Understanding Kim Jong Un’s Economic Policymaking: Tourism as an Industry

This article is not about booking a tour to North Korea.[1] That’s a topic for another day. Rather, this is a study of how articles on tourism in the primary Democratic People’s Republic of Korea (DPRK) economic journals—Kyo’ngje Yo’ngu and Hakpo (the Journal of Kim Il Sung University (Economics))—reflected and possibly played a role in the regime’s thinking about economic policy between 2012 and 2020.[2] A recent government daily editorial endorsing the cabinet’s leading role in the economy called for: “continuously researching, perfecting and applying optimized economic management methods” by “carrying out discussions broadly and in-depth between academia and functionaries on the ground.”[3] This suggests that the ideas being put forward in North Korea’s economic journals carry policy significance and are intended to have a practical impact.

Broadly speaking, these articles on tourism can be separated into two categories: the first, and by far the smaller, was concerned with tourism as an ideological issue; the second was purely practical explorations of how to make tourism successful and, most of all, profitable. Naturally, some articles were a little of both, with authors starting with a nod to ideological orthodoxy and then halfway through casting that off to concentrate on pragmatic approaches.

Background

Between 2012 and 2020, the two aforementioned journals published nearly 60 articles dedicated to tourism. The topics ranged from general discussions about the nature of “socialist tourism” to areas such as hotel service work, tourism advertising, the impact of tourism on the economy and international trends in tourism. This focus went well beyond the South Korean-financed Mt. Kumgang tourist area in Kangwon Province.[4]

Despite the oft-repeated description of North Korea as being isolated and closed to outsiders, tourism was not a new concept to the DPRK when Kim Jong Un assumed power after his father, Kim Jong Il, died in December 2011. The elder Kim had devoted much attention to tourism, especially near the end of his rule, when North Korea signed several agreements with the People’s Republic of China (PRC), easing visa requirements for Chinese tourists, whose numbers had increased to tens of thousands per year.[5] Kim Jong Il himself made on-site inspections to tourist hotels and sites around the country to check on new construction and upgrades to existing facilities.[6] Money was spent on infrastructure improvements, including rail lines to get tourists to various sites, especially in the northeast.[7]

What changed under Kim Jong Un was how tourism became part and parcel of the extensive push for new economic policies. The DPRK introduced its tourism initiative in the midst of researching and testing various economic reform ideas that spanned from incentivized farming and greater autonomy to enterprises to revitalized commercial banks. All of which suggested that tourism was part of Kim’s new economic policies. His first public endorsement of tourism and economic development districts came at the March 2013 party plenum, simultaneously with his broad guidelines on the “economic management methods of our style,” which was code for the aforementioned economic reform initiatives.[8] In the months that followed, North Korea started to actively promote tourism, holding knowledge-sharing conferences and promulgating relevant laws.[9] Eventually, tourism became seen as an “economic activity” in its own right.[10] As such, it required consideration in the context of a full range of economic issues rather than simply as an ornament or ideological-propaganda tool to influence the thinking of foreigners. For that reason, discussions about tourism in the country’s economic journals should be seen as bearing increased policy significance.

Pushing the Envelope

Taken as a whole, the articles on tourism implied ways to probe, and in some cases transform, the boundaries of economic thinking–boundaries that had to be crossed for new ideas and practical approaches to succeed. A few of the articles appeared to bump up against red lines beyond which thinking on tourism could not tread, although some authors seemed determined to tiptoe in that direction regardless. This pattern is consistent with their handling of the range of reforms Kim Jong Un has advocated for from the outset of his rule.

For example, a Hakpo article in 2017, which wrestled with the problem of how to be (or seem) faithful to Marxist economic concepts when applied to tourism, sought to find a safe middle ground. The author went to great pains to explain why the “law of value,” a thorny topic due to it being equated with the market economy, still plays a role in a socialist economy, albeit limited. The author then warned: a “socialist state should correctly assess these characteristics of the law of value and should not show left and right deviations in its use.”[11] This, of course, might well raise the question: If the law of value needed to be watered down in the tourist economy, why not in other sectors as well?

While seemingly focused on the narrow question of tourism, several articles in these journals have implicitly raised wider policy issues—security, foreign policy and resource allocation.[12] All of these were singled out as areas that had to be addressed in fashioning effective tourism policies.

Some of this attention to tourism flowed from Kim Jong Un’s 2013 instructions to establish new economic and tourism zones around the country. This expansion of zones—some of which were already in existence—was directly connected with his efforts to slowly and carefully open the economy to foreign participation and, in the process, to hand localities more responsible for their own development through the cultivation and use of foreign resources. A 2017 article in Kyo’ngje Yo’ngu pressed the point that the tourist zones in particular needed to break free from the considerations driving the development of industrial zones. In effect, it argued that for tourist zones to succeed, they had to march to the beat of a different economic drummer. In industrial zones, according to the author, “the basic purpose of the use of foreign investment is to combine the advanced technologies of other countries with our advantageous potential to achieve world-class competitiveness in industrial products.” The same author pointed out that in a tourism zone, on the other hand, “under the condition that its purpose is tourism service, the use of foreign investment in infrastructure construction, service facility construction, and related industries… is investment in service and thus the result of its use is also service.”[13] Once again, this became another excuse to push against the boundaries of economic thinking on a number of levels.

The DPRK’s economic journals’ discussions on tourism appear to have followed the same pattern as those on new economic concepts in other areas, such as banking. The early articles begin with more limited descriptions of the concept of tourism, for example differentiating “capitalist” from “socialist” tourism. The capitalist form of the tourism industry was portrayed as reflecting greed, where businesses squeeze as much as possible out of tourists in order to feed themselves. Socialist tourism was described as being more interested in improving the lives of the tourists.[14] Over time, this distinction was blurred and, in most cases, dropped entirely.

The next phase ushered in articles that began to tackle new ideas. It was not uncommon for these pieces to begin by praising the orthodox economic theory before moving beyond—in some cases, considerably beyond—the limits. Finally, in step with the tenor of the times, bolder articles appeared that advocated for ideas that only a few years before would have been impossible to publish.

Exploring New Boundaries

By 2017, by which time many of Kim’s economic reforms had found their footing, the discussions on tourism were more clearly exploring new concepts that pushed against the boundaries of economic thinking in step with the developments in other fields. Increasingly, journal articles portrayed tourism as part of a global industry, making the case that one had to keep up with and surpass overseas trends to capture a share of the market. There was no such thing as Juche tourism or “tourism in our style.” Some articles unabashedly admitted that the country would not attract large numbers of foreign tourists if it could not compete on an international scale in accordance with global standards.[15]

To do that, a variety of steps were presented as being necessary, ranging from the removal or easing of legal barriers, such as visa requirements and eliminating some forms of tourist taxes, to improving the quality of goods sold to tourists and significantly upgrading the tourism infrastructure such as transportation, guides, hotels and sewage.[16] In short, tourism was being described in what previously would have been seen as capitalist terms, and there was no reticence about emphasizing that it had to operate by the golden rule of capitalism—supply and demand.[17]

Increasingly, articles revolved around the issue of how to estimate and increase demand and how to balance demand with an adequate supply that would give tourists value for their money. The bottom line was not about fulfilling a central plan—though the idea of sticking to the “plan” was given lip service—but how to make the tourists happy. It was argued that to achieve this, there had to be an understanding that tourists operated outside of planning; that not all tourists were the same, and that age, gender, physical condition and particular interests all played a part and could, implicitly, confound planning. For example, younger tourists might enjoy the beach more than older ones and could thus be charged more.[18]

None of these steps would be without opposition, though that was never explicitly noted. Visa-free entry would make the job of the security service more difficult. Dropping the tourist taxes would deprive the state of income. Accepting that the tourism economy would not function according to state plans but almost entirely to supply and demand conceivably set a bad example for other sectors of the economy. However, it is possible that letting tourism economics lead the way was part of the plan. For tourism, money had to be spent to make money. One author went so far as to suggest that profits from the tourist business should not go to the state but back into development of the tourism sector. It was understood this would not be a moneymaking venture, at least not at first.[19]

By 2018—when North Korea shifted from weapons tests to diplomatic engagement and from the byungjin policy of parallel economic and nuclear development to a policy of focusing on the economy—journal articles had already started portraying the tourism economy as a separate entity and implying that it had to grow and adjust to different factors in accordance with modified or altogether separate rules from other sectors.[20] To some extent, this put tourism on the leading edge of new economic thinking. Supply and demand were paramount forces, price and advertising were key components and service to the consumer was the sine qua non.

Interestingly, one article argued that the top socioeconomic factor affecting tourism was good relations with other countries, as bad relations were bad for tourism.[21] The same article pointed out that increases in tourism were in part reliant on the availability of more leisure or vacation time and called for “research on international tourism markets in order to set reasonable tourism service fees.” But most of all, there was an underlying recognition that there was no plan that could dictate the number of tourists. It was necessary to recognize the existence of different economic classes so that tourist packages could be divided into “luxury,” “medium” and “ordinary.”[22] Tourism packages that included hotel, meals and airfare could be sold as a way of lowering prices and making things more accessible for tourists. The concept of “price levers,” which had already begun to gain traction in North Korean economic discussions elsewhere, was stretched to include a form of surge pricing, though that term was never explicitly used. Instead, it was presented as charging different prices for the same hotel room, airplane seat or entry fee depending on when the booking was made and for whom.[23]

Conclusion

Tourism was not a new concept to the DPRK when Kim Jong Un assumed power at the end of 2011. However, under his rule, the shift in the treatment of tourism within economic policymaking is notable and evident in how the concept was discussed in the DPRK’s economic journals. At the same time that Kim defined the concept of “economic management methods of our style”—a reference to his various economic reform initiatives—he also encouraged tourism to blossom as part of his economic policy framework. This suggests tourism was part of his new economic policies.

The journal discussions on tourism appear to have followed the same pattern as those introducing new policies in other economic areas. The early articles begin with more limited descriptions of the concept of tourism. The next phase introduced articles that began to present new ideas that pushed against the boundaries of economic thinking in step with developments in other fields. Finally, by 2018, when North Korea was making diplomatic overtures and shifted from byungjin to a policy of focusing on the economy, bolder articles advocating for ideas, such as allowing the principle of supply and demand to take its course in lieu of central planning, appeared, where only a few years before these would have been impossible to publish.

1. [1]

   38 North has launched the second phase of the “Understanding Kim Jong Un’s Economic Policymaking” series, which will focus on the external elements of North Korea’s economic policies. This is the first in this series, made possible through generous support from the Korea Foundation and the Henry Luce Foundation. To review the first phase of the “Understanding Kim Jong Un’s Economic Policymaking” series, which dealt with North Korea’s domestic economic policies, see https://www.38north.org/2022/03/understanding-kim-jong-uns-economic-policymaking-a-review-and-implications/. For those interested in more background on tourism in North Korea, see Dean J. Ouellette, “Understanding the ‘Socialist Tourism’ of North Korea Under Kim Jong Un: An Analysis of North Korean Discourse,” North Korean Review 16, no. 1 (Spring 2020): 55-81, https://www.jstor.org/stable/26912705.

2. [2]

   This series uses a modified version of the McCune-Reischauer romanization system for North Korean text. Diacritics are replaced with apostrophes. Some well-known proper nouns will follow internationally recognized spellings or North Korean transliterations instead.

3. [3]

   “<사설> 내각의 결정과 행정명령은 당의 결정이고 국가의 법이다,” Minju Joson, June 30, 2022.

4. [4]

   Mt. Kumgang was an inter-Korean joint tourism venture that closed in 2008 due to an incident of a North Korean guard shooting a South Korean tourist. This was one of the first large-scale tourism projects in North Korea. Despite being closed since 2008, articles dedicated to the resort appeared in Kyo’ngje Yo’ngu as late as 2017, and hopes to reopen the resort resurfaced during inter-Korean talks as recently as 2018. However, Kim Jong Un in October 2019 threw cold water on this inter-Korean project by calling for removing South Korean facilities and developing the district without the South.

5. [5]

   “Agreement and Agreed Documents Signed between DPRK and Chinese Governments,” KCNA, October 4, 2009; “DPRK Draws Many Tourists,” KCNA, April 21, 2011; and “Harbin-Mt. Kumgang Tourist Group Tours Mt. Kumgang,” KCNA, November 7, 2011.

6. [6]

   “Kim Jong Il Gives Field Guidance to Mt. Myohyang Recreation Ground,” KCNA, October 25, 2009; and “Kim Jong Il Inspects Renovated Hyangsan Hotel,” KCNA, January 30, 2010.

7. [7]

   “Rason City Development Plan,” KCNA, April 6, 2011; and “Rason Directs Efforts to Tourist Development,” KCNA, August 30, 2011.

8. [8]

   “경애하는 김정은동지께서 조선로동당 중앙위원회 2013년 3월전원회의에서 하신 보고,” Rodong Sinmun, April 2, 2013.

9. [9]

   “DPRK Law on Economic Development Zones Enacted,” KCNA, June 5, 2013; “Tourism-related Explanation Session Held in DPRK,” KCNA, August 24, 2013; and “DPRK to Develop Tourism as One of Major Industries,” KCNA, August 28, 2013.

10. [10]

    Cho’n Yo’ng-myo’ng, “Tourism Economy as Economic Relations of Tourism Activities,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 1, (2017).

11. [11]

    Cho’n Yo’ng-myo’ng, “Key Economic Laws Operating on Socialist Tourism Economic Activities,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2017).

12. [12]

    Ri Myo’ng-hu’i, “Understanding of Socioeconomic Factors Affecting Demand for Tourism,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2016); Kim In-cho’ng, “The Essence and Characteristics of Tourism Resources,” Kyo’ngje Yo’ngu 3, (2015); and Cho’n Yo’ng-myo’ng, “Essence and Characteristics of the Tourism Industry,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 1, (2014).

13. [13]

    Kim Ch’ung-hyo’k, “Characteristics of Foreign Investment Uses in the Development of the Wonsan-Mt. Kumgang International Tourist Zone,” Kyo’ngje Yo’ngu 4, (2017).

14. [14]

    Cho’n Yo’ng-myo’ng “Essential Characteristics and Role of Socialist Tourism,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 1, (2015).

15. [15]

    Ri Myo’ng-hu’i, “Important Issues Arising in Drafting State Tourism Development Plans,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2018).

16. [16]

    Kong Hyo’k, “Several Issues Arising in the Development of Tourism Development Parks,” Kyo’ngje Yo’ngu 2, (2017).

17. [17]

    Cho’n Yo’ng-myo’ng, “Key Economic Laws Operating on Socialist Tourism Economic Activities,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2017).

18. [18]

    Pak Cho’ng-ch’o’l, “Ways to Rationally Use Price Levers in Business Activities of Tourism Businesses,” Kyo’ngje Yo’ngu 3, (2019).

19. [19]

    Ri Myo’ng-hu’i, “Important Issues Arising in Drafting State Tourism Development Plans,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2018).

20. [20]

    Ibid.

21. [21]

    Ri Myo’ng-hu’i, “Understanding of Socioeconomic Factors Affecting Demand for Tourism,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2016).

22. [22]

    Ibid.

23. [23]

    Pak Cho’ng-ch’o’l, “Ways to Rationally Use Price Levers in Business Activities of Tourism Businesses,” Kyo’ngje Yo’ngu 3, (2019).