This is a significant change as economic development has taken a back seat for the last two decades.

The conflict on the Korean peninsula has always been one of legitimacy; two governments both claim the right to rule the whole nation. Without continually fostering the support of their own citizens, both Koreas face a threat posed by the competing government. North Korea’s claim to legitimacy has been based on various narratives since Korea’s division in 1945. The first narrative was that the leadership was made up of genuine anti-Japanese independence activists and guerrilla fighters.

In the 1950s and 1960s, Kim Il-sung’s personal greatness was the greatest point of emphasis as well as the promise of higher living standards that communism could deliver. Then in the 1970s and 1980s as Kim Jong-il was groomed for leadership, his familial connection to the paramount leader, his filial piety and personal genius were all emphasised.

As global communism collapsed in the 1990s and North Korea’s economy nosedived, ‘Songun’ (or military-first politics) came to the fore. Legitimacy since then has appealed to the idea that all efforts needed to be channelled into protecting the DPRK from hostile, outside forces. With survival at stake, economic considerations were not made a priority.

Now, however, the development of nuclear weapons has provided the North Korean leadership with the ability to claim that the DPRK is part of an exclusive and very powerful club.

This status firmly in hand, domestic propaganda has been championing a ‘strong and prosperous’ nation going into 2012. Meanwhile, the government offers highly public exhortations on raising the material standard of living. It appears that North Korea has recently placed the delivery of economic performance as one of its claims to legitimacy once again.

There are some significant public and private signs of such a change.

First, in both 2010 and 2011, North Korea’s most important domestic policy statement — a joint editorial published each New Year by the major newspapers — spoke of ‘bring[ing] about a decisive change in the people’s lives by accelerating once again light industry and agriculture’. This is in contrast to previous years, which focused on military strength, revolution and socialism.

Second, the type of official visits and inspections carried out by Kim Jong-il seems to have shifted. He made 63 official visits in the first six months of 2011 and of these only 14 were military-related visits, the lowest number ever recorded. By contrast, 28 visits were economic-related.

Third, North Korea has recently shown greater seriousness in developing two Special Economic Zones on the Chinese border. Ground was recently broken in Hwanggumpyong, near Dandong, while Rason is seeing more infrastructure upgrades than at any time in its 20-year history.

Fourth, and perhaps most significantly, senior North Korean politicians are increasingly judged by their ability to bring in FDI. North Korean leaders associated with the National Defence Commission, the highest level policy body, have been meeting with visiting foreign investors. In 2009, the Taepung International Investment Group was re-purposed along the lines of a holding-company model as a vehicle for attracting FDI.

In July of the same year, the Joint Venture and Investment Commission (JVIC) was established. Instead of a holding-company model, JVIC is a government institution modelled as a ‘one-stop shop’ for investors — that is, JVIC is meant to ‘seek out investments and assist investors in setting up operations in North Korea’. While multiple institutions claiming to hold such authority have always existed in North Korea, many of these institutions have been merged into JVIC and long-time investors have been directed to liaise with JVIC as their primary government contact.

In August of 2010, we received credible reports that foreign investors were approached to help set up a group similar to Taepung that would be backed by another member of the National Defence Commission. Given this proposed initiative’s similarities to Taepung, the prior establishment of JVIC and that all three groups do not appear to communicate with each other, we surmise that these various groups have a competitive relationship with the support of different patrons. Investment officials with whom our colleagues have met confirm that the relationship between the agencies is ‘very competitive’. If this is the case, it is a signal that influential groups in Pyongyang sense that future power bases will require the ability to attract and deploy capital.

So, what accounts for this shift? The shift appears to be the result of interaction between broadening information environments, leadership succession and changing social attitudes. North Koreans have greater access to information from outside the country. Despite having perhaps the strictest system of censorship in the world, technology has changed the information environment significantly since the 1990s. While many analysts focus on the comparison between North and South Korea’s standard of living, interaction with Southerners is still extremely limited. China’s greater volume of exchange with North Korea and its rapid growth, despite relatively similar starting systems, are what has accentuated the lagged pace of economic development in North Korea.

Further impetus for change comes from the relative erosion of ideology, combined with a next generation of leaders that will be far removed from the original revolutionary movement. If Kim Jong-un assumes the central role in a new leadership regime, something more concrete than family ties will have to be demonstrated to inspire broad popular support. By all accounts, Kim Jong-il does not inspire the same respect his father did and there is a major concern that his son will inspire even less.

Finally, the era of ‘Songun’ politics coincided with a period of great hardship for North Koreans. However, putting the military first did, the government can argue, result in a successful nuclear program, effectively taking care of half of the stated goal of becoming ‘a strong and prosperous nation’. Now that the perceived external threat is held at bay by a nuclear deterrent, the citizens of North Korea can rightfully expect the government to devote more resources to achieving ‘the prosperous’ part. Continued calls to endure hardship cannot go on forever. This is recognised by policy makers as well as less-politically engaged North Koreans.

Still, there are question marks over both the ability and sustained willingness to push through changes that will raise living standards.

There is a tendency to read any new emphasis on economic performance as North Korea having a new interest in ‘economic reforms’ or ‘marketisation’. This fails to take into account what specific mix of policy measures North Korean policy makers consider effective. Over the short term, for example, policy makers might continue implementing ineffective economic policies despite a new emphasis on economic performance if they lack an understanding of what works. On one end of the spectrum are government officials whose idea of assuaging investors is to offer nothing more than promises that they are ‘powerful’ and will thus resolve any conflicts the would-be investor faces. However, there certainly are policy makers who are well-informed about why investors are hesitant to enter the North Korean market and seek to overcome these issues in pragmatic ways.

Talented investment officers will also have to overcome a number of external constraints, including sanctions, fluctuating political conditions and a legacy of mistrust by foreign investors. North Korea’s investment history is peppered with defaults and false promises. Whether there exists the will and ability to make necessary changes in policy in the face of competing interests remains to be seen.

Geoffrey See is a Managing Director and Andray Abrahamian is an Executive Director at Choson Exchange. Choson Exchange is a non-profit focused on economic policy, business and legal training for North Koreans. They most recently completed an economic and investment policy training program overseas for North Koreans.

An earlier version of this article first appeared here in the Harvard International Review.