Looking for a Crack in the Armor:
North Korea’s Knowledge Economy and
IT as an Area for Growth
by
Geoff Blizard and Mariam Samsoudine
Global Knowledge Newspeak Consulting Alliance
November 2010
ABSTRACT
This report examines North Korea as a reverse case of knowledge development and some potential avenues for growth through increased international interaction in selected sectors. Due to the isolated nature of the DPRK, we first use the most publicized and open event in the country, the yearly Arirang festival, as a way to examine and gain a better understanding of the current cultural context and political situation. When combined and contrasted with what is generally known about North Korea, the messages of propaganda presented in Arirang from year to year, and the feat of organizing the games themselves, presents the challenges and limitations of North Korea’s knowledge economy, but also indicate some potential areas where the country may be able to make a shift and open its borders to people and information. The most promising area is in the information technology sector, where the North Korean government has already made strides to encourage development and innovation. North Korea has invested a great deal of time and energy into attracting foreign investors in all fields, but especially in modern ICT development, including infrastructure. This may be precipitated by a foreseeable transition in leadership with the succession of Kim Jong-un in the near future. The question, however, is how modern investment fits into North Korea’s aggressively centralized hierarchy and protectionist worldview. Facilitating North Korea’s own development efforts of ICTs may be an indirect way to create the conditions and infrastructure needed for increased flows of information and improving North Korea’s knowledge economy.
This paper is prepared for presentation at the GKE Workshop “Case Studies in Knowledge Development” organized by the United Nations Economic and Social Council (ECOSOC) to be held in Washington DC, November 29, 2010. The findings, interpretations, and conclusions expressed in this paper are those of the authors from the firm Global Knowledge Newspeak Consulting Alliance, and do not necessarily represent the views of ECOSOC, the UN, or the Member States they represent.
North Korea is one of the most reclusive and least understood countries in the world. In an era of globalization, where people and countries are increasingly interacting and sharing knowledge internationally, the Democratic People’s Republic of Korea (DPRK) is the antithesis of a growing knowledge economy. The North Korean government’s deliberate mission to define national culture by monopolizing information flows makes it the perfect case study on “what not to do” in order to become a thriving information society. Chapter 1 will examine how this is effectuated through the Arirang games, and how national ideology challenges successful interaction with the international community in politics and business. It will also present the shared heritage with South Korea and IT as areas where North Korea shows the most potential and willingness to progress. Chapter 2 examines the environment for foreign investment, and presents the challenges and successes resulting from the paradox of maintaining North Korean ideology while allowing foreign investment and development of information communication technologies. Chapter 3 summarizes the recommendations made in each chapter, and directed to ECOSOC for improving North Korea’s knowledge economy.
Chapter 1 by Mariam Samsoudine
Arirang: Mass Mind in North Korea’s Mass Games
I. Introduction
The quintessential manifestation of North Korea’s efforts to physically and mentally control, homogenize, and indoctrinate its citizens are the mass gymnastics games, Arirang, organized and directed by the government. The Arirang Festival is an ideal event through which to examine the case of North Korea, both because of its intentional and implied messages throughout the program, and also due to the underlying aspects which make such a spectacle possible in the first place. It is also one of the rare occasions for which the country opens its doors to tourism, and allows more open documentation by foreign press and journalists. For the purpose of gaining insight into North Korea, Arirang can be likened to the annual State of the Union Address given by the President of the United States, but through artistic expression and sport instead of speech, and expressing the way the North Korean government desires things to be instead of the actual reality of things. In this chapter we use the Arirang games to examine how the North Korean government shapes nationalism, uses sports as a homogenizing mechanism, invents culture and history, and controls information directed at the North Korean citizenry, tourists, and foreign audiences through 1) the history 2) the production and 3) the messages in the context of the four acts of the Arirang Festival. Finally we discuss the overall affects to North Korea’s knowledge economy, and how the games shed light on few sectors where there is headway to be made by the international community.
II. Origins
The idea of "mass games" was originally conceived in Prague by a youth gymnastics movement, called the Sokol, which was officially a non-political institution, but was an effective tool in the development of Czech nationalism (Globe and Mail, 2008, p. T3). Since 1946, North Korea has regularly staged Mass Gymnastics Games (MGG) (Merkel, 2008, p. 304), and it is the only country that continues to stage MGGs on a regular basis. From its inception, the North Korean games have been political in nature (Lee & Bairner, 2009, p. 390), but the last decade has seen them become progressively more grandiose, lavish, and politically charged.
In a talk to organizers of an MGG on April 11, 1987, Kim Jong Il said:
Our MGG is a complex and popular physical culture that consists of a decent ideology, artistic feature and physical technique. Developing an MGG program has a significant meaning in breeding youth people into all-around communist individuals ... In order to become all-around communist individuals, it is essential to have a revolutionary ideological consciousness, versatile knowledge, rich cultural acquirements and physical strength. With regard to this, an MGG plays an important role in making young people acquire such communist characters.
Arirang is the most recent project of extravagant MGGs, and it premiered on April 29, 2002, to celebrate the 90th birthday of the late “Great leader” Kim Il-sung, the 60th birthday of “Dear Leader” Kim Jong-Il, and the 70th anniversary of the establishment of the Korean people’s army (Lee & Bairner, 2009, p. 403). The timing was also strategic, in order to compete for attention with the World Cup in South Korea, and to counter the North’s description as “evil” by George W. Bush (Merkel, 2008, p. 304). This supports the notion that the significance of the games goes beyond physical activity, and anchors them as a cultural and political event. It is also evidence that inflammatory actions and statements from the international community are used by the North Korean government as a source of propaganda directed at its own citizens.
In addition to the political nature of MGGs, the Arirang Festival, so named after a popular Korean folk song about separated lovers ( Globe and Mail, 2008, p. T3), has particularly nationalistic connotations. In a review of the mass games, the DPRK’s political magazine explains the significance of the title saying that “the folk music Arirang is more than just a traditional song. Instead, it should be seen as a symbol of the nation because the folk song Arirang deeply reflects the national feeling and emotions” (as quoted in Lee & Bairner, 2009, p. 403). As a shared piece of heritage with South Korea, it goes beyond the nation-state, and reinforces the idea of nationality amongst all Koreans.
III. Power in Logistics
The Arirang games are held yearly in the 150,000 seat Rungrado May Day Stadium in Pyongyang, from August until October since 2002 to 2005 and 2007 until today. 100,000 schoolchildren, soldiers and amateur athletes perform 90-minute shows, six days a week (MacKinnon, 2009, p. A.14). Preparation for the mass games are estimated to be about 200 million hours (Globe and Mail, 2008, p. T3). They consist of six parts (prelude, four acts, and finale), and each act includes a number of scenes (Lee & Bairner, 2009, p. 304).
The performance is comprised of two distinctive elements. The first is a floorshow by thousands of gymnasts, acrobats, dancers and other performers including: a military tattoo, a martial arts display, groups of waving, smiling children, an aerial ballet by dancers on bungee ropes, rhythmic gymnastics, aerial acrobatics, traditional dancing and military taekwondo routines (Merkel, 2008, p. 304).
The second is the backdrop, comprised of 20,000 schoolchildren filling one side of the stadium and flipping giant cards with precision and speed, so that, like human pixels, they form a gigantic screen flashing picture-quality images and communist slogans, and all synchronized to a massive video and laser light show (Choe, 2005, p. 4).
As a form of social control, the whole process is highly effective. Mobilizing 100,000 people for months of training and performing keeps the population occupied and reinforces the impression of a strong state and a government firmly in control (Watts, 2005, p. 1). And For the thousands of performers it is an honor to be chosen (Merkel, 2008, p. 304) and it is all in the service of national pride, and to honor to Kim Jong Il. Koreans claim the mosaic is the largest work of art ever created. A schoolgirl in training for the games points out in the 2003 British documentary A State of Mind, that over months of practices, of up to 10 hours a day, "group power develops and individualism disappears completely." (as quoted in The Globe and Mail, 2008, p. T3). This denotes the view that the purpose of the individual is solely to contribute to the collective interest.
IV. Ideology: In Four Acts
The performance embraces a range of political propaganda, and nationalism is the underlying theme throughout. In addition, the idolization of the late Kim-Il-sung and the promotion of the party’s ideology frequently appear during the show. These are the same messages North Koreans are taught from childhood, since the state was founded in 1948.
i. Act 1: A Nation Looking Backwards
The first act represents a brief history of the Korean nation that includes the difficulties it has faced, and focuses on how the people have addressed threats from foreign powers. It also glorifies the role of the late Kim Il-sung in keeping the nation safe, by having single-handedly, saved the country from Japanese colonialism and American imperialism, and establishing the sovereign state against its enemies. Now Kim Jong-Il, is building North Korea into a force that is inspiring fear and awe in the outside world (MacKinnon, 2009, p. A.14). The primary aim of this act is to engender nationalistic sentiments and reinforce the cult of personality, through a historical perspective.
Some of the symbolism may be lost on foreign spectators, but messages are constantly flowing through North-Korean Communist iconography, such as when the sun rises - this means Kim Il Sung; when a gun is shown - it is the gun which Kim Il Sung gave to his Son Kim Jong Il; a snowy mountain with a lake - is Mount Paektu where Kim Jong Il is said to have been born in a log cabin during the fight against Japanese oppression, whereas in actual fact he was born in the Soviet Union, in complete safety.
The color purple means Kim Il Sung, and the flower Kimilsungia is a lilac orchid named after the Great Leader by the Indonesian President Sukarno in 1965. Red means Kim Jong Il, as Kimjongilia, a red begonia was created by a Japanese horticulturist on the occasion of Dear Leader's 46th birthday (G, 2005, p. 20).
Act one demonstrates a trend in North Korea of a shift back towards an aesthetic model of culture. The DPRK has come to pay greater attention to its history and has begun to excavate its cultural traditions and artifacts. It has published various texts related to Korean ancient history, excavated the tomb of Dankun, a mythical founding father of the nation during this period, and revived various traditional rituals and customs such as the ways to celebrate traditional holy days (Lee & Bairner, 2009, p. 394). This effort to restore cultural and historical conventions in an attempt to underpin national consciousness appears to be part of a larger process: that of using the past to create a politically forged culture.
ii. Act 2: Military Might
The second act portrays militarism in North Korea. Sungun (army-centered) policy is fundamental to the DPRK’s political doctrine and emphasizes that the armed forces are the foundation of the communist state. The existing army is 1.1 million people large, and most of the monuments in Pyongyang are linked in some way to war or self-sacrifice. This act of Arirang features a military drill and parade with a backdrop of guns, missiles and other images highlighting the country's perceived achievements at building a socialist utopia (Globe and Mail, 2008, p. T.3). It also aims to highlight the cooperative relationship between the soldiers and the people. The Juche philosophy advocates self-reliance, and this includes solidifying international independence through force. This explains why North Korea often favors displays of military might over more diplomatic channels of communication with the international community.
iii. Act 3: Industry and Technology
The third act describes the industrial development of the state, its modernization process and indicates the future of the nation based on the advancement of the DPRK’s state-of-the-art technology.
Technology is clearly a priority in North Korea, as computers are prominently featured in the displays of the Arirang games. They are used to convey a sense of sophistication and modernity in a country otherwise stalled in the Soviet era (Fifield, 2005, p. 6). Political and economic messages are an integral part of the act.
Banners bearing the abbreviation "CNC (computer numerical control)" recently appeared for the first time at Arirang. CNC is generally understood as code for leader Kim Jong-il's son and heir apparent Kim Jong-un, who according to propaganda is leading the country's modernization. The Unification Ministry confirmed that banners with the slogan "The Might of CNC Juche Industry" appeared in the synchronized flash card performance at this year’s 2010 event. The North Korean media use the phrase "achieving CNC production" whenever they need to stress the importance of cutting-edge technology, and Kim Jong-Il has made visiting CNC factories a focus (BBC, 2010, p. 1). Posters were hung in Pyongyang highlighting computerized technology, and propaganda songs and movies have been disseminated to publicize automated production processes. Even in an area in which North Korea is actively pursuing innovation and progress, the government remains central to the organization of the process. The government has further motives for framing the discourse on technology, as it is also using it to justify the hereditary transfer of power (BBC, 2010, p. 1). This can be seen as a way in which the government is using technology, innovation, and the games simultaneously to lay the foundations for extending the cult of personality to the heir. In turn, Kim Jong-un is expected to lead the country’s transition toward embracing new technology, such as cell phones.
iv. Act 4: Reunification
The fourth act and the finale concentrate on a political message regarding the reunification of the Korean peninsula. This depicts the nation’s prosperity in the future as dependent on unification.
The issue of reunification played a major role in the 2005 show, when an unprecedented number of South Koreans traveled to attend the games marking the 60th anniversary of North Korea's ruling Workers' Party. The mass games were designed to evoke nostalgia and emotion in the South Koreans. The program filled with sentimental tunes and operatic skits about separated families reaching for one another across barbed wire. Participants held up colored cards creating a montage of South and North Korean children, while chanting ‘How much longer do we have to be split due to foreign forces?’ Another segment featured the ‘reunification train,’ which is a reference to a new railway link across the demilitarized zone (Merkel, 2008, p. 305). The finale used a backdrop of doves with the message "The last wish of the father is reunification of the fatherland" (Demick, 2005, p. D.5). This displays the nature of individual citizens’ relationship to the state, where the state, represented by Kim Il-sung and Kim Jong-Il, is the father, and where people are the children.
V. Concluding Analysis
A nation's development is commonly described in terms of progress along criteria such as moving from tradition towards modernity, agrarian versus industrial society, monarchy versus representative government, and fluidity of borders to people and information. According to these criteria, North Korea is failing to develop. Rather it seems stuck in the past, turned inward, and facing back towards history in looking for its direction for the future.
Both the cultural messages and physical practices involved in the Arirang function as a ways of maintaining the DPRK’s political system. Thus, North Korean nationalist totalitarian socialism is communicated to the people. The mass games exemplify the nature of the DPRK as a country where doctrine and dogma, controlled by the government, determine what knowledge should be known, and what information should be excluded from society.
North Korea likes to present itself as an unchanging place, a ‘socialist workers' paradise’ where the challenges have been solved by the supernatural brilliance of their leaders (Rogers, 2009, p. 3). North Korea’s implicit and explicit discourse is proof in itself, that despite its emphasis on weapons and building a physically strong nation, the biggest threat to the authoritarian regime is information, and the perceived threat of outside cultures which allow freedom of expression, thought and action. Evidently, the policies of the North Korean government are aligned with Hofstede's description of culture as fixed and based on values. This would explain why they consider exposure to different cultures to be "sources of intra-personal tension and disruptive of social equilibrium” (Murphy, Peters, & Marginson, 2009, p. 225). This begs the conclusion that increased flows of information from outside the country would show North Korean citizens that a nation can be powerful through means that do not require them to sacrifice personal happiness and independence. They might come to believe that society should exist for the benefit of individual people, who should not be constrained by government interventions or made subordinate to collective interests. A shift towards individualism in the country would be much more conducive to creativity, knowledge-sharing, and innovation.
Inadvertently, the Arirang games also provide clues to achieving progress toward these goals, along with other useful information for the international community. The focus on the cult of personality and applying it to the likely successor, suggests that the idolatry attached to the leaders may diminish as they become further removed from the original “Eternal President” Kim Il-sung. If Simon Marginson’s theory on the psychology of sojourners is applied, perhaps Kim Jong-un’s foreign education will also make him more amenable to mobility, openness and cultural pluralism (Murphy, et al., 2009, Ch. 8). He already holds favorable views of modernization with respect to technology, but time will tell whether this progressive approach will be applied to other sectors as well. For now the military sector remains highly structured and hierarchical, epitomizing North Korea’s top down approach, as opposed to Israel’s flexible collaborative IDF (Senor, Singer, & Council on Foreign, 2009). The North Korean government clearly knows how to effectively manipulate facts and shape public opinion. Therefore antagonistic diplomacy and international sanctions, in addition to depriving those who need food and resources the most, are used by the North Korean government to reinforce its message of nationalism and Juche ideology, perpetuating isolation. The international community would do better to promote interaction, by fostering the existing cultural affinities with neighboring South Korea, and focusing on promoting business ventures in the IT sector.
Chapter 2 by Geoff Blizard
Deal or No Deal: Foreign Investment in North Korea
I. Introduction
North Korea has, with little argument, one of the most repressive and controlling governments in the world today. Kim Jong Il and the other heads of the DPRK have carried on the Juche ideology of their predecessors, and ensured that the state remains the center of all cultural, financial, and industrial transactions within the borders of North Korea. Since the early 2000s, North Korea has made strides towards consolidating its national Research and Development efforts. A great deal of effort has been put into industrial and physical goods and technologies, including new processes for iron and steel production and special trade zones. There has been an even greater effort, however, to advance Information and Communication Technologies, such as mobile phone networks, internet cafes, and fiber optic cable connections. The North Korean government has had a great deal of success in these endeavors, but remains quite isolated, despite its advances in technology. How is it possible that a country can maintain such strongly controlled boundaries between its own people and the outside world, when the most viable strategy for modernization necessitates advancement of ICTs, which almost inherently increase interconnectivity? It would seem that no country in today’s global network society can compete without opening its borders to some degree. In addition to this, how could ICTs and international business positively affect the relationship North Korea and South Korea and its allies, in light of the violent history between the two nations? This question will be addressed primarily through examination of North Korea’s legal support for foreign investment, and significant contemporary business contracts between North Korea and international businesses.
II. Legislation for International Investment
Every country with international business agreements must encounter cultural and national differences; this is a simple, logical fact. North Korea, however, engages with foreign businesses in a rather distinct way, which is illustrated by the form of the business relationships that are formed between the state and would-be investors. These relationships are founded on a variety of laws and regulations which are intended to both provide guarantees to foreign businesses (a must, given North Korea’s unpopular image abroad), and to protect North Korea’s national and cultural sovereignty.
North Korea’s international business regulations have their origins in the 1990s, when the Soviet Union collapsed. Without the guaranteed trade ties that the Communist superpower could provide, North Korea found itself in need of a strategic revision of its policy on international business. This process began with three key laws: the Foreign Investment Law, the Foreign Enterprise Law, and the Joint Venture Law. These three laws form the foundation of every law that has followed in North Korea. Without them, there would be no incentive or reason for any company to invest time and money in a North Korean branch. The primary power of these laws is that they allowed 10% foreign ownership within North Korea, and also loosened the government’s control over employee layoffs (Encyclopedia of the Nations). It should be noted, that the available pool of employees would still be determined by the government, through its allocation of school resources, education incentives, and party loyalty-related benefits. Business deals are allocated based on levels of partnership, essentially, which falls into three separate categories: contractual joint ventures, equity joint ventures, and "foreign enterprises."
Contractual joint ventures are primarily created to solidify business partnerships revolving around tourism, manufacturing, and service sectors. As such, they are involved with low-security areas of the North Korean economy. Because of this, foreign businesses are allowed to use their own personnel in whatever positions they wish. The terms of the partnership between North Korea and the foreign entity are determined by the contract itself, which can even include provisions for the creation of a joint committee for decision making comprised of both foreign and North Korean individuals (Coudert Brothers, 1999). This sort of arrangement is, as stated, intended for physical goods, information technology products are generally treated under a more involved contract.
ICTs are generally covered under what are called equity joint ventures. As the name would suggest, the business arrangement is based on the level of equity invested into the project by both parties. The North Korean and foreign members of the agreement are free to invest as much or little as they wish during the initial phase, which then determines to a certain degree the overall ownership of the project (Coudert Brothers, 1999). While this system of proportional control is perhaps more attractive for foreign investors, it also carries a certain degree of risk. North Korea retains the right to tax EJVs, as well as determining what is an “equitable” amount of registered funding for each venture. This could cause a greater burden to be placed upon foreign businesses, which might be loath to push away the potential North Korean partners by asking them to cover a greater share of the funding. Considering that North Korea is a relatively untouched market, there is also the danger that local authorities might overvalue local contributions, forcing foreign businesses to take up the remainder (Coudert Brothers, 1999). An alternative to a partnership would be to set up as a completely autonomous “foreign enterprise,” as they are defined in the laws of North Korea, but this is not an option for ICT businesses.
Foreign enterprises, of course are solely owned and operated by foreign businesses. They are allowed to hire and fire their own staff, as well as reap profits on whatever products or research that they create. These sorts of arrangements are only allowed, however, in specially designated Economic Zones, and usually are only permitted for businesses dealing with heavy machinery, electronics, consumer goods, chemicals, and infrastructure, although there is an allowance for “other sectors deemed necessary” (Coudert Brothers, 1999). This does not mean that ICT companies could possibly negotiate this sort of contract. The reason for this is simple, and is evident in the restrictions that are placed upon companies that enter into this type of enterprise. North Korea, as stated before, is one of the most restrictive countries in the world when it comes to information flow with foreign nations. Foreign investment and sole control of information networks would be disastrous for the government’s domestic policy regarding education and information access. This is summed up somewhat more diplomatically by the official word of the law, in which projects “whose type of business and mode of management . . . do not conform with or may have a negative impact on the sound ideological emotions of the people and the mode of life" are prohibited (Coudert Brothers, 1999). It is quite clear to see that because Kim Jong Il and his government control the ideological content of North Korean life, they can dictate what is and is not permitted. This, of course, is the right of any sovereign nation; it does not matter whether the state is as liberal as Sweden or as conservative and restrictive as North Korea, businesses must negotiate in order to gain contracts within national borders.
One thing is clear about North Korea’s legislative framework for foreign investment: there is no room for true collaboration between North Korean and foreign developers, particularly in the realm of ICTs. All aspects of ICT investment and development within North Korean borders are controlled and directed by the North Korean government, which leaves literally no space for independent or spontaneous networking between businesses. Although there are various kinds of joint ventures and contracts available for foreign companies interested in ICT development and investment, they are not permitted to create anything that is not approved or controlled by the central government or its research apparatuses. Yet, North Korea is still reaching out to foreign businesses through these contracts. It appears that North Korea is stuck firmly in the “Detroit model” of networking mentality, while attempting to create the framework for modern international business networks on the ground. The “Detroit Model,” as described by Peter Murphy, is a rejection of the market as a force in technology development, and a concentration of research and development control in the centralized hierarchy (Peters, Marginson, Murphy, 2008, p. 30). The primary force for ICT development in North Korea is the Chosun (or Korea) Computer Center, and which dispenses numerous contracts every year. The CCC is a government-funded and operated institution, and serves the interests of the North Korean government, which is not interested in full public access to ICTs, nor is it interested in completely opening the borders to every foreign interest. Ultimately, then, the government is responsible for the direction and tone of research and development in ICTs in North Korea (Ko, Jang, Lee, 2006). Despite this centralized organization, the fact that there is legislation for foreign business to enter into North Korea is quite significant.
III. Contemporary Foreign Investment
The fact that there are laws in place for equitable and legally accountable business transactions is a major step for North Korea’s potential for foreign investment, despite any moral or political compunction that a company’s leadership might feel. It is a relatively untapped market for foreign business, and is actually quite inexpensive for outsourcing projects. Many organizations are keen to gain more access to North Korean markets, especially in ICT products. North Korea, despite its many efforts to modernize its industrial and communications infrastructure, is still relatively “behind,” as compared to other modernized nations. For this reason, the North Korean leadership is very interested in bringing software and communications technology developers into outsourcing contracts. In many cases, even South Korean corporations have entered into distribution agreements in North Korea. Samsung, for example, has been involved in a joint software development project with the Chosun Computer Center since 1999. Two other South Korean firms, Hanabiz.com and Entrac have also entered into similar software distribution agreements with North Korea (Lee, 2005, p. 117).
South Korea is only one investor, however, among a multitude. The Egyptian telecommunications company Orascom received an exclusive mobile phone distribution deal with North Korea in 2008. Orascom reportedly pledged $400 million towards improving network infrastructure throughout the country over the course of the four year contract, starting with Pyongyang itself (Lee Jong-Heon). While the spread of mobile phones and other networking tools can aid in the liberalization of a society, especially one that is so tightly controlled as North Korea, this should not necessarily be taken as a trend towards liberalism. South Korean analysts had quite conservative estimates of the phones’ impact on the population for a number of reasons, first among them being that the mobile phones, much like computers and internet access, will be a privilege for the elite and wealthy among the North Korean population. A large part of this reason is purely through price control: joining the mobile phone service in 2008 would cost about $500, which amounted to about 500 times the average monthly wage for a college graduate in North Korea. In addition to this, the phones cannot make calls outside of the country, much in the same way that North Korea maintains its own Intranet separate from the World Wide Web (Lee Jong-Heon, 2008).
IV. Concluding Analysis
If it is North Korea’s intention to satisfy its citizens’ desire for information and technology with tightly controlled phone and computer networks, then they have failed. Even without any interference from foreign governments, black market cell phones have become a hot item on the black market. Mainly of Chinese origin, the North Korean leadership has been unable to stop the flow of these contraband phones across the border between the two nations. These phones are so valuable to would-be buyers because of the existence of a strong Chinese relay network on the border, which was constructed in 2003. These cell phones are easy to transport and conceal, and most importantly, are completely free from any kind of censoring. Ironically, it appears that one of the reasons that a crackdown on the trade in these cell phones has failed is because North Korean elites need the phones in order to conduct business with Chinese trade partners (MacKinnon, 2005). In light of this problem, Orascom’s exclusive contract in 2008 might be an attempt to wean the North Korean citizenry off of illegal phones onto a government approved alternative. This would make sense, given that North Korea’s international business policy is enacted in an inherently restricted manner – restricted, because while North Korea certainly desires to gain recognition as a modernized state and to collect a great profit from international investment, it cannot risk liberalizing the controls that have been placed upon its populace. Despite this risk, it is in North Korea’s best interest to continue to open its borders to international business, particularly to South Korean business.
South Korea is already one of the major ICT powerhouses in the world, and likely has more investors than just Samsung that are interested in investment in North Korea. North Korea, although it has made some strides in its infrastructure and technological development, there are still a lot of gaps in their national cable networks that would limit the ability of the government to connect the entirety of the population (Ko, Jang, Lee, 2006). If North Korea really wants to advance in the IT world, it needs to build up its infrastructure first, and working with South Korea, or China for that matter, could serve to accelerate that process greatly. Indeed, joint contracts, like the one given to Orascom in 2008, are often the most productive kind of research and development initiatives, since they allow for injection of new perspectives, increased collaboration, and efficient use of resources (Peters, Marginson, Murphy, 2008, p. 263).
It is likely that there will be increasing amounts of investment in North Korea in the future, as word spreads about potential opportunities and projects. It remains to be seen, however, if Kim Jong Il, his successor, and the rest of the North Korean government will attempt to maintain such stringent control over information technology development, even as they attempt to present themselves as reformers and innovators. It is in the best interest of South Korea and its allies, therefore, to convince North Korean leaders that collaboration, rather than confrontation is a more productive approach to their internal development as well as their foreign policy (with the recent artillery strikes on South Korea in mind). To this end, sanctions and diplomatic impositions should be loosened, since they do nothing but give more political power to Kim Jong Il and his subordinates, and diplomatic and business channels should be opened. The more the borders are opened to business, the greater the chance that North Korean citizens will gain a broader opinion of the world.
Chapter 3
Summary of Recommendations
It is our conclusion that the greatest challenge to North Korea’s knowledge economy is the lack of information flows, within the country and with the outside world. North Korea currently lacks the most basic freedoms and infrastructure needed for the successful and durable promotion of creativity and innovation, and the policies of the current regime are in direct opposition with these goals. Therefore it is evident that the international community must capitalize on the areas where North Korea is allowing minimal interaction and cooperation. In an effort to assert independence, strength and economic prosperity, North Korea is promoting business with its IT sector. The more the borders are opened to business, the more opportunities there will be for interaction and information to leak in, and the greater the chance that North Korean citizens will gain a broader opinion of the world. This in turn may set the stage for their own grass roots efforts for progress, and potentially regime change. To this end, we recommend the following:
§ Advising North Korea it is in its best interest to continue to open its borders to international business, particularly with respect to South Korea, because it is already a major player in the ICT sector, and likely has investors that, like Samsung, would be interested in investing in North Korea.
§ North Korea needs help to build up its infrastructure, and this could be achieved and accelerated through working with South Korea, or even China.
§ Promoting even a censored version of the internet, like China’s model, would benefit North Korea economically, and increase information flows.
§ Joint contracts, like the one given to Orascom in 2008, should be encouraged, as they are high yielding R&D initiatives, and allow for injection of new ideas, increased collaboration, and efficient use of resources.
§ Diplomatic and business channels should be opened, because sanctions and diplomatic impositions only give more political fuel to Kim Jong-il and the ruling party over their own population, and increase isolation.
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Chapter 2 Sources
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