Following fresh diplomatic efforts between North Korea and the US, questions are being asked about what the nation's future could hold as an open economy.

The nation's deposits of highly valued rare earth elements, prized for their use in everything from industrial technology to smartphones, has long made a more open North Korea an attractive prospect.

However, while the potential wins may be huge and help to transform it into a developed economy, it would not be a straightforward process, reports the Daily Telegraph.

The Asian state is one of the most secretive in the world. As a result there is a dearth of trusted statistics on its economy. No meaningful figures have been published by its regime since the 1960s.

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By this time an economic boom generated by post-war rebuilding had begun to wane. With mounting missed economic performance targets, it was expedient for the increasingly oppressive regime to avoid sharing bad numbers altogether.

Intelligence agencies have since stepped in to try to bridge the data gap. Now, the best source is an amalgam of data gathered by these spy networks and combined into estimates by South Korea's central bank.

These figures suggest that the North's economy saw GDP growth of 3.9 per cent in 2016.

North Korea leader Kim Jong Un (left) and US President Donald Trump during their first meeting at the Capella resort on Sentosa Island. Photo / AP
North Korea leader Kim Jong Un (left) and US President Donald Trump during their first meeting at the Capella resort on Sentosa Island. Photo / AP

However, while this is highest growth rate for 17 years, it must been seen in the context of 2015: an especially bad year which saw the economy contract following a drought and low prices for key commodity exports.

Since 2017, the United Nations has banned more than 90 per cent of North Korea's "publicly reported 2016 exports of US$2.7 billion ($3.8b)". These sanctions followed its acquisition of nuclear arms and have been ramped up in recent years following ostentatious weapons testing.

North Korea's gross domestic product (GDP) per capita - the amount of wealth generated per person - was thought to be around US$1,700 in 2015. That would rank the country 214th by this measure among the world's economies, below the likes of Sierra Leone and Guinea Bassau and just above other deeply troubled nations such as The Democratic Republic of Congo and South Sudan.

In 2016, GDP per capita hit US$1,342. That is just 5 per cent of South Korea's. Estimates place the population at about 14 million.

The US Central Intelligence Agency (CIA) lists the country's main economic strengths as follows: military products; machine building, electric power, chemicals; mining (coal, iron ore, limestone, magnesite, graphite, copper, zinc, lead, and precious metals), metallurgy; textiles, food processing and tourism.

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There have been repeated instances of famine, and self-sufficiency when it comes to food has been essential due to the country's minimal international trade in goods. Estimates suggest that 37 per cent of workers are dedicated to agriculture, with the rest focused on industry and services.

It is mining, particularly of what are known as rare earth metals, that excites international business about the potential opening up the North Korean economy. These metals are highly valued in many industrial processes and for use in technology such as batteries and, by extension, smartphones.

China is by far the dominant force in the mining of rare earth metals and has used this clout against neighbours such as Japan.

Many billions, if not trillions' worth of these metals are thought lie in deposits in North Korea.

Some reports have said it could be as much as US$6 trillion, but several geologists and mining experts were contacted by the Daily Telegraph - and none thought it was appropriate to put any figure on just how much there could be.

So what would happen if sanctions were lifted?

There are a few, rather major hurdles to get over even if North Korea were to agree to a programme of nuclear disarmament and UN sanctions were lifted in part or fully.

The process would be "multi-year, multi-decade", according Tai Hui, chief market strategist for US bank, JP Morgan, in the Asia Pacific region.

Shortages in materials have held back the progress of many industries for decades and there would be considerable ground to make up.

Can North Korea be brought in from the cold? Photo / AP
Can North Korea be brought in from the cold? Photo / AP

The labour market would also need a health upgrade: Aid flows would be required for humanitarian work to address issues such as wide-spread malnutrition and drug-resistant tuberculosis.

Another major reason why it would take so long to build its prosperity is that North Korea isn't a market economy.

For the most part workers do not receive wages. Instead, payment in kind is made - if there is any payment at all. It is therefore, by in-large, a barter economy with huge levels of bonded labour.

Put another way: swathes of the population are thought to be enslaved in addition to being generally oppressed and are likely to have to trade foods, fabric or coal, in order to get by.

The country has nothing like the highly complex monetary systems of many developed economies. Even among the catalogue of states that might have failed and required wide scale economic reconstruction via international bodies such as the World Bank or UN, few have been so alienated from world markets so entirely, or for as long, as North Korea.

Developmental economists would face an uphill struggle: What should a worker be paid for an hour's work? Who has a bank account to put their wages in? What is a pig worth in North Korea? Or what is a North Korean pig worth to another country?

Fringes of interactions with neighbours have led to some loose estimates of labour costs being made - Swiss bank UBS suggests a North Korean labourer is worth 1/23 of their South Korean equivalent.

Alongside rapid and wide-ranging re-education of the population, infrastructure projects in road, rail and skills training from South Korea in manufacturing would be among the first areas to address.

But there has been some contact with the outside world's economy.

Since Kim Jong-Un inherited the dictatorship from his in 2011, he has taken an increasingly "relaxed approach" to the country's shadow economy, says Freya Beamish of Pantheon Macroeconomics.

It is highly ethically complex since large amounts of the shadow economy are driven by human trafficking but it also presents some means of working out potential economic activities in a more open North Korea. As importantly, it shows an appetite from Mr Kim for international trade, according to Ms Beamish.

"Mr Kim might be eager to pursue the development model that the Chinese are offering; greater market freedom, with the parameters of state control, with a tight grip on the socio-political levers," Beamish says.

A research paper from the central bank of South Korea argues this hidden economy is so substantial that it accounts for 28.5 per cent of economic demand.

China has also turned the screw on North Korea in recent months, cutting off its petrol supply and shutting down many of the shadow markets in its goods.

Alex Woolf of Aberdeen Investments says it's "very clear what China wants". Chinese President Xi Jinping is keen to encourage Kim to follow its economic model.

As for opening up the all important mining industry to further exploit valuable rare earth metals, there's a great deal of work to do.

One rare earth element, which is thought to have deposits in North Korea is yttrium. In iphones yttrium is used in order to heighten the colour display. Photo / AP
One rare earth element, which is thought to have deposits in North Korea is yttrium. In iphones yttrium is used in order to heighten the colour display. Photo / AP

Decent labour standards would need to be introduced, proper transparent geological surveying conducted, and the level to which deposits can be extracted and used must be established.

Any investors should take such steps very seriously before committing funds, mining experts warn.

If the country were to open up, via a Chinese economic model or a true market economy, it would take years to generate returns from its rare earth metals.

Professor Frances Wall of the Camborne School of Mines believes this could take as long as a decade in the case of many rare earth elements, such as those already mined in China.

Others, including Peter Hayes, director of the Nautilus Institute, believes real progress towards reigniting the metals extraction industry for some precious metals could be done in "three to five years".

However, even if the deposits were to prove to be worth a fraction of that generated by the hype, the potential of North Korea's mining industry is considerable. It could create a second substantial source of metals used in technology, of which China largely holds a monopoly.

So prized are rare earth elements, and so large are the potential deposits in North Korea, its theoretical wealth could generate a whole new set of diplomatic headaches.