North Korea Economic System
North Korea, officially the DPRK, operates a command economy under strict government control, common in communist nations. It primarily exports coal, iron ore, textiles, and garments. Notably, the garment industry thrives through partnerships and North Korean labour. Valuable natural resources like coal, copper, and hydroelectric power from water contribute to the economy.
Economy of North Korea
Economic Planning and Priorities
North Korea operates under a centralized economic system, where the state controls all means of production. Economic planning is conducted through a series of national economic plans, with shifts in priorities over time. Early plans focused on postwar reconstruction and heavy industries, especially chemicals and metals. Later plans emphasized resource exploitation, technology improvement, mechanization, and infrastructure development. Agriculture received limited attention until the 1970s, with a focus on improving consumer goods’ quality and quantity in the late 1980s.
Data Reliability and Self-Reliance
Reliable information on North Korea’s economic performance is often scarce. The country has struggled to meet its goals, and government-reported production figures are frequently inflated. Despite its policy of self-reliance (juche), North Korea has relied on foreign aid, mainly from the Soviet Union, China, and Eastern European countries. Essential commodities like fuel, machinery, and grain were imported. Read more about this article: North Korea Religion
Economic Hardships in the 1990s
In the early 1990s, North Korea faced severe economic hardships. The Soviet Union’s collapse and the fall of its allies left North Korea with fewer trading partners and reduced aid. In the mid-1990s, natural disasters, including floods and drought, led to grain and food shortages, widespread malnutrition, and starvation.
Food Problem and International Assistance
To address economic challenges, the government introduced measures to tackle the gap between the official economy and a thriving black market. Despite these efforts, addressing the “food problem” remained a top priority. Massive international food assistance helped improve the situation by the end of the 1990s.
Foreign Investment and Trade
Opening to Foreign Investment
In the late 1990s, North Korea began opening its economy to limited foreign investment and increased trade. European Union (EU) countries, South Korea, and others were actively invited to invest. The country maintained minimal contact with the United States, Japan, and South Korea, who remained the primary sources of foreign aid in the early 21st century.
Labor Productivity and Industrialization
Labor Productivity Improvement Efforts
Throughout North Korea’s history, efforts were made to enhance labour productivity. Initiatives like the Ch’ŏllima (“Flying Horse”) movement and various management programs aimed to boost productivity.
Strong Military and Prosperous Economy
In the late 1990s, North Korea adopted the official goal of building a strong military and a prosperous economy, under the slogan “Kangsŏng taeguk” (“Strong and prosperous nation”). This approach emphasized the military’s significance while opening parts of the economy to foreign investment and trade.
Agriculture, Forestry, and Fishing
Agriculture’s Role and Challenges
Agriculture, forestry, and fishing contribute to North Korea’s economy. The country produces grains like rice, corn, wheat, and barley. However, there have been challenges, including shortages of fertilizers, seed grains, and farming equipment. The mid-1990s food crisis impacted agricultural production.
Forestry and Environmental Issues
North Korea possesses large forest reserves. However, extensive deforestation along the coast, partly from Japanese actions during World War II, has not been substantially reversed. The loss of forest cover contributes to flooding and economic difficulties.
Fishing as a Protein Source
Fishing plays a crucial role in North Koreans’ diet, with the government expanding commercial fishing. Main catches include pollack, sardines, mackerel, and shellfish. Aquaculture accounts for a significant portion of the country’s fish production.
Resources and Power
Abundant Mineral Resources
North Korea holds abundant mineral resources, with an estimated 200 minerals of economic value. Iron ore, coal, gold, magnesite, lead, and zinc are prominent. Other minerals include tungsten, graphite, and molybdenum.
Electric Power Generation
Electric power production relies primarily on hydroelectricity, although thermal electricity is becoming more important due to lower costs and hydroelectric power’s seasonal unreliability. However, power production has declined significantly since the 1990s, affecting the country’s overall economy.
Manufacturing Industries
Industrial Sectors
North Korea’s industrial sector consists of state-owned enterprises and production cooperatives, mainly focused on industries like iron and steel, machinery, chemicals, and textiles. Iron and steel production was initially concentrated in cities like Songnim and Ch’ŏngjin but expanded to include other locations.
Chemical Industry and Textiles
The production of chemicals in North Korea emphasizes fertilizers and petrochemicals, with much of the latter being manufactured near P’yŏngyang. The textile industry is centred in cities like P’yŏngyang, Sinŭiju, and Sunch’ŏn. Other products include cement, armaments, vehicles, glass, ceramics, clothing, and processed food.
Financial System
North Korean Currency and Banking
The North Korean won is the official currency, and the Central Bank of the Democratic People’s Republic of Korea is the sole bank of issue. Various state banks operate under its supervision, including the Foreign Trade Bank. The government allowed a limited amount of joint-venture banking in the late 1980s, and later, private and corporate savings accounts for nonresidents were permitted. The government revalued the won in late 2009, causing economic difficulties.
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Transportation
Transport Infrastructure
North Korea’s transportation system is stagnant, with limited new infrastructure development. Railways are the principal means of transportation, and highways and river transportation play roles as well. However, there are few motor vehicles, and many roads are unpaved. Air services are controlled by the air force, with flights connecting major cities and international routes to Beijing and Moscow.
Conclusion:
In conclusion, North Korea’s economic system is a tightly controlled command economy, following the principles of communism. The nation relies on exports such as coal, iron ore, textiles, and garments, with China as its primary trading partner. The garment industry, driven by unique partnerships and North Korean labor, has found success. The country’s valuable natural resources, including coal, copper, and water for hydroelectric power, play significant roles in its economic landscape.
FAQs
Q. What is North Korea’s economic system?
A. North Korea operates a command economy, where the government centrally plans and controls economic activities. This system is common in communist countries.
Q. What are North Korea’s main exports?
A. North Korea primarily exports commodities like coal, iron ore, textiles, and garments. China is its major trading partner.
Q. How does the garment industry in North Korea function?
A. The garment industry in North Korea operates through partnerships involving North Korean firms, foreign partners, or Chinese firms with North Korean involvement. It often relies on North Korean labour.
Q. What are North Korea’s key natural resources?
A. North Korea possesses valuable natural resources, including coal, copper, hydroelectric power generated from water sources, and minerals like iron ore, lead, and zinc.
Q. Is North Korea’s economy self-sufficient?
A. Despite the policy of self-reliance (juche), North Korea has historically relied on foreign aid, particularly from the Soviet Union, China, and Eastern European countries, for essential imports like fuel and machinery.