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North Korea
Table of Contents
 * Introduction & Quick Facts
   
 * Land
    * Relief
   
    * Drainage and soils
   
    * Climate
   
    * Plant and animal life

 * People
    * Ethnic groups and languages
   
    * Religion
   
    * Settlement patterns
   
    * Demographic trends

 * Economy
    * Agriculture, forestry, and fishing
   
    * Resources and power
   
    * Manufacturing
   
    * Finance and other services
   
    * Trade
   
    * Transportation

 * Government and society
    * Constitutional framework
   
    * Local government
   
    * Justice
   
    * Security
   
    * Health and welfare
   
    * Housing
   
    * Education

 * Cultural life
    * The arts
   
    * Press and broadcasting

 * History
    * The Kim Il-Sung era
      * The 1950s and ’60s
      * From 1970 to the death of Kim Il-Sung
        * Domestic developments
        * International relations
        * Relations with the South
   
    * North Korea under Kim Jong Il
      * Domestic priorities and international cooperation
      * Nuclear ambitions
      * Internal challenges and international relations
      * Relations with the South
   
    * The rise and rule of Kim Jong-Un
      * Kim Jong-Un’s consolidation of power
      * Acceleration of North Korea’s nuclear program
      * Engagement with South Korea and the United States

Fast Facts
 * 2-Min Summary
 * Facts & Stats

Media
 * Images

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 * More Articles On This Topic
 * Additional Reading
 * Contributors
 * Article History


ECONOMY OF NORTH KOREA

North Korea has a command (centralized) economy. The state controls all means of
production, and the government sets priorities and emphases in economic
development. Since 1954, economic policy has been promulgated through a series
of national economic plans. The early plans gave high priority to postwar
reconstruction and the development of heavy industries, especially chemicals and
metals. Subsequent plans focused on resource exploitation and improving
technology, mechanization, and infrastructure. Little attention was given to
agriculture until the 1970s, and it was not until the late 1980s that much
effort was made to improve the quality and quantity of consumer goods.


Kanggye
Timber-processing factory, Kanggye, N.Kor.
Dprk48

Reliable information on the performance of the North Korean economy usually has
been lacking. Outside observers have concluded that the country has consistently
failed to meet its stated goals and that production statistics released by the
government often have been inflated. Thus, although North Korea has made strong
efforts to transform an essentially agrarian economy into one centred on modern
industry in the post-Korean War years, it is generally believed that the country
has been only partially successful.

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North Korea’s economic goals have always been linked to the general government
policy of self-reliance (juche, or chuch’e). The country shunned foreign
investment, although it accepted considerable economic aid from the Soviet Union
and its satellite eastern European countries as well as from China. Despite its
stated policy of self-reliance, North Korea routinely found it necessary to
import such essential commodities as fuels and machinery as well as grain.



By the early 1990s, North Korea had begun to experience severe economic
hardships. The Soviet Union had collapsed, and the communist regimes of its
eastern European allies had fallen, depriving North Korea of most of its trading
partners and much of its former aid. China reduced but did not completely cut
off its provision of materials to North Korea, but in 1992 it began to demand
cash payments in place of grants-in-aid or credit accounts. In addition, in the
mid-1990s the country suffered a series of natural disasters, including floods
and drought. Serious grain and food shortages resulted, and starvation and
malnutrition were widespread throughout the country.

The situation improved somewhat by the end of the decade because of a massive
infusion of international food assistance. In July 2002 the government
proclaimed a new policy intended to deal with the huge gap that had developed
between the official economy and the so-called “real people’s economy” (i.e., a
black market), which was in the throes of runaway inflation. But the measures
served only as a temporary stopgap; well into the first decade of the 21st
century, the highest priority of the government remained the solution of what it
called “the food problem.”

In addition to North Korea’s acceptance of foreign aid during the 1990s, its
poor economic performance during the decade forced the government to begin
opening up the economy to limited foreign investment and increased trade. By the
end of that decade, North Korea was actively inviting foreign investment from
European Union (EU) countries, South Korea, and others. It was more receptive to
discussions with EU and Commonwealth countries than it was to the United States,
Japan, and South Korea—the latter three countries having been much more at odds
diplomatically and strategically with North Korea since the Korean War (in the
case of Japan, since the colonial period) than the others. However, since those
three countries have been the main sources of foreign aid in the early 21st
century, North Korea has maintained at least minimal contact with each of them.

Efforts have been made throughout North Korea’s history to increase low labour
productivity. In the late 1950s the state adopted a mass-mobilization measure
called the Ch’ŏllima (“Flying Horse”) movement that was patterned on China’s
Great Leap Forward of 1958–60. Subsequently, in the early 1960s, programs were
instituted in agricultural and industrial management, called respectively the
Ch’ongsan-ni Method and Taean Work System. In the late 1990s the country adopted
the official goal of building a strong military and a prosperous economy,
adopting the motto “Kangsŏng taeguk” (“Strong and prosperous nation”). Under
this slogan Kim Jong Il paid meticulous attention to the military, his primary
base of power, while opening parts of the economy to accommodate foreign
investment and trade. North Korea even allowed parts of its territory to be used
by foreign (South Korean) businesses, including the sightseeing areas around
Mount Kŭmgang, in the southeast, and the Kaesŏng Industrial Complex, in the
southwest. However, the operation of these enclosed and restricted areas, known
as special economic districts (gyŏngje t’ŭkgu), was conducted strictly under
North Korean supervision and was only for the purpose of collecting foreign
currencies (mainly U.S. dollars), not as part of the country’s overall economic
activity.




AGRICULTURE, FORESTRY, AND FISHING

By 1958 all privately owned farms were incorporated into more than 3,000
cooperatives; each cooperative comprises about 300 families on about 1,200 acres
(500 hectares). The farm units are controlled by management committees, which
issue orders to the work teams, set the type and amount of seed and fertilizer
to be used, and establish production quotas. Produce is delivered to the
government, which controls distribution through state stores. There are also
state and provincial model farms for research and development.



Agriculture contributes a decreasing proportion to the national economy, but
there has been an overall increase in cultivated land, irrigation projects, the
use of chemical fertilizers, and mechanization. Nonetheless, since the early
1990s, North Korea has had a chronic shortage of chemical fertilizers, seed
grains, and farming equipment. Farmers are paid for their labour in money or in
kind and are allowed to keep chickens, bees, fruit trees, and gardens. In
theory, farmers can sell surplus produce at local markets that are held
periodically, but with the food crisis that began in the mid-1990s, any surplus
above the subsistence level disappeared. Although farmers fared relatively
better than most urban workers during the lean years, even they struggled for
survival.

The main food crops are grains—notably rice, corn (maize), wheat, and barley.
The country formerly produced enough rice for domestic consumption, but some is
now imported. Wheat had to be imported even before the period of food shortages,
although wheat productivity increased after the mid-1950s. Potatoes, sweet
potatoes, soybeans and other beans, vegetables, and tree fruits are raised
extensively. Industrial crops include tobacco, cotton, flax, and rape (an herb
grown for its oilseeds). Livestock raising is concentrated in areas poorly
suited for crop raising. Livestock production has increased steadily, especially
poultry production, over the country’s history. However, all sectors of
agricultural production were drastically affected during the food crisis.

The northern interior contains large forest reserves of larch, spruce, and pine
trees. Most of the coastal slopes have been extensively deforested, however,
much of this having been done by the Japanese during World War II; reforestation
programs have stressed economic forestry. Forestry production, after having
declined following the war, has not grown substantially. Much of the wood cut is
used as firewood. During the severe fuel shortage that accompanied the years of
economic crisis, North Koreans indiscriminately—and often illegally—cut down
trees for firewood. Many hillsides in the country are now barren; the loss of
forest cover contributes to massive flooding in the monsoon season, which in
turn leads to poor harvests and further economic hardships.

The sea is the main source of protein for North Koreans, and the government has
continually expanded commercial fishing. Most fishing activity centres on the
coastal areas on each side of the peninsula, although there was an increase in
deep-sea fishing beginning in the late 20th century. The main species caught
include pollack, sardines, mackerel, herring, pike, yellowtail, and shellfish.
Aquaculture represents about one-fourth of the country’s fish production.



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