Economy of North Korea

1.The economy of North Korea is an industrialized and centrally planned economy. The North Korean economy has become increasingly isolated from that of the rest of the world, and its industrial development and structure do not reflect its international competitiveness. By 2000, taking into account penalties and accrued interest, North Korea's hard-currency debt was estimated at USD 10-12 billion

2.North Korea and South Korea both suffered from the massive destruction caused during the Korean War. After partition the North was better off in terms of industry and natural resources. By most economic measures, The South, however, had two-thirds of the work force. In the years immediately after the war, North Korea received large amounts of aid from other communist countries, notably the Soviet Union and the People's Republic of China. The collapse of communist governments around the world in 1991 have forced North Korean economy to realign its foreign economic relations. Economic exchanges with South Korea have even begun in earnest ways at times. Trade between the countries increased from $18.8 million in 1989 to $333.4 million in 1999, much of it processing or assembly work undertaken in the North.

3.The energy sector is one of the most serious bottlenecks in the North Korean economy. North Korea has no coking coal, but has substantial reserves of anthracite. Lack of foreign exchange to purchase spare parts and oil for electricity generation left many factories idle. Crude oil was formerly imported by pipeline at “friendship prices” from the former USSR or China. Coal accounted for more than 80% of primary energy consumption and hydropower more than 10%.

4.Only about 18% of the total landmass, or approximately 22,000 km², is arable; the major portion of the country is rugged mountain terrain. Lack of fertilizer, natural disasters, and poor storage and transportation practices have left the country more than a million tons per year short of grain self-sufficiency. Since the 1950s, a majority of North Koreans have received their food through the public distribution system (PDS). About 62% of the entire North Korean population, which represents the entire urban population, receives food through this government-run system (recipients were generally allotted 600-700 grams per day). It is estimated that between 1992 and 1998 North Korea's economy contracted by 50% and several hundred thousand (possibly up to 3 million) people died of starvation.

5. Beginning in the end of the decade, North Korea began slowly to modify its rigid selfreliant policy. The changes, popularly identified as the opendoor policy, included an increasing emphasis on foreign trade, a readiness to accept direct foreign investment by enacting a joint venture law, the decision to open the country to international tourism, and economic cooperation with South Korea.

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