The economy of the DPRK. Industry of the Democratic People's Republic of Korea

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:45

The economy of the DPRK is mainly characterized by the concepts of "planning" and "mobilization". A distinctive feature of the economic system is a high degree of militarization. At the same time, the Democratic People's Republic of Korea is one of the most closed states. Any information, including economic indicators, is not available to the international community. Therefore, external expert assessments cannot accurately determine how developed the DPRK economy is.

Of course, the disruption of ties with the whole world, combined with unfavorable natural resources, makes the country one of the least developed financially. Although the modern leader of the DPRK is carrying out peculiar reforms, the population is experiencing a food shortage. The Juche policy and the economy of this state will be discussed in this article.

Colony Development

Why did the administrative-command system affect the DPRK in particular? What country is capable of such a step? The reason for the development of today's situation goes tohistory, or rather, in the first half of the twentieth century. At that time, the territory was a Japanese colony. The actual rulers made multiple efforts to establish the economic sector. Sufficiently diverse industries could provide natural resources, which were slightly more than in the southern part of the peninsula. Against this background, migration flows formed within the country.

But the Second World War broke the idyll. The peninsula was divided into two parts, one of which belonged to the Soviet Union and the other to the United States. This led to the fact that everyone could go to the sector to which they were more sympathetic. But the advantage was on the side of the southern part. The situation remains unchanged to this day. This is clearly seen in the population, which is twice as large in the Republic of Korea.

The economy of the DPRK experienced an imbalance, as natural and human resources were divided unevenly. The main part of the labor force was concentrated in the south of the peninsula, but it was the Democratic People's Republic of Korea that had the best potential, resource base and prospects. The factories of the DPRK mainly specialized in heavy industry products.

The coming of the communists

Significant changes in the country occurred along with the assertion of the power of the Communists. This has also had a significant impact on the financial sector. Any form of private property was henceforth prohibited. Commerce was preserved only in the form of markets, but was rare. The introduced card system became total in two years.

Seventies

The economy of the DPRK in the seventies experienced significant reforms, which were due to the modernization of production in the manner of Western technology. The deplorable state of the financial sector pushed the government to such a step. The reasons for the default were a drop in demand for Korean goods abroad, which stopped the inflow of foreign currency. The second factor was the oil crisis.

The North Korean Won depreciated heavily towards the end of the decade. The country was simply unable to pay off all its debts. These obligations hung over the DPRK, making the state impoverished. Japan defaulted on its former colony around the same time period. Over the next twenty years, the external debt of the DPRK increased by twenty billion dollars.

End of the twentieth century

The end of the second millennium was marked for the state by a negative trend in all economic indicators. The GDP of the DPRK was so low that it was three times smaller than that of the Republic of Korea.

The direction taken by the government to develop the economy was obviously losing. The reasons for this result are as follows:

• greater contribution to the development of heavy industry (with absolute disregard for other sectors of the economy);
• huge debt obligations;
• policy of closeness and centralization;
• poor conditions for attracting investment.

Then ruler KimIl Sen decided to develop the financial sector. In his plan, much attention was paid specifically to agriculture. Kim Il Sung decided to improve the potential of this industry by building appropriate infrastructure and carrying out restoration and enrichment work for the land. A separate place was occupied by projects related to the transport network and the electric power industry.

Attracting foreign capital

To ensure the inflow of foreign currency and increase the GDP of the DPRK, the authorities decided to make changes to the regulatory framework. In 1984, a corresponding law was adopted, which provided the opportunity to create joint ventures and implement common projects.

The second step towards attracting foreign capital and technology was the organization of the Special Economic Zone, which was located in the north-east of the country. But this idea did not bring much success, since there was not enough infrastructure development. Obstacles were also created by local officials and the lack of guarantees for the safety of investments.

Crisis events

DPRK - what kind of country in terms of economic development? In the nineties, one could safely say that the one who experienced hunger. For such a civilized time, it's just wild. The reason for this terrible phenomenon was the contraction of the economy. The financial crisis worsened an already deplorable state, but the withdrawal of material support from the Soviet Union and China was a double whammy. According to various estimates, about 600,000 residents of Korea became victims of food shortages. People's Democratic Republic.

This crisis contributed to the softening of the government's positions and liberalization in relation to foreign partners. The industry of the DPRK has become the object of close attention and study. To overcome hunger, the government again allocated funds for the development of the agricultural sector. At the same time, the reforms also affected light industry. The plan of the authorities consisted in the harmonious distribution of resources and the simultaneous improvement of indicators in various areas of the national economy.

Many of the government's ideas have not yielded results - turned out to be inappropriate or not effective enough. The food shortage only worsened. This was primarily due to the shortage of grain crops. The catalytic factor of the crisis was problems in the energy sector, which suspended the work of many industrial facilities.

Twenty-first century

At the beginning of the third millennium, the North Korean won strengthened its position. This is due to the correct policy of the new leader Kim Jong Il. By his order, an entire industrial region was organized. As a result of market reforms, innovations have also appeared at industrial facilities. Some began to make attempts to introduce cost accounting. This helped attract additional investment. China's contribution to the economy of the Democratic People's Republic of Korea doubled over the year.

The monetary reform carried out gave mixed results. On the one hand, she was calledstrengthen the position of the planned economic system. According to those responsible for this project, these changes should have led to a decrease in the influence of the market. But in fact, this reform has caused an increase in inflationary processes and a shortage of essential goods. For such unfavorable moments, the person responsible for this innovation was imprisoned and then shot.

At the moment, the balance of foreign trade operations in the DPRK has a positive trend and the balance of payments account is equal to the number with a plus sign.

Commercial activity

The weak development of trade among the population has a historical background. Even in Confucianism, this work was considered less prestigious, and the corresponding segments of the population were engaged in it. To some extent, precisely because of this, the inhabitants of the DPRK were in no hurry to master the trade industry until the nineties of the twentieth century. The totality of the card system also played a role.

But the famine that occurred during this period of time forced many Koreans to go into this field. Moreover, most often they carried out their activities by not entirely legal methods. The authorities tried to fight this phenomenon. However, this had bad consequences in the form of another emerging process - corruption. Prohibited products of the Republic of Korea were smuggled into the territory of the DPRK. Before that, she passed through China, but nothing stopped people. These actions were practically not stopped, the punishments for private traders became less severe. This led to the fact that the illegal market of Chinese goodsworks great so far.

Russia and North Korea

For many years, it was Russia that occupied the lion's share of the total volume of trade with the DPRK. Now in this regard, the Russian Federation ranks fifth, supplying strategically important materials and resources.

To a greater extent, the Russian Federation imports raw materials into the state, such as coal and oil. A significant share is occupied by products of mechanical engineering, as well as the chemical industry.

One of the problems of developing cooperation in other areas, as well as establishing partnerships, is the outstanding debt obligations of the DPRK to the Russian Federation. Basically, all planned projects between the countries relate to the energy sector.

DPRK, whose currency against the ruble is currently equal to the ratio of 1000 to 51.39, is far behind in development from many states. Won to dollar ratio - $1 to $900.

Heavy industry

DPRK's exports are mainly characterized by heavy industrial goods. The extractive sector occupies the main place in the state economy. The country is self-sufficient in almost all types of mineral raw materials.

It is thanks to a good raw material base that industries such as metallurgy and engineering have developed. In terms of iron ore reserves, the DPRK surpasses many developed countries, and non-ferrous metallurgy is generally the most promising industry.

Chemical industry

The task of this industry is to provide raw materials to other areas,such as light industry and agriculture. The advantage of the chemical industry lies in the use of local raw materials, which makes production cheaper. However, the problem of this industry, like all others, is the lack of fuel and raw materials. The government is fighting this through cooperation and purchases from other countries.