‘Hermit Kingdoms’ in the 21st century?



Trade and diplomacy are very much connected; in fact some nations have already combined the two functions. The nations of the world have been becoming more and more economically interdependent. They have to be.
I was once invited officially to North Korea; I couldn’t accept the invitation because at the time it came I was just about to relocate from one company to another. The reason for the invitation was that the North Koreans wanted to establish a joint venture fuel retail business and add filling stations to the single filling station that at the time existed in Pyongyang. There was no domestic oil production in North Korea although there was, I found out, some offshore potential that had not been properly explored or developed. Oil comes to North Korea via a pipeline from China [90 percent of demand] and is supplemented by some agency arrangements in Singapore.

North Korea is the “Hermit Kingdom” but it cannot and does not exist in isolation from the rest of the world. It has to have support from other nations. North Korea’s main trading partners are China and South Korea. India and the EU each provide about 3-4 percent of North Korea’s imports. Its GDP per capita is somewhere between $500 and 1,800. In 2014 it exported about $3.1 billion of products and imported $3.9 billion. It is the 123rd biggest export economy in the world out of 220 nations. The Philippines in 2014 exported $56 billion and imported $65 billion of products.

So although perceived by many as the most isolationist nation in the world, North Korea is not isolated, it hosts 23 foreign embassies, including 4 from EU member states. Whilst there is probably not a big market for IPhone 7’s or Lamborghini’s it does trade internationally, maintains diplomatic relations and has a dependency on importation of basic commodities such as oil.

The Philippines in contrast is very much a part of the global market not only through its wide ranging international trade but also through the 12 million or so Filipino Diaspora who seem to be skilled at “fitting in” wherever they may be.

Foreign policy in the 21st century seems more to be about trade than it is about political ideologies. North Korea does not only trade with its ideological partners, Russia and China, but also with much of the democratic world. It seems to me that political and cultural preferences should take a back seat to the need to stimulate export markets in their widest sense, including markets for the export of Filipino skills—the OFWs; otherwise there would be a risk of restricting economic growth due to ideological preferences.

The Philippines needs all the overseas markets it can get and it needs to produce more goods to feed those markets and to do that it needs investment whether local or foreign. Investment needs money and it needs all the money available to go into the production of goods for export. If an investor wants to sink say $100 million in some form of manufacturing facility for export, it doesn’t want $50 million of that to be siphoned off along the way in facilitation payments of one sort or another. If that continues to happen then the Philippines becomes an unattractive investment destination, or it will produce goods which cannot, due to their cost level, capture as much of the export market as originally intended.

There are massive corruption problems in the Philippines, which have a seriously negative impact on the level of investment. The Philippines has the basics to be a world beating producer of export goods rather than exporting Filipinos, it would be much better to stimulate investment in manufacturing facilities, produce higher quality products and sell them worldwide to whoever is prepared to buy them—isn’t this what the Chinese are doing to the great benefit of their economy? Stay open to the world regardless of ideological preferences and let’s have a “war” on corruption and bureaucracy.

Mike can be contacted at mawootton@gmail.com


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