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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. Overview. Strategic industries of the future Geo-political context Tourism ROK DPRK ICT ROK DPRK Conclusion. Strategic Industries .

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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 l.jpg

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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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2000

  • World tourism grew 7.4%

  • 698 million international arrivals

  • Receipts of US$476 billion

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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’

Tim Beal: North Korea and the new strategic industries of the future


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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)

Tim Beal: North Korea and the new strategic industries of the future


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ROK in international tourism, 2001

Tim Beal: North Korea and the new strategic industries of the future


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ROK in Asian tourism, 2001

Tim Beal: North Korea and the new strategic industries of the future


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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?

Tim Beal: North Korea and the new strategic industries of the future


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DPRK tourism

  • Paradoxes

  • Politics

  • Kumgangsan

  • Other destinations

  • Prospects and problems

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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Tim Beal: North Korea and the new strategic industries of the future


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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)

Tim Beal: North Korea and the new strategic industries of the future


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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)

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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Destinations

  • Kumgangsan

  • Myohyangsan

  • Paektusan

  • Chilbosan

  • Pyongyang

  • Rajin-Songbong

  • Kaesong

    • Historical attraction

    • Close to Seoul

Tim Beal: North Korea and the new strategic industries of the future


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Problems and prospects

  • Geo-political situation

    • Country image

  • Inadequate infrastructure – electricity, roads, etc.

  • Personnel

  • But…great potential

    • Marvellous scenery

    • ‘unusual destination’

    • Hub of fastest growing tourism market in world

    • Sports – World Cup, Olympics..

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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% of population online, top countries and Asia, 2000

Tim Beal: North Korea and the new strategic industries of the future


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Fig 5: Internet use and wealth, 2000

Tim Beal: North Korea and the new strategic industries of the future


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Fig 6: Growth in Internet users in Asia/Pacific, by country, 1997-2000

Tim Beal: North Korea and the new strategic industries of the future


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Fig 7: E-readiness in major and Asian emerging markets

Tim Beal: North Korea and the new strategic industries of the future


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DPRK?

Tim Beal: North Korea and the new strategic industries of the future


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The sky at night

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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Software

  • DPRK strong point

  • Kim DJ’s 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

Tim Beal: North Korea and the new strategic industries of the future


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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 ?)

Tim Beal: North Korea and the new strategic industries of the future


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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

Tim Beal: North Korea and the new strategic industries of the future


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Watch this space

  • http://www.vuw.ac.nz/~caplabtb/dprk/

Tim Beal: North Korea and the new strategic industries of the future


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