North Korea and the new strategic industries of the future: the case of ICT and tourism

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North Korea and the new strategic industries of
the future the case of ICT and tourism

• Tim Beal
• Victoria University of Wellington

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Overview

• Strategic industries of the future
• Geo-political context
• Tourism
• ROK
• DPRK
• ICT
• ROK
• DPRK
• Conclusion

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Strategic Industries
..new motifs for economic growth will be
developed as the nation advances into a
knowledge-based economy.   First,
infrastructure of information and
telecommunication industries will be established,
and new strategic industries of the future, such
as culture and tourism, nurtured. In addition,
industries in general will be transformed into
ones suitable for the knowledge-based economy
ROK Ministry of Finance and Economy, January
2001
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ICT and Tourism

• ICT information and communication central to
  contemporary economies
• New economy
• Tourism?
• Claimed to be NZ largest earner of foreign
  exchange

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Contemporary International tourism

• 11 September events will have unknown and uneven
  impact
• Korea's travel industry is reeling from the
  impact (Korea Herald 20 Sep)
• Chinese tourism has continued to rise
• Nevertheless, tourism has been and probably will
  continue to be major component of global economy

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2000

• World tourism grew 7.4
• 698 million international arrivals
• Receipts of US476 billion

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Geopolitical context

• Collapse of Soviet Union plunged DPRK into
  economic crisis
• GDP halved, lack of electricity, fertilizers,
  spare parts
• Still on US terrorism list
• Despite condemning terrorism
• Effectively excludes it from loans from WB, ADB
  etc.
• Restraints on technology exports to DPRK

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DPRK-ROK relations

• Spirit of Pyongyang summit has faded
• Largely because of Bush administration
• Domestic opposition to Sunshine policy (GNP,
  military?)
• Unwise DPRK strategies
• Should outflank US/GNP via KDJ
• ROK Defence White Paper still describes DPRK as
  main enemy
• US-ROK joint landing exercises

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Current N-S relations

• Talks resumed in September but relations
  overshadowed by terrorism issue
• Kim DJ under great pressure star fading fast?
• Seoul has complied with US pressure
• Eg US has sent extra aircraft to ROK
• 22 Nov - Test of missile able to hit virtually
  anywhere in the North

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Tourism

• ROK is a small player, but
• Tourism is growing importance to ROK
• ROK experience can offer pointers/example to DPRK
• Joint ventures (eg border airport)

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ROK in international tourism, 2001
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ROK in Asian tourism, 2001
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ROK tourism

• Being close to Japan and China tourism could
  become ROK mega industry of future
• Sports events have positive impact
• 2002 World Cup
• Beijing Olympics?

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DPRK tourism

• Paradoxes
• Politics
• Kumgangsan
• Other destinations
• Prospects and problems

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The paradox of DPRK tourism

• DPRK is an industrial economy (45 of GDP) but
  tourism as great a share of foreign earnings as
  Caribbean
• Tourism requires peace but still in state of
  war with major actual and potential sources
• ROK, USA, Japan
• Negative international image
• Derives substantial earnings
• Has huge tourism potential

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The Politics of DPRK tourism

• Tourism originally not commercial but winning
  friends and influencing people
• Example essay competition run by korea-dpr.com

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(No Transcript)
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Politics underlies KGS

• North
• is a noble national project which started and
  has been under way in reflection of the unanimous
  aspiration of all the fellow countrymen after
  national reconciliation and unity and the
  reunification of the country and the wishes of
  the South Koreans to visit Mt. Kumgang (KCNA)

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South

• Both Hyundai and ROK Government have been driven
  by political considerations
• ROK tourists to KGS not just the sightseeing
  but that they could set their foot on the long
  forbidden half of motherland. For students in
  particular, the four-day tour is better than 100
  classroom lectures about their nation and
  history (Korea Herald)

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Sources and destinations

• ROK major source
• Mainly to KGS
• 425,715 Nov 98 Nov 01
• China
• Sinuiju
• Rajin-Sonbong
• Europeans.Aus, NZers

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Destinations

• Kumgangsan
• Myohyangsan
• Paektusan
• Chilbosan
• Pyongyang
• Rajin-Songbong
• Kaesong
• Historical attraction
• Close to Seoul

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Problems and prospects

• Geo-political situation
• Country image
• Inadequate infrastructure electricity, roads,
  etc.
• Personnel
• Butgreat potential
• Marvellous scenery
• unusual destination
• Hub of fastest growing tourism market in world
• Sports World Cup, Olympics..

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ICT

• ROK is one of most highly wired countries in
  world
• Internet in hotel, at airport
• Date on connectivity uncertain but ROK comes out
  well by most surveys

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of population online, top countries and Asia,
2000
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Fig 5 Internet use and wealth, 2000
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Fig 6 Growth in Internet users in Asia/Pacific,
by country, 1997-2000
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Fig 7 E-readiness in major and Asian emerging
markets
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DPRK?
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The sky at night
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ICT in DPRK

• Hampered by
• Economic crisis of 1990s
• US-led sanctions
• Eg Wassenaar Arrangement bans export of 486
  machines and above
• ICT has central place in economic strategy
• Compulsory in all secondary schools
• The North's IT frenzy originates in Kim Jong Il
• Hardware and telecom infrastructure rudimentary

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Computers

• Ministry of Electronic Industry Pyongyang
  factory produces Pentium and Celeron computers
• Best school in North Korea using outdated
  computers
• Moranbong
• Korea Computer Center has 80 Pentiums, 500
  researchers

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Software

• DPRK strong point
• Kim DJs entourage impressed
• Produces own software Korean wp, speech
  recognition, translation
• Joint ventures with ROK, Japanese and Chinese
  companies
• Creates software to order
• Niche in animation

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Internet

• Backbone linking research centres, universities
  and government ministries
• Already? This year?
• International agencies in Pyongyang have
  satellite access
• Silibank just launched
• Shenyang
• DPRK, Chinese and Korean Chinese
• Commercial ISP aimed at foreign business (DPRK
  businesses ?)

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Conclusion

• DPRK is far behind in tourism and ICT
• Both greatly affected by geo-political situation
• Have implications for local political order
• Both are vital to economic rehabilitation and
  growth
• Both have great potential but uncertain whether
  this potential will be realised

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Watch this space

• http//www.vuw.ac.nz/caplabtb/dprk/