North Korea: Encyclopedia II - North Korea - Economy

North Korea - Economy

North Korea's economy has stagnated since the 1970s. The government refuses to release economic data, limiting the amount of reliable information available. Publicly owned industry produces nearly all manufactured goods. The government continues to focus on heavy military industry. As of 2005, the government is estimated to have spent around 25% of the nation's GDP on the military.[2]

The 1990s saw a series of natural disasters, political mismanagement crises and corruption scandals. This, along with the collapse of the Soviet bloc, has caused significant economic disruption. The agricultural outlook is poor, and some food products are deliberately diverted away from citizens and into the military. The combined effects of a reclusive regime, serious fertilizer shortages, and structural constraints — such as little arable land and a short growing season — have resulted in a shortfall of staple grain output of more than 1 million tons from what the country needs to meet internationally-accepted minimum requirements. Recent evidence suggests serious food shortages.[3]

North Korea has previously received international food and fuel aid from China, South Korea, and the United States in exchange for promises not to develop nuclear weapons. In June 2005, the U.S. announced that it would give 50,000 metric tons of food aid to North Korea. The United States gave North Korea 50,000 tons in 2004 and 100,000 tons in 2003. On 19 September 2005, North Korea was promised food and fuel aid (among other things) from South Korea, the U.S., Japan, Russia, and China in exchange for abandoning its nuclear weapons program and rejoining the Nuclear Non-Proliferation Treaty. It remains to be seen if this exchange will actually occur. The agreement was less than one day old before issues arose with its implementation.

In July 2002, North Korea started experimenting with capitalism in the Kaesŏng Industrial Region. A small number of other areas have been designated as Special Administrative Regions, including Sinŭiju along the China-North Korea border. Mainland China and South Korea are the biggest trade partners of North Korea, with trade with China increasing 38% to $1.02 billion in 2003, and trade with South Korea increasing 12% to $724 million in 2003. It is reported that the number of mobile phones in P'yŏngyang rose from only 3,000 in 2002 to approximately 20,000 during 2004. As of June 2004, however, mobile phones became forbidden again. A small amount of capitalistic elements are gradually spreading from the trial area, including a number of advertising billboards along certain highways. Recent visitors have reported that the amount of open-air farmer markets have increased in Kaesong, P'yŏngyang, as well as the China-North Korea border, bypassing the food rationing system.

Moreover, there have been economic improvements since 1999. According to the ministry of unification of South Korea, the GDP grew by 6.2% in 1999, 1.3% in 2000, 3.2 % in 2001, 1.2% in 2002 and 1.8 % in 2003. Similar figures are expected in 2004 and 2005.

See also: List of North Korean companies, Communications in North Korea, Transportation in North Korea

Adapted from the Wikipedia article "Economy", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki