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Western Aid: The Missing Link for North Korea's Economic Revival?

31 Pages Posted: 15 Mar 2012  

Nicholas Eberstadt

American Enterprise Institute (AEI)

Date Written: April 2011


In the months and years ahead, it is plausible, perhaps even likely, that the issue of renewed Western economic assistance for the DPRK, or North Korea, will return once again to policymakers‘ agendas. We should therefore ask: Could major inflows of Western aid lead to an economic revitalization of the DPRK? Could they even be the key to jump-starting the North Korean economy? The US provided massive economic assistance to South Korea after the Korean War, and subsequently entered into a sustained spurt of dazzling growth that transformed the country into an affluent and highly productive society. Could massive Western aid spark a corresponding of transformation for the DPRK?

This paper will address these questions by examining a number of separate but related issues: 1) the record of North Korea‘s economic performance in recent decades; 2) the relationship between DPRK policies and practices and the country‘s economic performance; 3) the international record of Western aid‘s influence on economic growth and development; 4) the rationale or logic behind current DPRK policies and practices bearing on economic performance; 5) the history of US aid to, and economic development in, South Korea; and 6) some of the prerequisites for sustained economic growth (and aid effectiveness) for the DPRK.

Keywords: Aid Selectivity, "Cultural and Ideological Infiltration", Development Assistance, Economic Assistance, Economic Development, Famine, Humanitarian Assistance, "Military-First Politics", North Korea, Security Assistance, South Korea

JEL Classification: O16, O47, O53, P21, P26, P27, P31, P33, P37

Suggested Citation

Eberstadt, Nicholas, Western Aid: The Missing Link for North Korea's Economic Revival? (April 2011). Available at SSRN: or

Nicholas Eberstadt (Contact Author)

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

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