What is the optimal economic approach necessary to take in order to alleviate the extreme poverty that is taking a toll on North Korea?
Capitalism is probably the first thing we need to introduce to this socialist country. However, many cautions should be taken into consideration when attempting to implement an open market system in North Korea. This is because numerous socialist countries have failed to improve their economies despite adopting such liberal market economy systems. Unlike the extraordinary growth of China, other socialist countries such as Russia, Poland, or Ukraine have yet to show impressive results years after the introduction of capitalism. Moreover, the economic conditions in some countries have even deteriorated after adopting liberal economic policies. After the recognition of such discrepancies, economists have begun to formulate new approach to economic policy, resulting in the development of a compelling theory, ‘Economics of Institutions’.
Economics of Institutions works around the idea that although capitalism should still be the central aim of socialist countries, this economic transition alone cannot succeed without the implementation of both institutional and cultural change. The theory was presented by one of the world’s most renowned economists, Gérard Roland (UC Berkley, US), when he visited the KDI School to give a lecture titled, ‘From Economics of Transition to Economics of Institutions,’ on Feb. 22nd, 2007. Thanks to Professor Roland’s in-depth knowledge and extensive data, the details of his theory were delivered effectively. The lecture ran for 100 minutes, which included an interactive 30 minute Q&A session. A large number of students and faculty showed up, reflecting the audience’s anticipation of the lecture.
Professor Roland, a prominent scholar in the field of Comparison Economics, is also the author of “Transition and Economics: Politics, Markets, and Firms,” which is one of the most widely-used textbooks in American universities today, including Massachusetts Institute of Technology.