N. Korea`s new economic system could reduce state control

North Korea`s new economic system plan could deny socialist planned economy line maintained since 1961, which will likely bring a huge change in North Korean society.

First, individuals may be able to establish a company. A massive outflow of unnecessary workers from companies will create a massive number of jobless people. Neglecting these people would be a huge risk to North Korean regime. This would necessitate the creation of competitive companies that hire the unemployed. Whether North Korea would allow individuals` establishment of a company is unknown. Yet companies that are state-owned but are actually individual companies are increasing. Individual`s company establishment will be an inevitable trend.

Second, the state`s executive nomination rights on existing companies will shrink and democracy demand will surge. Workers could blame an incompetent executive for lower returns despite their hard work. Then they could demand that they pick competent executive on their own. In the process, centralized executive nomination principle that had maintained North Korean regime could head for a collapse.

On a broad perspective, the function and role of Workers` Party could be drastically reduced. Party secretaries overseeing existing plants and companies have absolute authority on executive nomination. However, if new economic regime starts, administrative workers who have to take responsibility for on-site duties will strengthen. A source on North Korea says administrative workers and laborers are welcoming and supporting the new economic system.

The introduction of new economic system will also facilitate North Korea`s market opening. Since the announcement of economic management improvement measures on June 28 last year, North Korea designated more than 300 pilot companies. Those with outstanding performance were clothing plants and companies that exported minerals through foreign orders. In other words, the integration of foreign capital and North Korea`s cheap labor, or export of North Korea`s underground resources are proving to be the most ideal model for North Korean companies` survival. The acceleration of this trend can lead to increase of companies partnering with foreign companies, which will inevitably lower the barriers of the closed regime that has maintained North Korean society.