North Korea Economic Conditions

By | June 6, 2022

Thanks to the availability of mineral resources and the financial and technical support of the Soviet Union and China, in the decades following the Second World War, North Korea achieved a rapid and relatively balanced development, promoting the modernization of agriculture, the birth of industry and the expansion of infrastructures, and aiming to achieve economic results that did not differ from those of South Korea. Agrarian reform, cultivation of new surfaces and land collectivization have marked the primary sector, achieving excellent production performance in the early days, up to reaching self-sufficiency (then lost also as a result of contingent meteorological events); decisive development of heavy industry, only recently flanked by the production of consumer goods, and rigid planning of production objectives have characterized the secondary sector; the tertiary sector, on the other hand, is limited to transport, distribution and the public sector, armed forces (over 1.1 million personnel, about 20% of the state budget). Between the end of the 20th century. and the beginning of the 21st century, the obsolescence of the industrial system, the resumption of strong international tensions, the lack of adequate technologies and a series of unfavorable agricultural years have led to a sudden loss of competitiveness, increased dependence on international aid, stagnation of production, decline in incomes, now far from those of the South Korea, and growing state indebtedness.

According to Homosociety, the consequent political-social tensions were relatively contained, also thanks to the moderate diffusion of social services and the attempts to normalize relations with the Southern region and other countries with advanced economies, but also as a result of an iron state control. International investments are scarce, although increasing (from China, above all, and from Southern Italy), attracted by the very low cost of labor.

About 17% of the surface, in the coastal plains, is occupied by crops. The main product is rice (2.5 million tonnes in 2005), followed by potatoes, corn, soy, vegetables and fruit. The production of industrial plants such as cotton and tobacco, whose production has had to make way for an expansion of food crops, is now decidedly modest compared to its past importance. Famines at the end of the 20th century. have led to an enhancement of food production capacities, not only with the rationalization of the production structure, increasing mechanization and greater use of fertilizers, but also through infrastructural interventions aimed at improving living and production conditions in rural areas. The exploitation of forests is increasing, which occupy more than 2/3 of the total area,3 in 2005). Breeding has limited proportions, while fish production is relatively developed, which is also being strengthened through the development of aquaculture.

Mineral resources are conspicuous, but their exploitation has registered a significant reduction in recent years: mainly coal (16.5 million tonnes in 2005) and lignite are extracted, used for the production of electricity (which, however, is more than half guaranteed by hydroelectric plants), iron and magnesite, of which North Korea is one of the largest producers in the world.

Industry, which employs about 28% of the active population, participates for less than 25% in the formation of the gross domestic product, while a few years ago it still reached about 60%; in the composition of GDP the tertiary sector now prevails (about 43%), followed by the primary sector (33%). The main industrial centers have sprung up in the mining areas and in correspondence with the main ports. The most relevant industrialized areas gravitate to Pyŏngyang, on the north-western border with China (centering on the city of Sinŭiju), on the south-western border with South Korea (Kaesŏng) and on the ports of the east coast. Strong development is shown in the iron and steel sectors, and more generally in the metallurgical, chemical and cement sectors; a place of absolute importance has the production of armaments; more modest, even if in development, are the sectors of intermediate and final goods (apart from traditional processes such as Kaesŏng porcelain) which see textiles, electronics, mechanics, paper and wood pulp among the best placed.

The railway system (5200 km) is discreet, albeit of an old concept, connected with the Chinese and Russian networks; The road network, on the other hand, is totally inadequate, covering just over 23,000 km, for less than a tenth of asphalt. Ports play an important and growing role, especially those of Chŏngjin (passengers), Chinnampo (minerals) and Unggi (timber). There is little air traffic. Over half of the foreign trade is carried out with China, but exchanges are expanding with Southern Italy and Japan, and also with some Western countries, including in particular Italy and France.

North Korea Economic Conditions