The Benefits of Reconstructing North Korea’s Economy
Political Science 105
Professor Chad Smith
Following the split caused by the Korean War, North Korea was able to create its desired economy in little to no time, with industrialization as the key component. However, shortly following the reconstruction, the poorly modeled Soviet-style economy failed in both management and development, leading to a state of stagnation. Soon to follow were chronic food and power shortages, as well as failed industrial capital stock. (Bajpai, n.d.). International food aid has been a major component in keeping the populous alive, but the assistance is not enough to sustain and nurture the people nor economy. If the North Korean government does not undergo structural reform to obtain a market economy, it faces unsurpassable barriers in reaching economic growth and stability.
Throughout much of North Korea’s recent history, international business and trade have not only been looked down upon, they have also been carelessly disregarded in light of selfish pursuits. During the 1970s, the country pushed its juche ideology to the breaking point though excessive military growth, leaving it greatly in debt with little to no external help. This predicament only worsened in 1975 when the de facto embassy ultimately severed North Korea’s ties from international capital markets. The already bleak situation went from bad to worse in the 1980s with the withdrawal of Soviet economic support, which eventually led to the early 1990s ruin of the Eastern Bloc economies, which had been North Korea’s largest trade partners. (Buruma, 2013, pg. 1). North Korea’s obsession with nuclear activity, its military-first mindset, and lack of proper treatment of its people, are some of the key elements prohibiting growth in international relations and enterprise.
Due to a desire for self-sufficiency based on juche ideology, present day North Korea’s food shortage proves to be one of the most devastating elements in its failed economy. Initially, this independent drive produced more than enough food for North Korea, ultimately getting the country to a place where it could export food during the 1980s. However, without help from international sources, natural disasters all but destroyed croplands in the 1990s and left the people in a state of starvation. As the geographical regions well suited for agriculture diminished, overuse of local farms and lack of resources led to a depletion of sustainable crops within the country. A CRS report prepared for members and committees of congress noted that “food aid—largely from China, South Korea, and the United States—has been essential in filling the gap between North Korea’s supply and demand, though since 2009 donations from all countries except China have dwindled to a minimal amount. (Manyin and Nikitin, 2014, pg. 2). Even with China’s support, the future looks bleak for North Korea because food shortages are arising elsewhere, and political tensions are only increasing.
Energy is also an immense concern, and an article in National Geographic Magazine explains that “like isolated regimes of the past—Germany in the 1930s and South Africa under apartheid—North Korea is turning to coal to fuel engines that in rest of the world run on oil or natural gas.” (Lavelle, 2011, pg. 1). Having suffered from lack of energy sources for more than half a century, the country all but crumbled when the Soviet Union collapsed. China offers minor help, but is diligent to oversee each and every aspect of North Korea’s energy policy. For example, China is entangled with the oil drilling along the country’s coast, and has two long-term leases in North Korea’s valuable ports. (Ahn, 2014). With increasing rumors of energy exploitation, it is unlikely this bond will last much longer if it remains unchanged, leaving North Korea where it started: a nation without power.
In a recent New York Times article written by Andrei Lankov, a professor and historian of North Korea, it is stressed that economics is the key to bettering the people of North Korea, emphasizing how successful the small agricultural reforms have been even though the “full impact of the reforms in industry will not be felt for a while” (2015). Following in the steps of Vietnam, China, and other countries making economic reforms, would alleviate many of the nation’s problems. Glimmers of hope, such as a set of measures for economic reform enacted by North Korea in July 2002 to “improve the people’s living standards based on new economic policy,” give promise to brighter future. (The People’s Korea, August 17, 2002). That being said, minor reform is not sufficient in itself to turn around the economy. Capital is fundamental to restoring the agriculture, energy supplies, and modern technology. Many countries are not open to investing in North Korea, given the country’s ill-fated government. A facebook conducted survey revealed that many people would not participate financially with a country utilizing a command economy for ethical reasons, and that a market economy is the superior economic system. (See graphs 1 and 2). The desire to change appears evident, but old habits and a restrictive regime are currently blocking the way.
Countries that operate in a communist fashion are often prone to economic conflict, and overtime, North Korea will eventually give way to economic reform or chaos. In an article found in the Asian Studies Review, Yong Soo Park suggests that Kim Jong-un is unlikely to sway from his predecessors, explaining that “no one in the present North Korean leadership is free from the powerful and pervasive influence of the monolithic system, Juche ideology and the military-first policy” (2014). North Korea’s military-first ideology, Songun Chongchi, absorbs much of the nation’s income, and takes precedence over providing the people with adequate food, housing, and jobs. Even though the economy has been reported as more stable since 2000 through growing revenue, North Korea has increased its reliance on international food assistance. Communist governments throughout history often fail because business and the economy is entrusted to civil servants who place the wealth in one pot, only to divide the wealth amongst the populace equally. North Korea is likely to either implode into a civil war over disputes, or slowly evolve economically, thereby gaining economic stability over time. Although the North Korean economy has experienced some positive growth in recent years, the longevity of the recovery is uncertain unless drastic reforms are made to economic operations.
Ahn, S. H. (Director) (2014, August 9). North Korea’s Energy Crisis. The Academic Minute. Lecture conducted from The Academic Minute, .
Bajpai, P. (n.d.). How the North Korea Economy Works. Retrieved April 16, 2015, from http://www.investopedia.com/articles/investing/013015/how-north-korea-economy-works.asp
Buruma, I. (2013, April 6). North Korea’s Tragedy Is That No One Wants to Change the Status Quo. The Daily Star (Beirut, Lebanon). Retrieved March 16, 2015, from http://www.highbeam.com/doc/1G1-325111120.html?
Lankov, A. (2015, January 22). North Korea Dabbles in Reform. Retrieved January 29, 2015, from http://www.nytimes.com/2015/01/22/opinion/north-korea-dabbles-in-reform.html
Lavelle, M. (2011, December 20). North Korea: Nuclear Ambition, Power Shortage. Retrieved April 22, 2015, from http://energyblog.nationalgeographic.com/2011/12/20/north-korea-nuclear– ambition-power-shortage/
Manyin, M., & Nikitin, M. (2014). Foreign Assistance to North Korea. Retrieved April 24, 2015, from https://www.fas.org/sgp/crs/row/R40095.pdf
Park, Y. S. (2014). Policies and Ideologies of the Kim Jong-un Regime in North Korea: Theoretical Implications. Asian Studies Review, 38(1), 1-14.
The People’s Korea. 2003. Various issues, http://www.korea-np.org.jp