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A carrot-and-stick ENTERPRISE REFORM IN LAOS 39 approach will be used to try to motivate the banks’ management and staff to implement these plans. Carrots will include the provision of recapitalization bonds, performance bonuses, continuation of contracts for existing management, and regulatory forbearance; the sticks will comprise the withholding of the same. The attempt to revive these state-owned banks entails no fewer than seven components, from simplifying operational management and branch rationalization to improving human resources and introducing wholly new IT systems.

This will be followed by the entry of new private enterprises, that is the legalized creation of collective enterprises by groups of entrepreneurs with accumulated personal 28 ENTERPRISE MANAGEMENT IN NORTH KOREA assets. By contrast, if the new arrangements are less successful, private entrepreneurs will continue to spread in an illegal fashion, since they are incompatible with the public-oriented ideology. To summarize, North Korea may begin with institutional change for boosting local enterprise, following the tradition of regional self-reliance and state and collective ownership.

While retaining them in public ownership, either stateowned or collective, the township and village enterprises with rights over surpluses burgeoned in China during the 1980s. Recognizing their positive role for local economy, the local party secretary and officials have had mutually dependent relationships with the managerial personnel of the enterprises. It seems that the Chinese case conforms to the continuing and future change in North Korea. This has been proved by successful cases of work teams in the production drive since the second half of the 1980s.

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