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By P. Ferdinand

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Extra resources for Enterprise and Welfare Reform in Communist Asia

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That is, the spread has been due to increasingly effective local leeway, whereas their activities and practices are not institutionalized because of the absence of provisions for legalizing them. Owing to the increased leeway of county-level governments, entrepreneurial activities are rationalized to some extent among the people whose interests are associated with them. County government officials and the party secretary and cadres come to be supportive—even if not explicitly—of the private entrepreneurs’ activities.

It seems likely that North Korea will follow the path of the Chinese township and village enterprises, while leaving for later the reform of large-scale state-owned enterprises and fiscal and banking reforms. Conclusion In North Korea, as in other transition systems, enterprise reform will be one of the most challenging tasks because of its complexity. One point is clear: the path of transition positively correlates with institutional and historical traditions. North Korea had established three institutions endorsing limited autonomy for local governments and work-places: regional self-reliance based on local enterprises, independent accounting methods, and a collective decision-making body centred on the party committee.

Regardless of organizational affiliation, the work teams are almost free to manage planning, producing, marketing and—most importantly—profit sharing. This is why the work teams proliferated, to take over the role of local enterprises that had been controlled by local government. The feasible path of transition for enterprise management will depend upon institutional traditions, particularly regional self-reliance, and the history of successful work teams in the production drive. From the perspective of the top authorities, it will be the establishment of legal institutions for increased local leeway; that is, the devolution of legal power to the county governments over ENTERPRISE AND WELFARE REFORM IN COMMUNIST ASIA 29 licences, taxes, contracts and appointments vis-à-vis local collective enterprises, whether new or well-established ones.

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