How North Korea’s Economy Thrives On Its Black Market
The average salary is about $47 per month and the current GDP per capita of $776 to nearly $4,000 depending on the model used and a national GDP of $26 billion. North Korea's economy remains one of the world's last centrally planned systems. The role of market allocation is sharply limited - mainly in the rural sector where peasants sell produce from small private plots. North Korea's GDP growth has been slow but steady, although in recent years, growth has gradually accelerated to 3.7% in 2008There are almost no small businesses. There is a The new-rich class, who have made huge profits from recent trade with China. In 2005, China and South Korea combined to provide 1 million tons of food aid, each contributing half. In addition to food aid, China reportedly provides an estimated 80 to 90 percent of North Korea's oil imports at "friendly prices" that are sharply lower than the world market price
North Korea has more plentiful natural resources than South Korea and inherited a substantial industrial base from the Japanese occupation, but the Korean War destroyed much of this. A Soviet type economy was constructed at a high rate with Soviet and Chinese aid. At present, more than 90% of the economy is socialized. agriculture employed about 30% of the labor force and made up 30% of the GDP in 2002, with making up 30%. In 1999, the economy grew the first time in a decade, expanding by 6%.
Reliable economic data on North Korea is hard to obtain. According to North Korea however, the GDP dropped 27% in 1994 .
End of Private Ownership - 5 Year Plans
All private ownership of farms was ended after the Korean War and completed by 1958. All farmers were forced to work in about 3,000 cooperative farms with an average of about 275 households. Farmers could cultivate small plots for themselves, which is how many North Koreans survived the famines of the 1990s. Family homes, could be passed down, however. The population grew from about 13 million in 1963 to about 21 million in 1978. The farming cooperatives were not able to keep up with population growth. Like the Soviet Union and China, North Korea carried out several industrial plans. The plans were often promoted by movements such as the Chollima ( 천리마 ) . The Chollima is a Legendary Flying Horse capable of traveling great distances in a day and untamable. Chollima speed is a phrase often used in North Korea, signifying rapid development) .
A majority of the wealthy lordlord or yangban class fled to South Korea in the late 1940s.Those yangban families that remained in North Korea found their land holdings taken away and given the same farm plots as the peasants.
Money & Power in North Korea - Hidden Economy New Documentariy 2015 North Korea has becoming increasingly isolated under a series of international
Rise of the North Korean GDP
It may seem hard to believe today, but for decades after the Korean War the North outpaced the South in economic development. The North's heavy industry grew rapidly with Soviet investment. South Korea only drew even with North Korea in 1978 in GDP. Life expectancy at birth was about the same in North and South Korea in 1983. The South Korean GDP took off in the 1980s with the growth of the auto,machine tool, construction and other industries.
Both Koreas started out or more or less equal grounds. Both the countries were devastated, the South had a larger workforce but the North had more natural resources and industries. And for the first couple decades the North Korean economy actually performed better than the South Korean economy. So what changed all this? And why did North Korea become such a poor country? Most people will tell you that North Korea is poor because the sanctions are working. Or that it has to do with the fact that the country is communist. In this report we take a closer look at the history of North Korea's economy.
An estimated 90,000 ethnic Koreans living in Japan (zainichi, long term Korean residents of Japan who trace their roots to the period of Japanese colonialism in Korea) returned to North Korea mostly from 1956 to 1965 . As word of the harsh living conditions spread, repatriation declined sharply, though it continued as late as 1984.
The Taean and Chongsan-ri Methods
Kim Il-Sung launched the Taean method for industry and the Chongsan-ri ( 청산리방법 ) method for agriculture. The Ch'ongsan-ni Method called for high-ranking party officials, party cadres, and administrative officials to emulate Kim Il Sung by making field inspections. The system also provided opportunities for farmers to present their grievances and ideas to leading cadres and managers. The method, however, subsequently was undercut by heavy-handed efforts to increase farm production and amalgamate farms into ever-larger units. Actual improvement in the agricultural sector began with the adoption of the subteam contract system as a means of increasing peasant productivity by adjusting individual incentives to those of the immediate, small working group. iin December 1961 as an application and refinement of agricultural management techniques to industry. The Taean industrial management system grew out of the Ch'ongsan-ni Method.
Economic Decline in the mid 70s
The GNP growth rates were high between 1954 to1976 and declined by the 1980s due to lack of capital, increasing military spending and bureaucratic control. The energy sector is one of the most serious bottlenecks in the North Korean economy. Since 1990 the supply of oil, coal, and electricity declined steadily, and seriously affected all sectors of the economy. Crude oil was formerly imported by pipeline at “friendship prices” from the former USSR or China, but the withdrawal of Russian concessions and the reduction of imports from China brought down annual imports. There were no free markets until government allowed informal markets after the great famines of the 1990s. Food ,clothing and other items are rationed and sold at state owned stores.
The North Korea's economy is currently one of the world's few remaining centrally planned systems. There are almost no legal small businesses, but illegal small businesses are very common.North Korean exports grew to $1.5 billion by 1986, but imports grew to $2.1 billion, creating a debt of $2~3 billion. By 2001 the external debt had increased to $12.5 billion. Because of North Korea's failure to repay its debts, Japan declared North Korea a bankrupt country in 1986 and 1987. 140 western banks declared North Korea was in default to the tune of about $770 million. Unlike South Korea, which had Japan and the U.S. bail South Korea out to the tune of $4 billion, the North had no one to turn to for its debt.
Growth of Chinese Trade
The collapse of the Soviet Union and end of Soviet subsides to the land of juche was a great blow. North Korea, having always played the Soviet Union against China, turned to China again . China Korea trade grew and China provides about 70% of North Korea's energy and 40% of its food. Trade between China and North Korea reached $2.79 billion in 2008, up 41.3%compared to 2007. North Korea has about a $1.2 billion trade deficit with China, which could be seen as an indirect subsidy, since North Korea cannot get financing for trade due to its being a bad credit risk after defaulting on loans. China is actively facilitating North Korea's arms trade. China has helped sustain Kim Jong-Il's regime and opposed harsh international economic sanctions in the hope of avoiding regime collapse and an uncontrolled influx of refugees . China has grown frustrated over continued North Korean brinkmanship that threatens to start a second Korea War and has withheld oil supplies for a few days, such as in 2003 after a nuclear standoff with the United States as punishment .
Kaesong Industrial Park 개성 공업 지구 and Other Trade Zones
123 South Korean companies, led by Hyundai, work out the Keasong and there is a direct road and rail link between North and South Korea. Construction started in 2003. In addition to Kaesŏng and Kŭmgang-san, other special economic areas have been established at Sinuiju in the northwest (on the border with China, a Dutch Chinese named Yang Bin and the second richest man in China in 2001 was to run it, was arrested in China on corruption charges), and at Rason-Sonbong in 1991 in the northeast (on the border with China and Russia). Sinuiju it is widely believed have beens abandoned the after the Yang Bin arrest .
Growth in the import of luxuries in the last five years - Office 39
Despite the American and UN trade sanctions on North Korea since a nuclear weapon test in 2006 and the sinking of a South Korean navy ship in 2010, there has been a significant increase in the importation of cars, cellphones, laptops, appliances and other goods from China. Imports of cellphones have risen 4,200% since 2007.
China opposes the North Korean trade sanctions in principle ( even though it agreed to comply) and promotes trade as the way to bring reform to North Korea. Some items legally through China, some are smuggled through China. China has now surpassed Japan as the largest exporter of cars to North Korea. Many high end luxury items are brought in through the secretive organization in North Korea known as Office 39. Office 39 was behind the attempt to import two $15 million dollar Italian made yachts into North Korea for Kim Jong Il in 2009 (which failed ).
Very little is known about Room 39 due to the secretive nature surrounding the organization, but it is widely speculated that the organization uses 10 to 20 bank accounts in China and Switzerland for the purposes of counterfeiting, money laundering and other illicit transactions. It is also alleged that Room 39 is involved in drug smuggling and illicit weapon sales. A 2007 report published by the Millennium Project of the World Federation of United Nations Associations said North Korea makes an estimated $500 million to $1 billion annually from criminal enterprises. Many North Korean watchers believe that North Korea can continue to bring in enough hard currency through weapon sales through the secretive Office 39 and import enough luxuries to maintain the support of the political and military elite.
The luxury items are not all being bought up by the elite class, a new entrepreneurial class has arisen in North Korea, many making hundreds of dollars a month. This new bourgeoisie is one of the driving forces behind this recent demand.
Cell phones in North Korea
Ownership of a cell phone was considered a crime in North Korea until recently. The Egyptian telecom company Orascom, which set up North Korea's first mobile network, estimates it has 809,000 subscribers in late 2011. International calls are forbidden . As of May 2011, 60% of Pyongyang's citizens between the age of 20 and 50 have a cellphone. There is also a growing number of black market Chinese cell phones.
North Koreans, mostly women, sell things such as clothes and electronics from China and South Korea in informal markets. Since many workers in factories and collectives are no longer getting paid it is the only source of income for some North Koreans.
Europeans and Chinese investing in North Korea
A cheap and educated workforce is a draw for Chinese and European investors . Labor in North Korea is now cheaper than in China since he economy there has boomed over the years. There are about 100 foreigners in Pyongyang doing business.
North Korea and South Korea Facts from CIA Fact Book
North Korean Population ( 2009 est) 24,051,218 South Korea Population 48,754,657 ( 2011 est )
North Korean GDP (2008 est) $28.2 billion 94th in world
China accounted for 83% of North Korean trade in 2010
South Korean GDP $1.375 trillion ( 2009 est ) 44th in world
North Korean GDP per Capita $1,800 (2009 est.) South Korean GDP per Capita $28,300 ( 2009 est )
North Korean Land Area 120,538 sq km ( slightly smaller than Mississippi )
South Korean Land Area 99,720 sq km ( slightly larger than Indiana )
North Korea's life expectancy was 63.8 years in 2009
South Korean Life Expectancy 79.05 years
North Korean Currency
The won is the currency of North Korea. It is subdivided into 100 chon. Since 2001, the North Korean government has abandoned the old rate of 2.16 won to the dollar (which is said to have been based upon Kim Jong-il's birthday, February 16) . The rate as of Jan, 2011 is 900 North Korean won to the dollar . A high rate of inflation has been eroding the North Korean won's value.
Kim Jong-il tried to smash his country's fragile free market with a shock currency devaluation. The Korean won was revalued in 2009. North Koreans were forced to exhange old notes to new ones at a rate of 1 to 100. When North Koreans heard the news, they rushing to the black market to convert hoarded bills into US dollars and Chinese yuan . The move, seen as a move against black market activity, wiped out many North Koreans' savings. The old notes ceased to be legal tender on November 30, 2009 . Pak Nam-gi, Director of the Planning and Finance Department was executed in march of 2010 for unrest and difficulties related to the devaluation .
North Koreans dare to protest as devaluation wipes out savings independent.co.uk
North Korea's official currency won is losing its footing in the country. Dollarization, or the phenomenon in which foreign currencies, such as China's renminbi, U.S. dollar and euro, replace the won is intensifying in North Korea. Notably, ever since the currency reform in 2009, the value of North Korean won has fallen sharply and citizens have been frequently using China's renminbi instead in marketplaces. Moreover, U.S. dollar is more favored as an asset than the won in North Korea. In this week's Bizline, we will listen to North Korean defectors and experts' views on the situations on usage of foreign currencies in North Korea and causes behind intensifying usage of foreign currencies.
Mar 17, 2014
North Korean 50 Won note, 1978
North Korean 5 Won note
1947 1 Won
North Korean 1/2 Chon
A Look At North Korea's Cars
North Korean schoolkids using computers
The operating system they use is probably DPRK's very own Linux distribution called Pulgunbyol.A majority of computers provided to North Korea are Chinese and South Korean models. North Korea has the domain country code .kp, there is no internet access for most people. the offical government website is www.naenara.kp. North Korea's first PC Bang (internet cafe) opened in 2002, and many town have them now.
The 330 metre, 105 floor Ryugyong Hotel ( 류경 capital of willows') as seen from the Potong Gate. Construction began in 1987 with planned completion in 1989.construction was eventually halted in 1992. ; had this been achieved, it would have held the title of world's tallest hotel.In July 2011, it was reported that the exterior work was complete. In 2008, North Korean officials stated that the hotel would be completed by 2012, coinciding with the 100th anniversary of the birth of "Eternal President" Kim Il Sung.