R&D PHILOSOPHY
Part of the Juche Ideology of North Korea emphasizes the importance of economic self-reliance. Ideology and arms are two of the major pillars for the construction of Kangsung Taeguk ('a strong and big nation'). The third pillar is science, and in 1998, Kim Jong-Il adopted a policy emphasizing science and technology.
The North Korean government promotes the importance of science to citizens of the country by organizing festivals, exhibitions, lectures, contests and conferences. The goal is to raise public awareness of science and technology development and to encourage researchers and technologists to improve their productivity and share their experiences and knowledge with the rest of society.
JUCHE BASED INDUSTRY
In response to economic isolation, in part due to international sanctions, North Korea has been trying to reconstruct and develop its collapsed industrial infrastructure. It implemented a “150-day battle” starting in April 2009, succeeded by a “100-day battle” to rebuild its industries including steel, chemistry and machinery (Jong-seon).
The chart below details the industry, status and evaluation of North Korea’s most prominent industrial development efforts.
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- (Korea Herald) |
Despite reconstruction efforts, North Korea is having difficulty sustaining industrial development due to heavy reliance on coal, high energy intensity, inefficient industrial structure, and a shortage in coal and electricity supply.
THE SINGLE LEAP STRATEGY
North Korea aims to maintain a socialist system while “leapfrogging” to the information age. The objective of this development strategy, called Single Leap, is not just to catch-up, but to yield breakthroughs. North Korean leaders view ICT development as playing a key role in the Single Leap strategy for national development. So after a secret visit to Zhongguancun, (the Silicon Valley of China) in May 2000, Kim Jong-Il ordered his government to actively promote ICT.
The Korean Workers' Party (KWP) oversees ICT development. In December 2001, the Party created a new unit, called Bureau 21, to direct ICT development. It is named after Kim Jong-Il's idea that 'the 21st century is the age of information technology industries.'
KEY ICT INSTITUTIONS
Guided by the Ministries and the Party, six key players are working in the ICT sector:
· The Academy of Sciences established the Department of Computer Science to focus on basic research in ICT.
· Pyongyang Informatics Center (PIC) was founded in 1986 with support from the Pro-North Korean General Association of Korean Residents in Japan and UNDP. PIC runs a training center for IT professionals and its goal is to become the center of development and education for computer systems.
· Korea Computer Center (KCC) was founded in 1990, and is the largest IT company in the DPRK. Its goal is to accomplish computerization in a variety of sectors, to develop technology for programming, and to promote technology exchanges in computing areas. KCC has a company for international businesses, which deals with joint development, subcontract development, software export and technology and expert exchange programs with foreign companies.
· Kim Il Sung University
· Kim Chaek University of Technology
· Pyongyang University of Computer Technology
FOREIGN INVESTMENT
While North Korea has made some strides towards institutionalizing its R&D, the government also supplements their own national efforts by allowing foreign development companies to outsource their operations to North Korea. A great number of these businesses are involved with software development, particularly video games for mobile phones, which are cheap, have excellent growth potential, and a large possible sales base. The KCC often invites companies to take tours of the available computer facilities and working environments in North Korea in order to entice them to actually set up shop.
To further entice foreign business, North Korea has passed two significant laws:
1. The Computer Software Protection Law (2003)- intends to “protect software copyright, promote adherence to copyright provisions of international treaties and promote international cooperation”
2. The Software Industry Law (2004)- “defines principles of software industry development, software writing and distribution, infrastructure building and international cooperation.”
Other laws, including the Foreign Investment Law, Contractual Joint Ventures Law, Joint Ventures Law and Foreign Enterprise Law, contribute to software industry development by allowing tax exemptions and tax reductions for foreign investors (Ko, Jang, and Lee).
The creation of these laws is a major incentive for international business to invest time and money in North Korean offices.
CASE IN POINT
GPI is a Dutch firm that specializes in software and IT outsourcing. After going on a tour of North Korean facilities, Paul Tjia commented that there are a wide range of benefits to working in North Korea.
Pros
· North Korean IT professionals are trained in a wide variety of programming code, development tools, and server architectures.
· Operating costs are much lower in North Korea, compared to China, for example.
Cons
· The relative isolation of North Korea (one can only fly in from Beijing or Moscow)
· The fact that most North Korean professionals can only read English, and cannot speak it (Tjia).
NOSOTEK
Tjia’s company, GPI Consultancy is involved with a variety of outsourcing deals in North Korea. Number One Software Technology (Nosotek) is, according to its own website, “the first Western IT Venture in the DPRK.”
Nosotek was founded in 2007 with assistance from GPI, and in a partnership with the European Business Association, which is an interest group of European business owners in North Korea.
Their motto for potential customers is “Skills, Secrecy, Dedication,” indicating the serious image that they are trying present to the market. To further entice investment, Nosotek also presents a reasonably detailed pricelist with various discounts for different levels of service, including whether a particular client wants the developers to have internet access, or English language skills (www.Nosotek.com). The fact that there needs to be a special qualifier for English Language skills validates Tjia’s observations on the state of the North Korean professional community. Still, the prices are fairly inexpensive, with few extra taxes as well.
Nosotek has received a fair amount of international press. President, Volker Eloesser, in an interview with North Korea Economy Watch states that Nosotek could be ahead of the game in terms of investment in North Korea. Countries like China, he says, have risen to become great economic powers from foreign investment. Foreign IT companies could be a major growth industry, says Eloesser, since North Korea has really only developed its Domestic capabilities (North Korea Economy Watch). It is very likely that North Korea could be on the verge of an IT “revolution,” simply based on how much money is flowing in through businesses like Nosotek. On this subject, Tjia simply states that it is “impossible to estimate” how much money really is entering North Korea in this manner (Campbell and Lim).
IMPLICATIONS
There is no lack of willingness to embrace science and investigate the forces of nature, however many accomplishments are attributed to Kim Jong-il, and are seen as only having been possible thanks to his ideas and vision. The scientists and researchers are recognized and celebrated by the government for their work, but as demonstrated after the development of Juche Iron, the cult of personality directs the ultimate credit to ‘Dear Leader.’
The laws that North Korea has passed concerning technology are a significant gesture because they send a message to foreign companies that North Korea will abide by common Western business practices. This shows that the country is interested in attracting foreign investment in its software industry.
The laws that North Korea has passed concerning technology are a significant gesture because they send a message to foreign companies that North Korea will abide by common Western business practices. This shows that the country is interested in attracting foreign investment in its software industry.
Kim Jong-Il and North Korean leaders seem to understand the value of knowledge based industries. Interestingly they are striving to develop and promote these industries while resisting the shift towards becoming an information society.
Contributions:
Alejandra Bustamante
-Research
Geoff Blizard
-Research
Geoff Blizard
Sections: Foreign Investment, Case In Point, Nosotek
-Research and Analysis
Mariam Samsoudine
Sections: R&D Philosophy, Juche Based Industry, The Single Leap Strategy, Key ICT Institutions, Implications
-Research, Analysis, Webmaster, Editing
Sources:
“Kim Bowled for Murdoch's Dollars With Korean Games” Sept 7, 2010. http://www.bloomberg.com/news/2010-09-06/kim-jong-il-bowls-for-murdoch-dollars-with-video-games-made-in-north-korea.html
Ko , Kyungmin, Seungkwon Jang and Heejin Lee, “.kp North Korea,” International Development Research Center. http://www.idrc.ca/en/ev-127149-201-1-DO_TOPIC.html
Tjia, P. North Korea: An upcoming software destination. 2006. http://www.gpic.nl/IT_in_NKorea.pdf
Kim Jong-seon. The Korea Herald “[R&D Policy in Korea (32)] Can North Korea sustain industrial growth?” August 18, 2010. http://www.koreaherald.com/national/Detail.jsp?newsMLId=20100818000677
North Korea Economy Watch. Interview with Volker Eloesser, President of Nosotek JV Company in North Korea. 2008. http://www.nkeconwatch.com/2008/07/01/interview-with-president-of-nosotek-jv-company-in-dprk/.
Nosotek Home Page. http://www.nosotek.com/Home.html
