Rason Special Economic Zone: A North Korean Development Vehicle

North Korea has attempted three times to establish special economic zones, where foreign companies can establish production facilities and enjoy special benefits and concessions, in order to attract foreign investment and kick-start its flagging manufacturing sector. These were inspired by the success of China’s special administrative regions and similar economic zones operating all over Asia. The first of these zones was the Rajin-Sonbong Trade and Economic Zone, established December 1991 in the northeast corner of the country near the convergence of the North Korea, Chinese and Russian borders.

This zone was earmarked to become a major container port, featuring export-oriented production facilities, an oil terminal at Sonbong and timber port at Unggi, with land linkages to China, Mongolia and the trans-Russian railway network with Europe. The site was chosen for its remoteness, as a precaution against the permeation of foreign ideas. It has been slow to take off because of its impracticality as an export hub, because of its isolation from large population centres in the DPRK, China, South Korea and Russia, as well as the investment disincentives of border crossing difficulties and excessive red tape from Pyongyang.

Despite this slow start, development activity in Rason is beginning to gain momentum. The new leadership under Kim Jong Un in the DPRK has overseen a restructuring of the institutional arrangements governing the zone. Externally, the Chinese government has incorporated Rason into its development plan for Jilin Province, building upon earlier agreements between the governments of China, Russia, North Korea, South Korea, and Mongolia to develop the Tumen River area. Rason is the sea port that could unlock the export potential of China’s landlocked north-eastern provinces. Recent Sino-DPRK ministerial-level contacts have taken place to coordinate development planning and improve the investment climate to attract further Chinese FDI to Rason. Russian interests have also invested in upgrading the railway line from Rason into Russia, and the construction of a new pier at Rajin port, which is still under construction.

I visited Rason in July 2013 looking for evidence of accelerated development activity. The following photo gallery is a record of this trip.

Further Information:

Abrahamian, A. (2012) A Convergence of Interests: Prospects for Rason Special Economic Zone. Korea Economic Institute – Academic Paper Series.

Abrahamian, A. (2011) Report on Rason Special Economic Zone, Democratic People’s Republic of Korea. Choson Exchange.

Cotton, J. (1998). “The Rajin-Sonbong Free Trade Zone Experiment: North Korea in Pursuit of New International Linkages.” in Kim, S. (ed.) North Korean Foreign Relations in the Post-Cold War Era. Oxford: Oxford University Press.

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3 responses to “Rason Special Economic Zone: A North Korean Development Vehicle

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