Both of the main strategies that the major powers and international institutions have employed to deal with North Korea—sanctions and engagement—are based on an economic logic that the authors of this rigorous analysis believe to be flawed. Such policies were supposed to work by hurting or helping the general population—but the public’s welfare is of little concern to Pyongyang’s leaders. When punishments or payoffs were narrowed to target the core group of leaders, they found ways of passing the suffering to the people. When carrots were offered along with sticks, they took them without making policy changes. Moreover, both strategies were vulnerable to the lack of coordination among Pyongyang’s negotiating and trading partners. Haggard and Noland substantiate their arguments with empirical data on North Korea’s authoritarian political structure, autarkic policies, opportunistic and often illicit foreign trade, and ability to wring aid and investment not only from China but also from South Korea. They use a survey of Chinese and South Korean firms doing business with North Korea to show that engagement does not increase marketization; it plays into the hands of Pyongyang’s state enterprises. The authors’ analysis provides many reasons to doubt that the enhanced sanctions regime recently put in place will bring North Korea to the negotiating table.
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