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With the announcement of North Korea's Kim Jong II's death on Monday, many business and world leaders are trying to figure out what will happen with the historically volatile country. Although the US places strict restrictions on how US businesses can interact with North Korea, other countries are much more liberal and have created many opportunities for their businesses to profit from relations with North Korea. South Korea has created an economic development zone while China allows businesses to export many products that other countries prohibit.
North Korea shares a border with South Korea, but that is where their similarities end. As a centrally planned economy, their economy is primarily agriculture and heavy industry with their GDP per capita at only $1,000 while South Korea's economy is only 2% agriculture and sports a GDP per captia of $20,000. Despite these differences, the two countries have been working together on business projects that benefit both countries. The outcome of these endeavors is the Kaesong Industrial Zone. This zone allows "123 South Korean firms to use inexpensive and skilled labour provided by more than 48,000 North Koreans to produce products for the Korean market and beyond." Proponents of the zone are hoping that the shift in leadership will not affect the zone and are working on ways to expand the complex.
North Korea has strained relationships with much of the developed world and many have restrictions on the export of products that can be used by the military (ex. computers) to North Korea. Luckily for small businesses, many of the typical rules that would restrict business in other countries are not enforced in China. Business leaders have recognized this opportunity and many are starting or expanding into North Korea and finding much success.
North Korea is in an interesting position where they have access to many resources that could improve their economy, but these resources are not utilized as a result of poor central management. North Korea has a "dedicated and inexpensive workforce, and ample natural resources" that can only be unlocked through foreign development aid. This initial economic push has the potential to improve North Korea's economy to the point where more international companies would be willing to invest in the country. This development process is dependent on Kim Jong Eun's ability to open the country's borders and implement new, market-oriented business practices.
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