The North Korean regime has adjusted to international sanctions by shifting that economic pain away from cities to the countryside, new Stanford research using satellite night lights data shows.

U.S. policy toward North Korea has been based on the expectation that economic sanctions could deter North Korea from developing nuclear weapons or change the behavior of the regime, according to Yong Suk Lee, a Stanford economist at the Freeman Spogli Institute for International Studies.

Since 1950, both the United States and the global community have adopted a series of economic sanctions against North Korea. The latest came in 2013 when the United Nations approved restrictions on banking, travel and trade in response to North Korea's underground nuclear test and threat to launch nuclear strikes against the United States and South Korea.

In a working paper, Lee examined how North Korea's Communist rulers have adapted to the increasingly tougher sanctions through the years.

"North Korea is one of many autocratic regimes that refuse to yield to sanctions, and its isolation and hereditary dictatorship make it a particularly good example to study the impact of economic sanctions in autocratic regimes," said Lee, the SK Center Fellow and a faculty member of the Korea Program at Stanford's Walter H. Shorenstein Asia-Pacific Research Center.

North Korea is one of the poorest countries in the world, Lee noted. Its leaders follow an economic model based on a centrally planned economy and self-imposed isolation from the rest of the world.

Satellite data

Lee's research was based on nighttime views of lights from data collected by the U.S. Defense Meteorological Satellite Program. The researcher created "average luminosity" measures of lights across North Korea based on a 1-mile-by-1-mile grid for the years 1992 through 2010. Light usage was examined for brightness on one-minute intervals.

To predict the impact of sanctions on economic activity in North Korea, Lee used a formula that transformed the luminosity measures into GDP measures. For example, a 10 percent change in the satellite lights is associated with about a 3 percent change in GDP.

According to Lee, satellite data is of greatest utility in assessing the economies of cities and regions in the developing world. In a country like North Korea, a large part of economic activity happens during the evening and night and involves light. For example, lights at night are generated by peoples' consumption of goods and services as well as transportation. And some production activities happen during the evening hours.

"Economists have found that how bright night lights are can predict national and sub-national GDP quite well, especially in countries where GDP data is not reliable," he said.

Lee found that economic sanctions decreased luminosity in the hinterlands, but increased luminosity in urban areas, especially toward the centers. As for whether additional sanctions affected luminosity, he found they increased the urban-rural luminosity gap by about 1 percent. When he examined the more central urban areas, the gap increased by about 2.6 percent.

"The results suggest that the dictatorship countered the effects of sanctions by reallocating resources to the urban areas," Lee said. One could surmise that the economic sanctions do not affect the country's leadership much, he said.

The hinterlands responded to declining economic fortunes by relying more on trade with China near those border areas, Lee added. In fact, the sanctions generated more North Korean migration to China and reliance on Chinese merchants and goods. North Korea's border with China is relatively porous as opposed to its heavily militarized border with South Korea.

'Increasing inequality'

The upshot, Lee said, is that sanctions that fail to change the behavior of an autocratic regime may eventually increase urban-rural inequality.

"Sanctions will likely be inefficient as long as North Korea can maintain powerful centralized control and oppress any discontent that arises due to increasing inequality," he said.

Lee added that sanctions will most likely not deter North Korea's nuclear weapons activities. They have not done so yet, and at this point, North Korea's leaders view sanctions as inconveniences, but not regime-threatening. Plus, even the harshest sanctions would be unlikely to stem the flow of all goods, energy and money into North Korea. Not all countries would go along with draconian trade restrictions that hurt the poorest people the hardest, he said.

"Even if sanctions were imposed to full capacity, the marginalized population would suffer the most," said Lee, adding that he was actually surprised about his project's findings.

"One can always hypothesize a story but to actually find such effect in the data was quite exciting. Frankly, I pursued this project expecting that I wouldn't find any impact of sanctions on lights," he said.

Clifton Parker is a writer for the Stanford News Service.

Seoul faces challenges that are not very different from other global cities, said Mayor Park Won Soon, the public figure who leads the South Korean city of over 10 million people, concluding that the key to solving them ­is by better engaging and empowering citizens.

“We tore down the silos,” said Park, speaking to a Stanford audience about his efforts to improve Seoul’s bureaucracy and access for citizens.

At McCaw Hall, Park discussed his background as a scholar, civic activist and philanthropist, emphasizing how it provides him perspective as a leader, and the acumen to think differently to address a wide range of issues affecting Seoul, including poverty, climate change and an aging population.

Park’s visit to Stanford University was sponsored by the Walter H. Shorenstein Asia Pacific Research Center (APARC) in the Freeman Spogli Institute for International Studies. The event was part of the Asia-Pacific Leaders Forum, a seminar series that brings Asian leaders to Stanford to share their experiences. In 2013, the series hosted Ban-Ki Moon, U.N. Secretary General, and in 2009, then-South Korean assembly member, now president, Park Geun-hye.

[[{"fid":"216091","view_mode":"crop_870xauto","fields":{"format":"crop_870xauto","field_file_image_description[und][0][value]":"Stanford professor Gi-Wook Shin welcomes Mayor Park.","field_file_image_alt_text[und][0][value]":"","field_file_image_title_text[und][0][value]":"Stanford professor Gi-Wook Shin welcomes Mayor Park.","field_credit[und][0][value]":"Rod Searcey","field_caption[und][0][value]":"Stanford professor Gi-Wook Shin welcomes Mayor Park.","field_related_image_aspect[und][0][value]":"","thumbnails":"crop_870xauto","pp_lightbox":false,"pp_description":true},"type":"media","attributes":{"title":"Stanford professor Gi-Wook Shin welcomes Mayor Park.","height":948,"width":870,"style":"margin-left: 0px; margin-right: 15px; padding: 0px; float: left; width: 225px; height: 240px;","class":"media-element file-crop-870xauto"}}]]Mr. Park has long-had a connection to the university, though. He was a visiting professor at Shorenstein APARC in 2005, and continued to collaborate with researchers after leaving.

Gi-Wook Shin, director of Shorenstein APARC, introduced Mr. Park, referencing their connection and past projects to a crowd of nearly 275 people, including Korean community members and media.

“We’ve known each other as colleagues and friends for a number of years," Shin said, "so it is a pleasure to host Mayor Park, and hold a public forum to hear [his] vision."

Shin and Park established a fellowship for Korean NGO leaders, and awarded it to 30 leaders over three years.

Fighting for equality

As a university student in 1975, Park protested against South Korea’s government led by President Park Chung-hee, a military leader who ruled under highly authoritarian law. Mr. Park was imprisoned for his activism and eventually expelled from school, but his enthusiasm for justice and democracy never waned, he said.

He said the political and social chaos during those years in South Korea motivated him to pursue justice through other channels, going on to become a human rights lawyer and into public office as mayor in 2011.

South Korea gradually transitioned into a democracy in the 1980s, influenced in large part by many sweeping civil movements. The country has since stabilized, and now enjoys cultural and economic success in the world today. 

Park speaks to the audience about governance, emphasizing the importance of communication.

But, there is a “shadow behind the miracle,” said Park, referring to the myriad of societal problems that Seoul still faces, like many cities dealing with the effects of urbanization.

He said the only way to identify and address problems is through a highly participatory system of governance, and one that isn’t afraid to think of new solutions to old problems.

“A city that constantly collaborates and innovates to improve the quality of life for citizens,” he said, those are the efforts that create an environment “where people live in harmony and where people are happy.”

Park said listening to the voices of Seoul citizens is a cornerstone of his administration’s approach. And he has a motto that matches.

“Citizens are the mayor,” is the saying that Park administration attempts to fulfill through a variety of initiatives, including those led by the Seoul Innovation Bureau, a new administrative branch established to bring fresh ideas into the city’s paradigm.

Park’s administration holds town hall meetings and uses some of the latest technology to initiate dialogue with citizens, including SNS text messaging, social media and Wikiseoul, an online blog-style platform, to communicate policies and receive feedback.

[[{"fid":"216092","view_mode":"crop_870xauto","fields":{"format":"crop_870xauto","field_file_image_description[und][0][value]":"Park meets community members and media following his talk.","field_file_image_alt_text[und][0][value]":"Park meets community members and media following his talk.","field_file_image_title_text[und][0][value]":"Park meets community members and media following his talk.","field_credit[und][0][value]":"","field_caption[und][0][value]":"Park meets community members and media following his talk.","field_related_image_aspect[und][0][value]":"","thumbnails":"crop_870xauto","pp_lightbox":false,"pp_description":true},"type":"media","attributes":{"alt":"Park meets community members and media following his talk.","title":"Park meets community members and media following his talk.","height":783,"width":870,"style":"margin-left: 0px; margin-right: 15px; padding: 0px; float: left; width: 230px; height: 200px;","class":"media-element file-crop-870xauto"}}]]He said he checks the city’s social media accounts personally because it allows him to keep a close eye on what issues are important to citizens, and often follows-up with constituents who write him “tweets,” messages received via Twitter.

Park says Seoul’s success is because of 10 million citizens and many institutions that have supported the city’s growth. He holds popular support in the city, and was recently reelected for a second mayoral term in June 2014, winning by a wide margin.

He said other countries are beginning to replicate his administration’s model, from e-governance activities to energy policy, calling it the “Seoul effect.”

Closing out the speech, Park said inclusiveness is the essence of good governance.

“If you want to travel fast go alone, but if you want to travel far, go together,” he said, citing a well-known proverb.

Below is the full video and transcript of his presentation.

Stanford researchers have introduced a major new study on North Korea policy at a hearing at the South Korean National Assembly. Entitled “Tailored Engagement,” the report concludes that South Korea is the only country today that may be both willing and able to try a new approach toward the worsening North Korea problem.

“There is considerable urgency for Seoul to act,” according to the report released by the Korea Program at the Walter H. Shorenstein Asia-Pacific Research Center (APARC) in the Freeman Spogli Institute for International Studies, which comes in response to increasing tensions and heightened nationalism in Northeast Asia.

“Only the Republic of Korea has both the need and the potential influence to change this dangerous trajectory on the Korean Peninsula.”

Published by Gi-Wook Shin, the director of Shorenstein APARC; David Straub, the associate director of the Korea Program; and Joyce Lee, the research associate for the Korea Program, the report is the culmination of more than a year of intensive research activities at Stanford University, including three international conferences focused on Northeast Asia’s security and political situation.

During the past year, North Korea continued to develop nuclear weapons and North-South Korean relations worsened, while increasing U.S.-China strategic mistrust has made it less likely that those two countries can cooperate to change North Korea's behavior.

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“I was very impressed by the concern that the Korean Congressmen showed about the current situation on the Korean Peninsula and by their interest in our reasoning and recommendations,” Shin said. “Almost all of the Committee’s 18 members attended, and engaged in a lively exchange of views during the three-hour-long hearing.”

In their report, Shin, Straub and Lee propose a process that involves a series of increased exchanges with North Korea. This would be applied in a principled, systematic way, based largely on expanding a domestic consensus in South Korea that treats South Korean engagement of the North as necessary for improving the situation on the peninsula, not as incompatible with maintaining pressure on Pyongyang to abandon its pursuit of nuclear weapons.

The report lays out four main steps that South Korea can implement to reduce the risk of regional conflict, while also creating a foundation for peaceful unification with North Korea.

• Focus on the pursuit of mutual interests and benefits rather than on symbolism and appeals to national sentiment.
• Apply market principles and international standards in economic activities.
• Collaborate with other countries and third-party companies in both economic and people-to-people projects.
• Be pragmatic and flexible in pursuing engagement at both the state-to-state and grassroots levels in complementary ways. 
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South Korea is well suited to engage the North because of their shared history, and its status as a major middle-power status has also increased its sway with both China and the United States.

No longer a “shrimp among whales,” South Korea has transformed since democratization, leaving that modest proverb behind and gaining an influential role in the region.

Now the country has an opportunity to begin to bridge the gap with North Korea, but first, it must create an internal structure that supports engagement.

In implementation

The North Korea problem is complex and wrapped in a varied history of engagement efforts by South Korea and other countries. Lessons of success and failure from past administrations provide important insight, the report says.

“The main impediment to South Korea’s assuming a greater international leadership role on the Korean question is not a lack of national power,” the report states, “but a lack of domestic political consensus about how to deal with North Korea and the consequent inconsistency in ROK policy across administrations.”

The South Korean government changes executive leadership every five years, and with it, there has been great inconsistency between conservative and progressive policies. The current administration that assumed office in 2013, led by President Park Geun-hye, pursues a North Korea policy of trustpolitik, wherein the government aims to build trust through a step-by-step process.

According to the report, the tailored engagement approach can inform and build on President Park’s policy. Three main actions can be taken by South Korea’s administration to implement productive engagement, the report states:

• Reorganize the Korean government itself to facilitate a more coordinated formulation and implementation of North Korea policy.
• Achieve much more consensus within South Korea on how to deal with North Korea.
• Seek to win support of the major powers, especially the United States and China for its approach to North Korea.

Developing trust is essential to de-escalate tension between the Koreas. Without progress in confidence-building, the two countries can hardly collaborate on even straightforward projects, such as expanding the existing Kaesong Industrial Complex, a bi-lateral industrial park located just north of the North-South border.

Solving more basic issues and participating in joint initiatives can help pave the way toward inter-Korean reconciliation during President Park’s administration, and the next.

“Reconciliation and convergence would improve many aspects of the situation on the Korean Peninsula, including eventually facilitating North Korea’s abandonment of its nuclear weapons program and the achievement of unification,” the reports says.

Asia Economy Daily wrote an article (in the Korean language) about the research team's presentation. A version of this article was also carried as a news release by the Stanford News Service. NK News, a news oufit focused on North Korea-related news, also wrote an article (in the English language) and can be found on NKNews.org. The Voice of America covered the presentation by Shin and Straub at the Brookings Institution. The article, written in Korean, can be accessed on the Voice of America online.