The Eurasia Center
4927 Massaschusetts Ave NW
Washington, DC 20009
www.eurasiacenter.org
Email: President@eurasiacenter.org
Democratic People’s Republic of Korea Economic Overview
Overview
Democratic People’s Republic of Korea (D.P.R.K.) is central ly
directed and closed economy, facing severe economic problems. As
resulted from underinvestment, shortages of spare parts and poor
maintenance for a long period, Industrial capital stock is damaged
beyond repair. Heavy spending on the military budget draws off
resources needed for investment and civil consumption. Industrial
and power outputs have stagnated at pre -1990 levels. Currently,
South Korea cut off most aid, trade, and bilateral cooperation
activities with North Korea in response to North Korea’s shelling of
YeonPyong Island and the sinking of S. Korean destroyer CheonA n in
2010. For the centennial celebration of N. Korea’ s founder, Kim IlSung’s the government highlights its 2012 goal of becoming a
“strong and prosperous” nation. Attracting foreign investment,
mostly from China, will be a key factor for reviving the economy.
Economic Indicator
 North Korea’s GDP (PPP) in 2009 was $40 billion,1 ranking it as 99th in the
world.
 GDP real growth rate in 2009 was -0.9% 2 and GDP per capita was
$1,8003.
 North Korea has $12.5 billion4 external debt as of 2001.
 Official Currency Exchange Rate in 2009: Won145: US $1.
Economic Structure
“The World Factbook - North Korea” Central Intelligence Agency < https://www.cia.gov/library/publications/the-world-factbook/geos/kn.html>
Ibid
3
Ibid
4
Ibid
1
2
 GDP by sector – Agriculture: 35%, Industry and Services: 65%5
 Main export commodities were minerals, metallurgical products,




manufactures (including armaments), textiles, agricultural and fishery
products.6
South Korea (47%), China (40%) was top export destination in 2009.7
Also, it is thought that North Korea earns hundreds of millions of dollars
from the unreported sale of missiles, narcotics, and counterfeit cigarettes
and currency, and other illicit activities.8
Main import commodities are petroleum, coking coal, machinery and
equipment, textiles, grain.9
China (61%) and U.S. (24%) was primary import source in 2009.10
Political System
 JuChe (self-reliance) ideology is N. Korea’s
ruling ideology combining nationalism and
Confucianism
that
emphasizes
independence of the people on the basis of
Marxist and Leninist theory.11
 D.P.R.K. has a centralized government
under the communist Korean Worker’s
Party (KWP). Following the death of Kim
Il-Sung in 1994, Kim Jong-Il inherited
supreme power. 12 He commands the
Worker’s Party and the National Defense
Commission.
 N. Korea pursues the “military-first” policy,
members
of
the
National
Defense
Commission and military generals occupy
top positions in the political hierarchy.13
Current Situations in North Korea
 Possible Leadership Change: Kim Jong-Il’s health is fragile; hence,
there is a possibility of a leadership change in the forecast period. Kim
Jong-un, Kim Jong-Il’s third son has been presented as successor.
However, he is young, and there may be an interregnum under the
5
Ibid
Ibid
7
Ibid
8
“Background Note: North Korea” U.S. Department of State <http://www.state.gov/r/pa/ei/bgn/2792.htm>
9
Ibid
10
Ibid
11
“North Korea - General Information” Ministry of Unification <http://eng.unikorea.go.kr/eng/default.jsp?pgname=NORinformation_politics>
12
Ibid
13
Ibid
6
leadership of Kim Jong-Il’s brother-in-law, Jang Song-Taek which could
lead to unstable political situation.14
 Tensions from N. Korea’s Nuclear Capability: Despite economic
sanctions and legal restrictions, North Korea has continued to build a
facility that enriches Uranium to more powerful degree. 15 Anti-nuclear
weapons movement Global Zero expected that North Korea will spend
around $700 million on nuclear weapons in 2011.16 North Korea threatens
to harm the United States if attacked. 17 U.S. and neighboring countries
are concerned with N. Korea’s potential nuclear arms sales and
technology transfer to hostile Middle Eastern countries.
 Poverty: The economic gap between the two Koreas has
continued to widen. The volume of ROK’s trade was 248
times18 that of the North in 2007. There are no reliable
statistics about the poverty rate in North Korea; however,
International relief organizations observed severe
economic damage and many Koreans suffering from
chronic food shortage.
(Satellite image of Korean peninsula at night)
Source: “National Unification Is Inevitable” Ministry of Unification
Research and Data Development Provided by: HyeSu Han, Research Assistant
Under the Supervision and Coordination of: Gerard Janco, President
“North Korea” Economist Intelligence Unit <http://country.eiu.com/North%20Korea>
“U.S. and Allies Fear North Korean Nuclear Capabilities” John C. Whitehead School of Diplomacy and International Relations
<http://blogs.shu.edu/diplomacy/2011/01/u-s-and-allies-fear-north-korean-nuclear-capabilities>
16
“Report: NK to Spend $700 Million on Nuclear Weapons in 2011” Korean Broadcasting System
<http://english.kbs.co.kr/News/News/News_view.html?page=1&No=82394&id=In>
17
Larry A. Niksch, "North Korea's Nuclear Weapons Development and Diplomacy," Congressional Research Service Report to Congress
<http://large.stanford.edu/courses/2011/ph241/agaian1/docs/RL33590.pdf>
18
“National Unification Is Inevitable” Ministry of Unification
<http://eng.unikorea.go.kr/eng/default.jsp?pgname=LIBpublications&brd_cd=eng0403&main_uid=799&file_nm=&page_n=1&sch_word_type=
&sch_title=&sch_attach=&sch_word=&sch_dt_type=&sch_begin_dt=&sch_end_dt=&contents_sub_board_list_search_item=0&contents_sub_b
oard_list_search_value=>
14
15