LAUSR

This study looks ahead to the possibility of the Democratic People’s Republic of Korea (DPRK, commonly known as North Korea) opening its economy and identifies products in which the country already enjoys a high comparative advantage. These products could provide opportunities for international investment and trade growth. The study offers a detailed analysis of North Korea’s exports, identifying tungsten, graphite, tin, watch movements and hat shapes as products in which it has comparative advantage compared to its neighbours. Using UN Comtrade data, we examine the relationship between the geopolitical risk index ‘GPRNK’ and North Korea’s export performance. Our estimations show a significant negative correlation, suggesting a 0.3–0.4% annual export growth increase and a 5.8–7.2 million USD rise in annual export revenue change for every one-unit decrease in GPRNK. The study also emphasises potential economic gains following a decline in geopolitical risk and stresses the need for trade liberalisation in order for North Korea to achieve sustained growth.