Korea after Kim Jong-Il.

Korea after Kim Jong-IL Marcus Noland Institute for International Economics: Washington, DC, 2004, 87pp., index.

Korea after Kim Jong-Il is in many ways an unusual book. Noland's work is prospective because Kim Jong-Il still runs North Korea. Although the 'Korea' of the book's title includes South Korea, its focus is on economic decline and other likely sources of regime change in North Korea, one of the world's most isolated regimes. Its polity, economy, and society are unlike any other. And, unlike many subjects of economic and political analysis, what happens there matters. North Korea manufactures missiles, is developing nuclear weapons capabilities, and is a reputed rogue state.

Noland begins by examining what is meant by 'political change', introduces taxonomy of revolution, and concludes that North Korea ... meets the prerequisites of a pre-revolutionary polity' (p. 9). He cites many predictions of regime collapse when Kim Jong-Il assumed power after his father, Kim Il-Sung, died in 1994. Since these 'collapsist' predictions were wrong, what is needed is a theory of regime change and '... the empirical modeling of its empirical drivers' (p. 19). These are provided in the next part of Korea after Kim.

North Korea is one of the 42 countries that have suffered major economic decline since 1960--defined as a drop of more than 25% in per capita GDP during any 12-year period. Noland uses three data sets, with different definitions of political change, to evaluate the impact of economic performance and other variables likely to influence political stability. Among these are government size, openness to international trade, and origin of the legal system. Regression results show that political stability is a positive function of income level and growth, openness, and small government size, and a negative function of socialist legal origins and the share of trade taxes in total tax revenue. The author then derives cumulative hazard functions predicting the likelihood of regime change over time. When North Korean data are entered into the regressions, Noland finds that '... cumulative hazard rises well above 50 percent ...' in 1990-2002 (p. 38).

Since this result confirms collapsist predictions, which proved wrong, the question remains of why Kim Jong-Il's regime is still in power. One possible reason is that the data are sufficiently bad to confound the relation between political stability and the empirical drivers. Another is that something else is responsible for Kim's longevity.

Noland is aware of the problems that beset international comparisons, including lack of data needed for potential explanatory variables. Also, he notes that political-history indicators, such as duration of previous political cycles, had to be discarded because they failed to yield robust regression results. More important, perhaps, is North Korea's secrecy. Its government provides virtually no information so that the only estimates available are by outsiders and typically cannot be confirmed.

The 'Dear Leader' (Kim Jong-Il) survives because, like his father, he enjoys cult-like status and because there are no civil institutions to compete with him for power. North Korea's extreme isolation also permits a highly authoritarian regime to exercise power with little regard for human rights or international obligations. Kim's oppressive control, reminiscent of Big Brother's in George Orwell's Nineteen Eighty-Four, is complete with forced-labor camps and doublethink. An example of the latter is the ideology of juche ('national self-reliance') for a country that has depended on external subsidies since before the breakup of the Soviet Union and, more recently, on nuclear blackmail to obtain foreign assistance.

The second half of Korea after Kim examines possible future scenarios, which range from 'cooperative engagement' and gradual economic evolution to sudden collapse. These depend mainly on North Korea's relations with the rest of the world, and also on its capacity for internal reform. In 2002, material incentives and market functions were further emphasised. Noland's reading of these policy changes suggests that the best we can expect is 'muddling through', which might however permit gradual integration with the South. Cooperative engagement with South Korea has required substantial aid, which supports the Kim regime and reduces the urgency of reform. Nonetheless, it may be preferable to collapse, when the South would have absorbed large numbers of impoverished North Koreans.

Noland concludes Korea after Kim by expanding on the economic implications for South Korea of the engagement and collapse scenarios. He also examines the South's institutional weaknesses, inherited from an earlier era of 5-year plans and industrial policies. Reform is needed, especially if the South is to be prepared for North Korean collapse, but this is less a matter of what to do than of how to muster the political support needed to implement reforms.

Paul Kuznets

Indiana University, Bloomington, IN, USA