At the beginning of the 1990s, North Korea started experimenting with economic changes that were intended to make its economy more comparable to that of China. A special economic zone was established in the city of Sinuiju, which is located on the border with China. This was one of the reforms that took place.
This special economic zone was established with the intention of luring international investment and fostering economic expansion.The Special Economic Zone did not end up being successful. The inflexible nature of North Korea's communist system made it challenging for enterprises to function within the country, and the political unpredictability of the country made investing there a high-risk endeavour.
As a direct consequence of this, not very many companies expressed interest in the SEZ, and it finally went out of business.This demonstration of North Korea's unreadiness for economic reform is provided by the failure of the country's attempt to implement capitalism. The country's economy is rigorously controlled, which is not an environment that is good to business, and the country's political instability makes investing there a risky proposition.