Could North Korea become the next Vietnam?

The Doi Moi policy that began in 1986 has spurred growth in Vietnam's economy. Photo: Getty

The summit in June between US President Donald Trump and North Korean leader Kim Jong-un, the first between a North Korean leader and a sitting US president, produced a joint statement in which Kim agreed to complete denuclearization of the Korean Peninsula in exchange for security guarantees from President Trump.

Of course, while some welcome this development, others remind us of North Korea’s long history of broken promises. But even if Mr Kim’s commitment is sincere, and his regime would benefit from such assurances, as well as the end of harsh sanctions, it remains to be seen whether the country will be able to revive its “ailing” economy.

Amazing facts about North Korea

North Korea is one of the few countries in the world where citizens do not pay any taxes, having abolished them in 1974.

Can North Korea learn from Vietnam's experience to develop?

In 1986, Vietnam initiated the doi moi policy, a series of economic reforms were implemented, similar to the reforms carried out by paramount leader Deng Xiaoping in China, to establish a market economy under the leadership of the Communist Party of China.

Over the next 30 years, Vietnam’s economy grew at an average annual GDP growth rate of 6.7%. By 2017, GDP per capita reached $2,340, and exports reached $210 billion, nearly on par with Australia and Brazil. Foreign investors, including South Korean giant Samsung, played a key role in this process.

North Korean leader Kim Jong-un. Photo: AP

At the April 27 inter-Korean summit, Kim Jong-un reportedly expressed interest in Vietnam’s economic reform model. US Secretary of State Mike Pompeo also shared a similar view, stating that North Korea could learn from Vietnam’s path to economic prosperity and normalization of relations with the US.

If North Korea, the world’s most isolated country, decides to pursue this reform path, it will surely face major obstacles. Its centrally planned economy has long been sluggish, with an average growth rate of less than 1% over the past decade and a GDP per capita of just $1,300.

Vietnam's economy achieved an average GDP growth rate of 6.7%/year. Photo: Bloomberg

However, North Korea has a fairly good economic foundation, such as a well-educated workforce, abundant natural resources, and geographical advantages such as a natural harbor. If Pyongyang implements comprehensive market reforms, imitating the “miracle” of the Vietnamese economy, the country could achieve double-digit GDP growth, pushing per capita income to $10,000 within the next 30 years.

10 interesting secrets about North Korea

(Baonghean.vn) - North Korea is currently the focus of the world's attention. It is known as an isolated country and is almost completely cut off from the rest of the world. But is that all? And what do we really know about this special country?

First, North Korea needs to take significant and credible steps toward denuclearization, a prerequisite for sanctions relief. Then, normalizing relations with South Korea and other Asia-Pacific economies, including Japan and the United States, would spur a deeper economic shift.