Economy of North Korea: description and interesting facts

The Government of the DPRK declares that there is a real paradise in their country: everyone is happy, secure and confident in the future. But refugees from North Korea describe another reality, a country where one has to live beyond the limits of human capabilities, without a goal and the right to choose. The economy of North Korea has been in crisis for a long time. Features of the country's economic development will be presented in the publication.

Characteristic

In the economy of North Korea there are three distinctive features. First, it is an order in which resources are centrally distributed. This type of economy is called planned. Secondly, resources are used to confront possible threats, which can destroy the integrity of the country. Such use is called mobilization economy. And third, they are guided by the principles of socialism, that is, justice and equality.

From this it turns out that the North Korean economy is a planned mobilization economy of a socialist country. This state is considered the most closed on the planet, and since the DPRK did not share economic statistics with other countries since the 1960s, one can only guess what is happening beyond its borders.

The country does not have the most favorable weather conditions, so there is a shortage of food products. According to experts, the inhabitants are beyond the poverty line, only in 2000 the famine ceased to be a problem of a national scale. As of 2011, the DPRK is at 197th place in the world in terms of purchasing power.

Because of the militarization and the policy of the national-communist state ideology of Kim Il Sung, the economy has been in decline for a long time. Only with the advent of Kim Jong-un new market reforms began to be introduced and the standard of living increased, but everything in order.

Economics of the post-war period

In the second half of the 20-ies of the twentieth century, Korea began to develop deposits of minerals in the north of the country, which caused the increase in the population. This ceased after the end of World War II. Korea was then conditionally divided into two parts: the southern one went to the USA, and the northern one was under the rule of the USSR. This division has provoked an imbalance of natural and human resources. So, in the north was concentrated a powerful industrial potential, and in the south - the bulk of the labor force.

After the establishment of the DPRK and the end of the Korean War (1950-1953), North Korea's economy began to change. It was forbidden to engage in business activities, and the card system entered into use. It was impossible to sell grain crops in the markets, and the markets themselves were used extremely rarely.

In the 1970s, the authorities began to pursue a policy of economic modernization. In the heavy industry, new technologies were introduced. The country began to supply the world market with minerals and oil. In 1979, the DPRK could already cover foreign debts. But in 1980 the country started defaulting.

Two decades of crisis

The economy of North Korea, in short, suffered a complete fiasco. Demand for products has significantly decreased, and because of the oil crisis, the country was declared bankrupt. In 1986, the external debt to the Allied countries was more than 3 billion dollars, and by 2000, the debt exceeded 11 billion. The deviation of economic development towards heavy industry and military equipment, the country's isolation and lack of investment have become factors that hampered economic development.

To rectify the situation, in the 82nd year it was decided to create a new economy, the basis of which was to develop agriculture and infrastructure (especially power plants). Two years later, the law on collective enterprises was adopted, which helped to attract foreign investments. 1991 was marked by the creation of a special economic zone. Let and with difficulty, but the investment there flowed.

Juche Ideology

The Juche ideology had a special impact on the economic development of the state. This is a peculiar combination of the concepts of Marxism-Leninism and Maoism. Its main provisions, which affected the economy, were as follows:

• Revolution is a way to achieve independence;
• Doing nothing means abandoning the revolution;
• To protect the state, all the people must be armed, so that the country can become a fortress;
• The correct view of the revolution comes from a feeling of boundless devotion to the leader.

In fact, this is what holds the North Korean economy. Most of the resources are aimed at developing the army, and the remaining funds are barely enough to save citizens from hunger. No one will rebel in such a state.

The crisis of the 90s

After the Cold War, the Soviet Union stopped supporting North Korea. The country's economy has ceased to develop and has declined. China also stopped supporting Korea, and in combination with natural disasters, this led to a famine in the country. According to experts, the famine caused the death of 600 thousand people. The next plan to establish a balance failed. There was a shortage of food, an energy crisis broke out, and as a result, many industrial enterprises stopped.

Economy of the 21st century

When Kim Jong Il came to power, the country's economy was a little "cheered up." The government carried out new market reforms, the amount of Chinese investment increased ($ 200 million in 2004). Due to the crisis of the 1990s, semi-legal trade was widely spread in the DPRK, but no matter how the authorities tried, even today there are "black markets" and smuggling of goods.

In 2009, an attempt was made to carry out financial reform in order to strengthen the planned economy, but as a result, the inflation rate in the country sharply increased, and some essential goods became scarce.

At the time of 2011, the DPRK's balance of payments finally began to show a figure with a plus sign, foreign trade has a positive impact on the state treasury. So what kind of economy is in North Korea today?

Planned Economy

The fact that all resources are at the disposal of the government is called the command economy. North Korea is one of the socialist countries, where everything belongs to the state. It is it that solves the issues of production, import and export.

The command and administrative economy of North Korea is designed to regulate the number of manufactured products and price policy. At the same time, the government makes decisions, not based on the real needs of the population, and guided by the planned indicators that are presented in statistical reports. There is never an excess of goods in the country, as this is inexpedient and economically unprofitable, which the government can not tolerate. But very often one can meet the shortage of essential goods, in connection with this, illegal markets flourish, and corruption along with them.

How is the treasury filled?

North Korea has only recently begun to overcome the crisis, behind the poverty line is ¼ of the population, there is an acute shortage of food products. And if we compare the economies of North and South Korea, which competes with Japan in the production of humanoid robots, then the first definitely lags behind in development. Nevertheless, the state has found ways of filling the treasury:

• Export of minerals, weapons, textiles, agricultural products, coking coal, equipment, grain crops;
• Oil refining industry;
• Established trade relations with China (90% of turnover);
• Taxation of private business: for every transaction the entrepreneur pays 50% of the profit to the state;
• Creation of trading zones.

Kaesong - commercial and industrial park

Together with the Republic of Korea, the so-called industrial park was created, where 15 companies are located. More than 50,000 North Koreans work in this zone, their salaries are almost 2 times higher than in the territory of their native state. The industrial park is profitable for both sides: finished products are exported to South Korea, and the North has a good opportunity to replenish the state treasury.

Dandong City

Similarly, relations with China have been established, only in this case the mainstay of trade is not the industrial zone, but the Chinese city of Dandong, where trade deals are conducted. Now there are many North Korean trade missions open. Sell goods can not only organizations, but individual representatives.

Seafood is in great demand. In Dandong there is a so-called fish mafia: to sell seafood, you must pay a fairly high tax, but even so it turns out a good profit. There are, of course, daredevils who import seafood illegally, but because of strict sanctions they are getting smaller every year.

Interesting Facts

Today, North Korea is dependent on foreign trade, this is an indisputable fact. But there are several interesting moments in the country's economy, some of them are inseparable from politics.

So, in the country there are 16 labor camps created on the principle of the Gulag. They have two roles: the punishment of criminals and the provision of free labor. Since there is a principle of "punishing three generations" in the country, some families spend their entire lives in these camps.

In the period of economic decline, insurance fraud flourished in the country, and at the international level, for which the government was repeatedly sued with a demand to return insurance payments.

In the late 70-ies the state monopoly on foreign trade was abolished. In this regard, any interested person could enter the international market, having previously registered in a special foreign trade company.

During the crisis, the main currency was food, it could be exchanged for anything.

On April 1, 1974, taxes were abolished, but this did not apply to private entrepreneurs.

The economy of North Korea is the world's first place can take on the degree of closure from the outside world.

There are still many gaps in the country's economy, citizens are trying to migrate at any convenient opportunity, and the cards that replace money have not yet left the household. It is almost impossible to get to the territory of the state, and all areas visible to tourists can be called exemplary-exemplary territories. The world is lost in conjecture about what is actually happening in North Korea, but the country's economy is rising and, perhaps, after a decade, the DPRK will be at the same level of economic development with its closest neighbors.