was "willing to share an economic solution and know-how with North Korea," reported South Korean newspaper Maeil Business at the time. Washington is in favor of the idea — U.S. Secretary of State Mike Pompeo said last July that Kim could enjoy an economic miracle akin to Vietnam's if he wished.

Comparing similarities

In many ways, modern North Korea is equivalent to Vietnam in the 1980s, experts say. For one, the Communist Party of Vietnam has ruled the state ever since its independence in 1945 just as the Workers' Party of Korea has always governed North Korea.

The two countries "were both under United Nations sanctions, in the case of North Korea, for developing nuclear weapons, and in the case of Vietnam, for occupying a foreign country," the Lowy Institute, an Australian think tank, said in a recent note.

Vietnam's invasion of Cambodia in 1978 effectively isolated it from the world, resulting in Hanoi being denied access to international financial support for nearly a decade. Similarly, Pyongyang has long been deemed a pariah state due to its clandestine weapons program.

North Korea has been willing to experiment with reforms under Kim Jong Un
Bradley Babson
Korea Economic Institute of America

Perhaps the biggest parallel is Pyongyang's desire to reform its economy, just like Hanoi did decades ago, the Lowy Institute note said.

In the late 1980s, Vietnam ended its occupation of Cambodia and embraced free-market reforms known as "do moi." That eventually opened the country up and resulted in its present socialist-oriented economy. Vietnam's frontier market is now one of the world's fastest-growing economies, thanks to an expanding middle class, strong manufacturing sector and young population.

Kim, meanwhile, has promised to improve domestic development since coming to power in late 2011.

"North Korea has been willing to experiment with reforms under Kim Jong Un," said Bradley Babson, who serves on the advisory council of the Korea Economic Institute of America, in a published note on 38North. DPRK is short for Democratic People's Republic of Korea, the North's official title.

In 2014, Kim also introduced measures to reduce farm sizes and allow some production for household use and sale in markets, said Babson, a former chairman of the DPRK Economic Forum at Johns Hopkins University's now-shuttered US-Korea Institute. "Since 2016, these reforms have been expanded and greater emphasis has been placed on more decentralized decision-making," he said.

Since last year, Kim has also embarked on a peace offensive to improve relations with the international community, reflected by his landmark meetings with the presidents of South Korea and the U.S.

VIDEO3:0203:02
Trump-Kim summit has more 'downside risk' this time: UOB
Vietnam's appeal

The Southeast Asian nation's gradual path to development is intrinsically appealing to Kim, Fitch Solutions said in a January report.

Vietnam began receiving assistance from the International Monetary Fund and the World Bank in the 1990s after it began enacting reforms. That was followed by significant foreign investment in the mid-2000s and membership to the World Trade Organization in 2007. Kim is a fan of small-scale reforms and would prefer this slow approach to economic rewards if it ensures political stability, Fitch said.

Vietnam has also maintained "geopolitical flexibility and relationship-building" — two qualities that "are likely to be admired" by Pyongyang, Fitch added. For example, Hanoi enjoys close ties with Washington despite stark ideological differences and decades of hostility during the Vietnam War. The Asian nation has also managed to cultivate ties with many countries, including both Koreas, Russia, Japan and India.

Given their respective emphasis on political stability, China and Singapore have also been touted as potential role models for Pyongyang, but both "have their disadvantages in the eyes of North Korean leader Kim Jong Un," Fitch said. Pyongyang wishes to emphasize its independence from, rather than subordination, to Beijing while Singapore's path may be unsuitable due to its smaller size, Fitch continued.

Of course, any North Korean attempt at liberalization will depend on the progress of ongoing nuclear negotiations. If Kim makes good on his promise to denuclearize, sanctions could be lifted, paving the way for Pyongyang to resume foreign trade.

The lifting of sanctions, coupled with economic reforms and changes in national security policy and international relations, "could help put the North Korean economy on a path of stable growth and economic integration," Babson said.