We keep getting asked which frontier markets we are not intending to invest in. Well, one day, even North Korea will be on the target list - but not righ now!When the dictatorship falls, and it will do, the latent capitalism (see last photo) will make the country flourish as a large pool of cheap labour right next to South Korea, which is in reality now a developed country!
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2 comments:
I very much enjoy the Frontier Markets blog and, in particular, the share- and sector-specific details provided. You go deeper than just writing "we like Brazil," for example.
However, I have to disagree somewhat with your prediction that North Korea will flourish once the dictatorship falls. As Danes, I would think the cautionary tale of East Germany would be a good example of the economic and investment risks of reunification. When East and West Germany reunified, the East's slow decline under Communism accelerated, as the productive and entrepreneurial members of society moved West. Meanwhile, the (rightly) moral and social aspects of government spent money on Eastern infrastructure and social programs. All the while, since 1990, the East's population and economic output has declined. This post-Communist hangover has led to subpar performance for Germany as an economy. Certainly, Germany as a nation has provided an improved societal and political outlook for most of the citizens of a reunified Germany, so I'm not arguing against reunification, just that it isn't a fait accompli that the Korean economy will flourish in the years following reunification with the South... whenever that may be.
The economics of the German reunification were interferred with by politicians who imposed an inappropriate Ost Mark-Deutche Mark exchange rate. Hopefully, the Koreans will not make the mistake. Still, we agree with you that it is not a fait accomplu, which is why we are not invested there righ now.
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