For the 50 thousand North Korean workers who worked in Kaesong, the closure of the zone was a blow. Although conservative human rights activists have often referred to the Kaesong Zone as a “convict camp,” such statements are patently hypocritical. Salaries in Kaesong are really low by the standards of the developed world: the average salary there was $150 per month, and more than half of this amount was withdrawn into government revenue. Nevertheless, $50-70 is very good by North Korean standards, so the work zones had every reason to consider themselves extremely lucky. Now their luck has run out.

True, there is still hope. Rumors persist in Kaesong that in the near future the empty enterprises will be transferred to North Korean private entrepreneurs, who will try to establish production there using abandoned South Korean equipment.

Although the very phrase “North Korean entrepreneur” may seem strange, in fact, private business has existed (and even flourished) in the Juche country for about two decades. There were times when the DPRK was an almost pure example of a total state economy, but those times are in the past. During the crisis and famine of 1996-1999, the state lost both the opportunity and the desire to fight the private economy, which began to slowly grow.

At first, North Korean entrepreneurs were engaged in small businesses: they traded in markets, founded handicraft workshops for the production of consumer goods, and conducted smuggling trade with China. Over time, quite large private enterprises began to appear in North Korea. In some cases, private investors began to take over state-owned enterprises that had ceased operating during the crisis years in the mid and late 1990s.

North Korean stalls

At the same time, the attitude of the authorities to what was happening remained extremely contradictory. On the one hand, by 2000 private business had become an important element of the economy. It was he who played a big role in the fact that the crisis was eventually overcome, and from about 2002-2003, the DPRK economy began to grow again, although not too quickly. On the other hand, the country's leadership under Kim Jong Il perceived private business as something fundamentally wrong or, at best, as a temporary phenomenon that had to be put up with during a crisis. Under Kim Jong Il, campaigns against private business were carried out from time to time, which, however, ended in nothing.

With the coming to power of Kim Jong-un in December 2011, the situation changed. For all his temper and eccentricity, the new North Korean ruler has a very positive attitude towards private business, so that after 2012, North Korean local authorities received explicit instructions, if possible, to no longer interfere in the affairs of private entrepreneurs and traders.

However, this does not change the fact that, from a formal point of view, private business remains completely illegal. Given that now in North Korea almost all public catering and retail trade, a significant part of intercity road transport, as well as a number of small and medium-sized food and light industry enterprises are in private hands, it is categorically categorical to mention this in the official press (and there is no other one in the country). prohibited.

Small workshops and stalls do without formalities, while larger private enterprises, such as restaurants, are formally registered as state property. Moreover, a significant part of what happens at these enterprises, from a formal point of view, is a blatant violation of the law and theft of socialist property, so that not only the prosperity, but also the survival of entrepreneurs depends on the goodwill of local officials, which can be bought, and the current position of the highest manual that is not for sale.

Nevertheless, it was the closure of the Kaesong zone that raised considerable hopes among entrepreneurs. As a result of Seoul's measures, more than a hundred enterprises with first-class equipment by North Korean standards and well-trained personnel have been abandoned, and now North Korean businesses are actively working to gain access to the suddenly appeared opportunities. Of course, the guild workers will operate, as always, under the formal roof of state institutions. There is no doubt that if he succeeds, the “closed” zone will continue to operate—perhaps with less efficiency than before, but perhaps with greater benefit for most North Koreans.

Reviews
Russian foreign trade

Russia's foreign trade with the DPRK (North Korea) in the 1st half of 2018

Prepared by the website Foreign Trade of Russia
based on data from the Federal Customs Service of Russia

Report on Russia's foreign trade with the DPRK (North Korea) in the first half of 2018: trade turnover, exports, imports, structure, goods, dynamics.

Trade turnover between Russia and the DPRK (North Korea)

In the first half of 2018, trade turnover between Russia and the DPRK (North Korea) amounted to USD 10,985,426, decreasing by 82.04% (USD 50,185,618) compared to the same period in 2017.

Russian exports to the DPRK (North Korea) in the 1st half of 2018 amounted to USD 10,081,548, decreasing by 83.00% (USD 49,237,201) compared to the same period in 2017.

Imports of Russia from the DPRK (North Korea) in the 1st half of 2018 amounted to USD 903,878, decreasing by 51.20% (USD 948,417) compared to the same period in 2017.

Trade balance between Russia and the DPRK (North Korea) in the 1st half of 2018 there was a positive amount of $9,177,670. Compared to the same period in 2017, the positive balance decreased by 84.03% (USD 48,288,784).

Share of the DPRK (North Korea) in Russia’s foreign trade turnover in the 1st half of 2018 amounted to 0.0033% versus 0.0228% in the same period in 2017. In terms of share in Russian trade turnover in the 1st half of 2018, the DPRK (North Korea) took 148th place (in the 1st half of 2017 - 109th place).

Share of the DPRK (North Korea) in Russian exports in the 1st half of 2018 amounted to 0.0047% versus 0.0355% in the same period in 2017. In terms of share in Russian exports in the 1st half of 2018, the DPRK (North Korea) took 132nd place (in the 1st half of 2017 - 92nd place).

Share of the DPRK (North Korea) in Russian imports in the 1st half of 2018 amounted to 0.0008% versus 0.0018% in the same period in 2017. In terms of share in Russian imports in the 1st half of 2018, the DPRK (North Korea) took 139th place (in the 1st half of 2017 – 127th place).

Export of Russia to the DPRK (North Korea)

In the structure of Russian exports to the DPRK (North Korea) in the 1st half of 2018 (and in the 1st half of 2017), the main share of supplies fell on the following types of goods:

• Mineral products (HS codes 25-27) - 63.27% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 86.23%);
• Food products and agricultural raw materials (HS codes 01-24) - 28.25% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 9.85%);
• Chemical industry products (HS codes 28-40) - 6.94% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 0.58%);
• Metals and products made from them (HS codes 72-83) - 1.37% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 1.63%);
• Machinery, equipment and vehicles (HS codes 84-90) - 0.15% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 1.25%).

The largest increase in Russian exports to the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Pharmaceutical products (HS code 30) - increase by USD 524,900;
• Fats and oils of animal or vegetable origin and their breakdown products; prepared edible fats; waxes of animal or plant origin (HS code 15) - an increase of $223,890;
• Oilseeds and fruits; other seeds, fruits and grains; medicinal plants and plants for technical purposes; straw and fodder (HS code 12) - increase by USD 172,751;
• Products made of ferrous metals (HS code 73) - an increase of $116,231.

The largest reduction in Russian exports to the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Mineral fuel, oil and their distillation products; bituminous substances; mineral waxes (HS code 27) - reduction by USD 44,653,533;
• Fish and crustaceans, molluscs and other aquatic invertebrates​ (HS code 03) - reduction by USD 2,327,000;
• Ferrous metals (HS code 72) - reduction by USD 929,898;
• Products of the flour and cereal industry; malt; starches; inulin; wheat gluten (HS code 11) - reduction by USD 780,876;
• Nuclear reactors, boilers, equipment and mechanical devices; their parts (HS code 84) - reduction by USD 373,921;
• Ground transport vehicles, except for railway or tram rolling stock, and their parts and accessories (HS code 87) - reduction by USD 222,501;
• Wood and products made from it; charcoal (HS code 44) - reduction by USD 199,795;
• Cereals (HS code 10) - reduction by USD 158,366;
• Electrical machines and equipment, their parts; sound recording and sound reproducing equipment, equipment for recording and reproducing television images and sound, their parts and accessories (HS code 85) - reduction by $123,644;
• Salt; sulfur; earth and stone; plastering materials, lime and cement (HS code 25) - reduction by $120,984;
• Fertilizers (HS code 31) - reduction by USD 94,050;
• Alcoholic and non-alcoholic drinks and vinegar (HS code 22) - reduction by USD 67,828;
• Rubber, rubber and products made from them (HS code 40) - reduction by USD 41,620;
• Sugar and sugar confectionery (HS code 17) - reduction by USD 31,322.

Russian exports to the DPRK (North Korea) in the 1st half of 2018 by product groups

Code TN VED	Name of product group	Export in 1st half. 2018, US dollars	Share in total exports, %	Export in 1st half. 2017, US dollars	Changes in 1 floor 2018 relatively 1 floor 2017, %
02	Meat and edible meat by-products	70	0,00	0	∞
03	Fish and crustaceans, molluscs and other aquatic invertebrates	0	0,00	2 327 000	-100,00
04	Milk products; bird eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0	0,00	16 440	-100,00
09	Coffee, tea, mate, or Paraguayan tea, and spices	4	0,00	0	∞
10	Cereals	25 432	0,25	183 798	-86,16
11	Products of the flour and cereal industry; malt; starches; inulin; wheat gluten	921 471	9,14	1 702 347	-45,87
12	Oilseeds and fruits; other seeds, fruits and grains; medicinal plants and plants for technical purposes; straw and fodder	183 251	1,82	10 500	1 645,25
15	Fats and oils of animal or vegetable origin and their breakdown products; prepared edible fats; waxes of animal or vegetable origin	1 658 117	16,45	1 434 227	15,61
17	Sugar and sugar confectionery	49 988	0,50	81 310	-38,52
21	Various food products	8 928	0,09	17 874	-50,05
22	Alcoholic and non-alcoholic drinks and vinegar	261	0,00	68 089	-99,62
24	Tobacco and industrial tobacco substitutes	131	0,00	0	∞
25		80 592	0,80	201 576	-60,02
27	Mineral fuel, oil and their distillation products; bituminous substances; mineral waxes	6 298 189	62,47	50 951 722	-87,64
28	Inorganic chemical products; compounds, inorganic or organic, of precious metals, rare earth metals, radioactive elements or isotopes	0	0,00	207	-100,00
29	Organic chemical compounds	0	0,00	14 318	-100,00
30	Pharmaceutical products	643 773	6,39	118 873	441,56
31	Fertilizers	0	0,00	94 050	-100,00
32	Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other coloring substances; paints and varnishes; putties and other mastics; printing paint, ink, ink	0	0,00	1 322	-100,00
34	Soaps, organic surfactants, detergents, lubricants, artificial and prepared waxes, scouring or polishing compounds, candles and similar articles, modeling pastes, plasticine, "dental wax" and plaster-based dental compositions	18 984	0,19	42 055	-54,86
38	Other chemical products	2 438	0,02	10 116	-75,90
39		24 239	0,24	13 036	85,94
40		10 712	0,11	52 332	-79,53
42		0	0,00	202	-100,00
44	Wood and products made from it; charcoal	0	0,00	199 795	-100,00
48	Paper and cardboard; products made from paper pulp, paper or cardboard	0	0,00	17 654	-100,00
52	Cotton	0	0,00	540	-100,00
54	Chemical threads; flat and similar yarns of chemical textile materials	0	0,00	3 174	-100,00
59		0	0,00	5 728	-100,00
62		2 119	0,02	4 001	-47,04
63		0	0,00	10 993	-100,00
64		0	0,00	3 967	-100,00
65	Hats and their parts	0	0,00	193	-100,00
68		0	0,00	2 549	-100,00
70	Glass and products made from it	0	0,00	3 195	-100,00
72	Black metals	21	0,00	929 919	-100,00
73	Ferrous metal products	137 468	1,36	21 237	547,30
74	Copper and products made from it	202	0,00	13 132	-98,46
76	Aluminum and products made from it	0	0,00	38	-100,00
82		0	0,00	1 024	-100,00
83	Other products made of base metals	0	0,00	2 180	-100,00
84		5 000	0,05	378 921	-98,68
85		0	0,00	123 644	-100,00
86	Railway locomotives or tram motor cars, rolling stock and parts thereof; track equipment and devices for railways or tramways and parts thereof; mechanical (including electromechanical) signaling equipment of all types	0	0,00	7 081	-100,00
87		0	0,00	222 501	-100,00
90		10 158	0,10	8 895	14,20
94	Furniture; bedding, mattresses, mattress bases, cushions and similar stuffed furnishings; lamps and lighting fixtures not elsewhere specified or included; illuminated signs, illuminated name or address plates and similar products; prefabricated building structures	0	0,00	15 103	-100,00
96	Various finished products	0	0,00	1 891	-100,00

Import of Russia from the DPRK (North Korea)

In the structure of Russian imports from the DPRK (North Korea) in the 1st half of 2018 (and in the 1st half of 2017), the main share of supplies fell on the following types of goods:

• Chemical industry products (HS codes 28-40) - 19.68% of the total volume of Russian imports from the DPRK (North Korea) (in the 1st half of 2017 - 31.01%);
• Machinery, equipment and vehicles (HS codes 84-90) - 14.32% of the total volume of Russian imports from the DPRK (North Korea) (in the 1st half of 2017 - 10.72%);
• Metals and products made from them (HS codes 72-83) - 0.85% of the total volume of Russian imports from the DPRK (North Korea) (in the 1st half of 2017 - 19.78%);
• Textiles and footwear (HS codes 50-67) - 0.70% of the total volume of Russian imports from the DPRK (North Korea) (in the 1st half of 2017 - 22.39%).

The largest increase in Russian imports from the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Musical instruments; their parts and accessories (HS code 92) - an increase of USD 297,685;
• Plastics and products made from them (HS code 39) - an increase of USD 9,052.

The largest reduction in Russian imports from the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Items of clothing and clothing accessories, except knitted or crocheted items (HS code 62) - reduction by USD 371,554;
• Other chemical products (HS code 38) - reduction by USD 358,061;
• Products made of ferrous metals (HS code 73) - reduction by USD 189,475;
• Ferrous metals (HS code 72) - reduction by USD 164,335;
• Essential oils and resinoids; perfumery, cosmetic or toilet preparations (HS code 33) - reduction by USD 46,767;
• Items of clothing and clothing accessories, knitted or crocheted (HS code 61) - reduction by USD 35,059;
• Ground transport vehicles, except for railway or tram rolling stock, and their parts and accessories (HS code 87) - reduction by USD 29,679;
• Electrical machines and equipment, their parts; sound recording and sound reproducing equipment, equipment for recording and reproducing television images and sound, their parts and accessories (HS code 85) - reduction by $24,471;
• Nuclear reactors, boilers, equipment and mechanical devices; their parts (HS code 84) - reduction by USD 12,152;
• Salt; sulfur; earth and stone; plastering materials, lime and cement (HS code 25) - reduction by USD 8,265;
• Nickel and products made from it (HS code 75) - reduction by USD 3,676;
• Products made of stone, gypsum, cement, asbestos, mica or similar materials (HS code 68) - reduction by $3,097;
• Optical, photographic, cinematographic, measuring, control, precision, medical or surgical instruments and apparatus; their parts and accessories (HS code 90) - reduction by USD 2,826.

Imports of Russia from the DPRK (North Korea) in the 1st half of 2018 by product groups

Code TN VED	Name of product group	Import in 1st half. 2018, US dollars	Share in total imports, %	Import in 1st half. 2017, US dollars	Changes in 1 floor 2018 relatively 1 floor 2017, %
25	Salt; sulfur; earth and stone; plastering materials, lime and cement	0	0,00	8 265	-100,00
33	Essential oils and resinoids; perfume, cosmetic or toilet preparations	445	0,05	47 212	-99,06
35	Protein substances; modified starches; adhesives; enzymes	4 200	0,46	4 809	-12,66
37	Photo and film products	0	0,00	62	-100,00
38	Other chemical products	0	0,00	358 061	-100,00
39	Plastics and products made from them​​	173 048	19,15	163 996	5,52
40	Rubber, rubber and products made from them	197	0,02	341	-42,23
42	Leather products; saddlery and harness; travel accessories, handbags and similar products; products made from animal intestines (except silkworm fibroin fiber)	426	0,05	183	132,79
55	Chemical fibers	1 527	0,17	0	∞
56	Cotton wool, felt or felt and non-woven materials; special yarn; twine, ropes, ropes and cables and products made from them	0	0,00	237	-100,00
59	Textile materials, impregnated, coated or laminated; textile products for technical purposes	0	0,00	7	-100,00
60	Knitted or crocheted fabrics	0	0,00	1 613	-100,00
61	Articles of clothing and clothing accessories, knitted or crocheted​​	4 549	0,50	39 608	-88,51
62	Items of clothing and clothing accessories, except knitted or hand-knitted items	0	0,00	371 554	-100,00
63	Other finished textile products; sets; used clothing and textiles; rags	244	0,03	585	-58,29
64	Shoes, gaiters and similar articles; their details	0	0,00	1 207	-100,00
68	Articles made of stone, plaster, cement, asbestos, mica or similar materials	0	0,00	3 097	-100,00
69	Ceramic products	49	0,01	310	-84,19
72	Black metals	3 618	0,40	167 953	-97,85
73	Ferrous metal products	4 089	0,45	193 564	-97,89
74	Copper and products made from it	0	0,00	70	-100,00
75	Nickel and products made from it	0	0,00	3 676	-100,00
82	Tools, utensils, cutlery, spoons and forks made of base metals; their parts are made of base metals	0	0,00	1 033	-100,00
84	Nuclear reactors, boilers, equipment and mechanical devices; their parts	1 348	0,15	13 500	-90,01
85	Electrical machines and equipment, their parts; sound recording and reproducing equipment, equipment for recording and reproducing television images and sound, their parts and accessories	25 041	2,77	49 512	-49,42
87	Ground transport vehicles, except railway or tram rolling stock, and their parts and accessories	102 292	11,32	131 971	-22,49
90	Optical, photographic, cinematographic, measuring, control, precision, medical or surgical instruments and apparatus; their parts and accessories	744	0,08	3 570	-79,16
92	Musical instruments; their parts and accessories	581 376	64,32	283 691	104,93
95	Toys, games and sports equipment; their parts and accessories	313	0,03	1 778	-82,40
96	Various finished products	372	0,04	830	-55,18

Russian foreign trade statistics
Federal Customs Service of Russia

The DPRK government claims that their country is a real paradise: everyone is happy, prosperous and confident in the future. But refugees from here describe a different reality, a country where they have to live beyond the limits of human capabilities, without a goal or the right to choose. was in crisis for a long time. The publication will present the features of the country.

Characteristic

Economics has three distinctive features. Firstly, it represents an order in which resources are centrally distributed. This one is called planned. Secondly, resources are used to counter possible threats that could destroy the integrity of the country. This use is called mobilization economics. And thirdly, they are guided by the principles of socialism, that is, justice and equality.

From this it turns out that the economy of North Korea is a planned mobilization economy of a socialist country. This state is considered the most closed on the planet, and since the DPRK has not shared economic statistics with other countries since the 60s, one can only guess about what is happening beyond its borders.

The country does not have the most favorable weather conditions, so there is a shortage of food products. According to experts, residents are below the poverty line; it was only in 2000 that hunger ceased to be a national problem. As of 2011, North Korea ranks 197th in the world in terms of purchasing power.

Due to militarization and the policies of the National Communist state ideology of Kim Il Sung, the economy was in decline for a long time. Only with the arrival of Kim Jong-un new market reforms began to be introduced and the standard of living increased, but first things first.

Economics of the post-war period

In the second half of the 20s of the twentieth century, Korea began to develop mineral deposits in the north of the country, which caused an increase in the population. This stopped after the end of World War II. Korea was then conditionally divided into two parts: the southern part went to the United States, and the northern part came under the rule of the USSR. This division provoked an imbalance of natural and human resources. Thus, powerful industrial potential was concentrated in the north, and the bulk of the labor force was concentrated in the south.

After the formation of the DPRK and completion (1950-1953), the economy of North Korea began to change. It was forbidden to engage in entrepreneurial activity, and the card system came into use. It was impossible to trade grain crops in markets, and the markets themselves were used extremely rarely.

In the 70s, the authorities began to pursue a policy of economic modernization. New technologies were introduced into heavy industry. The country began to supply minerals and oil to the world market. In 1979, the DPRK was already able to cover its external debts. But in 1980, the country began to default.

Two decades of crisis

The North Korean economy, in short, has been a complete fiasco. Demand for products decreased significantly, and due to the oil crisis, the country was declared bankrupt. In 1986, the external debt to the allied countries amounted to over 3 billion dollars, and by 2000 the debt exceeded 11 billion. The bias of economic development towards heavy industry and military equipment, the isolation of the country and the lack of investment were the factors that impeded economic development.

To correct the situation, in 1982 it was decided to create a new economy, the basis of which was to be the development of agriculture and infrastructure (especially power plants). Two years later, a law on collective enterprises was adopted, which helped attract foreign investment. 1991 was marked by the creation of a special economic zone. Even if it was difficult, investments flowed there.

Juche ideology

The Juche ideology had a particular influence on the economic development of the state. This is a kind of combination of the concepts of Marxism-Leninism and Maoism. Its main provisions that influenced the economy were as follows:

• revolution is a way to achieve independence;
• to do nothing means to abandon the revolution;
• to protect the state, it is necessary to arm the entire people so that the country turns into a fortress;
• the correct view of the revolution comes from a feeling of boundless devotion to the leader.

In fact, this is what the North Korean economy rests on. The bulk of the resources are aimed at developing the army, and the remaining funds are barely enough to save citizens from hunger. And in such a state no one will rebel.

Crisis of the 90s

After the Cold War, the USSR stopped providing support to North Korea. The country's economy stopped developing and fell into decay. China also stopped providing support to Korea, and combined with natural disasters, this led to famine in the country. According to experts, the famine caused the death of 600 thousand people. Another plan to establish balance has failed. Food shortages increased and an energy crisis erupted, resulting in the shutdown of many industrial enterprises.

Economics of the 21st century

When Kim Jong Il came to power, the country's economy perked up a bit. The government carried out new market reforms, and the amount of Chinese investment increased ($200 million in 2004). Due to the crisis of the 90s, semi-legal trade became widespread in the DPRK, but no matter how hard the authorities try, even today there are “black markets” and smuggling of goods in the country.

In 2009, an attempt was made to introduce financial reform to strengthen the planned economy, but as a result the country's inflation rate soared and some essential goods became scarce.

At the time of 2011, the DPRK's balance of payments finally began to show a figure with a plus sign; foreign trade had a positive impact on the state treasury. So what is North Korea's economy like today?

Planned Economy

The fact that all resources are at the disposal of the government is called a command economy. North Korea is one of the socialist countries where everything belongs to the state. It is this that resolves issues of production, import and export.

The command-administrative economy of North Korea is designed to regulate the quantity of manufactured products and pricing policy. At the same time, the government makes decisions not based on the real needs of the population, but guided by the planned indicators that are presented in statistical reports. There is never an oversupply of goods in the country, since this is impractical and economically unprofitable, which the government cannot allow. But very often you can find a shortage of essential goods, in connection with this, illegal markets flourish, and with them corruption.

How is the treasury filled?

North Korea has only recently begun to emerge from the crisis; ¼ of the population is below the poverty line, and there is an acute shortage of food products. And if we compare the economies of North and South Korea, which compete with Japan in the production of humanoid robots, the former is definitely lagging behind in development. Nevertheless, the state found ways to fill the treasury:

• export of minerals, weapons, textiles, agricultural products, coking coal, equipment, grain crops;
• oil refining industry;
• trade relations with China have been established (90% of trade turnover);
• taxation of private business: for each transaction made, the entrepreneur pays the state 50% of the profit;
• creation of shopping zones.

Kaesong - commercial and industrial park

Together with the Republic of Korea, a so-called industrial park was created, where 15 companies are located. More than 50 thousand North Koreans work in this zone, their wages are almost 2 times higher than in the territory of their native state. The industrial park is beneficial for both parties: finished products are exported to South Korea, and North Korea has a good opportunity to replenish the state treasury.

Dandong city

Relations with China have been established in a similar way, only in this case the stronghold of trade is not the industrial zone, but the Chinese city of Dandong, where trade transactions are carried out. Now there are many North Korean trade missions open there. Not only organizations, but also individual representatives can sell goods.

Seafood is in particular demand. In Dandong there is a so-called fish mafia: in order to sell seafood, you need to pay a fairly high tax, but even this makes a good profit. There are, of course, brave souls who import seafood illegally, but due to strict sanctions, there are fewer of them every year.

Today North Korea is dependent on foreign trade, this But there are several more interesting points in the country's economy, some of them are inseparable from politics.

Thus, there are 16 labor camps in the country, created according to the Gulag principle. They serve two roles: punishing criminals and providing free labor. Since the country has the principle of “punishment of three generations,” some families spend their entire lives in these camps.

During the period of economic decline, insurance fraud flourished in the country, and at the international level, for which the government was sued more than once to demand the return of insurance payments.

At the end of the 70s, foreign trade was abolished. In this regard, anyone could enter the international market by first registering with a special foreign trade company.

During the crisis, food was the main currency; it could be exchanged for anything.

The economy of North Korea may take first place in the world in terms of its degree of closedness from the outside world.

There are still many gaps in the country's economy, citizens are trying to migrate at any opportunity, and cards that replace money have not yet come out of use. It is almost impossible to enter the territory of the state, and all areas visible to tourists can be called exemplary territories. The world is at a loss as to what is really going on in North Korea, but the country's economy is rising and, perhaps, in a decade the DPRK will be at the same level of economic development as its closest neighbors.

North Korea's foreign relations are limited: the policy of isolationism has led to the country having fewer than a dozen trading partners. Large deliveries are made to China, Egypt and Iran. European countries do not actively trade with the republic - their share accounts for less than 2% of turnover. North Korea's aggressive policies have led to tougher trade sanctions, which are weakening the country's already underdeveloped economy.

Industry of the DPRK

North Korean enterprises are aimed at satisfying the internal needs of the state. They produce mainly clothing and footwear, household chemicals, and furniture. Difficulties arise in food production. The climate and natural conditions of the DPRK lead to low yields: drought alternates with floods, and 80% of the territory is occupied by rocky, infertile soils.

Over the past thirty years, the country has focused on the development of heavy industry. Due to the low economic level and limited resources, movement in this direction has been slow.

Attention is paid to the following sectors:

• energy production;
• coal;
• mechanical engineering.

However, none of the areas is so well developed that the products can be exported. The situation is better with light goods.

In this regard, the DPRK has succeeded in the following areas:

• textile and haberdashery industry;
• processing of bauxite into aluminum;
• production of accessories for everyday purposes.

The rest of the DPRK's needs are provided by foreign supplies - mainly Chinese. The country needs to import food, medicine, and fuel. Due to disagreements with the world community and the imposition of sanctions against the country, the supply of humanitarian aid stopped.

Official export in North Korea

The World Bank provided information according to which North Korea's trade turnover in 2011 was $3.7 billion. More than 60% of trade is with China, but this figure has been declining over the past decade. The country is one of the twenty largest exporters of seafood - a quarter of all export money comes from this industry.

The next positions are occupied by light industry, technology, metals and minerals. There is also demand for the sale of ginseng, deer antlers, medicinal herbs and other specific products used in folk medicine.

North Korea carries out large arms supplies to third world countries, mainly African. Since they also fall under the sanctions policy, such exports cannot be called illegal.

World political forces, however, speak negatively about deals of this kind. North Korea does not produce new weapons in sufficient quantities, so modernized models of Chinese and Soviet designs are sent for export.

Black market

In addition to official supplies, the DPRK carries out shadow economic activities. Of course, there were no government statements on this matter. However, on the global underground market there are goods conventionally labeled “made in the DPRK,” and they are not always legal.

The most frequently mentioned categories are:

• Medicines, including narcotics. Drugs intended for residents as part of the humanitarian program, as well as funds seized from public hospitals for profit, are resold on the black market. North Korea is rumored to be smuggling methamphetamine that is 99 percent pure.

• Cheap labor . Residents of the DPRK travel voluntarily to neighboring countries - China and Russia. The wages are meager, but by the country's standards it's worth the risk. In this case, up to 80% of the amount is taken by the state.
• Human trafficking . Refugees confirm rumors that batches of women are regularly trafficked into China and forced into prostitution. Up to 40% of refugees in South Korea decided to emigrate illegally precisely for this reason.

In addition, the DPRK has a dubious reputation in the field of counterfeiting. There is no official confirmation of these facts, but statements appear in Western media that large amounts of counterfeit banknotes produced in the DPRK are being withdrawn from circulation.

Due to natural conditions and lack of arable land [ ], as well as the policies of the country’s leadership, the DPRK is experiencing a significant food shortage, but not hunger, which, according to some experts, has not existed in the DPRK since the early 2000s.

GDP per capita . Researchers cite the Juche policy and excessive militarization of the country as the reason for economic underdevelopment.

Story

GDP

North Korea is one of the poorest countries in the world, ranking 213th out of 230 in terms of GDP per capita. According to the CIA, North Korea's GDP at purchasing power parity is the equivalent of $40 billion, or $1,700 per capita.

GDP by industry is distributed as follows [ ] :

Work force

Workers from the DPRK in Russia

Forced labor in the camps

Sectors of the economy

Private sector of the economy

As Korean scholar A. Lankov notes, the private sector of the economy accounts for, according to various estimates, from 30 to 50% of the DPRK’s GDP, and its role has been growing rapidly in recent years. Private capital is most common in the service sector, transport and fisheries.

Officially, the DPRK government does not recognize the existence of the private sector, but in practice the authorities are tolerant of its activities.

Finance

Currency

Budget

The total amount of the state budget is not officially announced. For the media, only the distribution of expenses as a percentage for various industries is announced. According to the data, the share of North Korea's defense expenditures relative to GDP is 43% (about $7.7 billion, according to information for 2007).

According to the Stockholm Peace Research Institute, North Korea's military expenditures amounted to 90 billion won in 2011.

According to the KCNA agency (DPRK), in the 2013 budget, expenses were distributed as follows:

Development of the national economy, including agriculture - 45.2% social expenditures (including health care, education, culture and sports) - 38.8% national defense - 16%

The following changes in expenditures are planned in the 2014 budget:

For agriculture (including fishing) - an increase of 5.1%; for capital construction - by 4.3%; for science and technology - by 3.6%; in the sphere of heavy and light industry and avant-garde sectors of the national economy - by 5.2%; for education - by 5.6%; for healthcare - by 2.2%; for culture - by 1.3%; for social insurance and social security - by 1.4%; for sports - by 17.1%; defense spending will remain almost the same level - 15.9%.

It is also planned to finance scholarships and study expenses for Korean children in Japan.

It is known that the DPRK has accounts abroad. On June 15, 2007, the United States confirmed the transfer of money from North Korean accounts from a bank in Macau to a Russian bank. According to the Japanese broadcaster NHK, a representative of the American administration said that the transfer of more than $20 million was carried out through the US Federal Reserve System and the Russian Central Bank. The funds were transferred to Dalcombank in Khabarovsk.

Allegations of counterfeiting

The United States has repeatedly accused North Korea of ​​producing and selling counterfeit American dollars. The son-in-law of North Korean Prime Minister Kang Moon To, who fled to the West, said back in 1995 that the DPRK annually prints from 8 to 19 million counterfeit American dollars and sends them by diplomatic mail to China and the Middle East, where this money is put into circulation. A statement from the US Department of Justice (2005) states that “the high-quality counterfeit bills that began to appear in global circulation beginning in 1989 were manufactured in the DPRK with the assistance of local authorities. The counterfeits were distributed around the world by individuals acting under the guise of Pyongyang officials." According to the US government, North Korea began counterfeiting dollars in 1989 and by 2006 had printed banknotes totaling $50 million. (According to some reports (as of 2005), Pyongyang earned about $250 million a year from the sale of counterfeit American currency. According to The Guardian, as of 2003, the DPRK annually produces 500 million high-quality counterfeit dollars.) . The leadership of the DPRK denied these allegations. In 2008, a batch of hundred-dollar counterfeits worth about 1 million was detained in South Korea. In 2010, the widespread distribution of counterfeit hundred dollar bills was noted in the border areas of the DPRK and China. Andrei Lankov, in his 2001 article, pointed out: “in recent years, the DPRK intelligence services have become actively involved in illegal economic activities. The North Koreans produce high-quality counterfeit dollars, which are then sold through Southeast Asian countries... such operations are an important source of foreign currency for the DPRK.”

Foreign economic relations

Foreign economic relations in the DPRK are regulated by the Law on Joint Ventures (1984), the Law on Foreign Investment - (1992), the Law on Foreign Economic Agreements, the Law on Land Leasing and other regulations. In 1991, the first Special Economic Zone (SEZ) was created . To create joint ventures, foreign investors can receive land plots to lease to their enterprises for a period of up to 50 years. North Korea maintains trade relations with more than 100 countries. The volume of trade turnover in 2008 amounted to $2.8 billion. The DPRK's key trading partner is China, which accounts for the majority of both the country's exports and imports.

While China maintains its undisputed dominance, the North Korean market is also being explored by European entrepreneurs. A number of foreign companies doing business in the DPRK are united in the European Business Association (EBA) in Pyongyang.

Twice a year, international exhibitions and fairs are held in Pyongyang with the participation of European and other enterprises

In recent years, there has been a steady increase in North Korea's exports and imports. From 1999 to 2011, exports of goods from the DPRK increased 6 times, and imports - 4 times. In 2013 alone, imports of crude oil from China to the DPRK increased by 11.2% and amounted to 578 thousand tons. In general, trade turnover between the DPRK and China increased by 8.9% in 2013, amounting to $6.54 billion. At the same time, exports of North Korean goods to China increased by 18% and amounted to $2.91 billion.

The volume of international assistance is gradually decreasing as the food situation in the DPRK normalizes. In 2011, assistance from the International Food Program amounted to about 46,000 tons, with a total consumption of rice alone of about 5-6 million tons.

Economic ties with South Korea

In post-war history, economic ties between North and South Korea were weakened and then restored. At the beginning of the 21st century, relations between the countries warmed, which led to a significant increase in investment by South Korean firms in North Korean industry. However, despite this, economic ties between the two countries are still quite weak.

After the South Korean government allowed trade with its northern neighbor, North Korean goods began to be imported into South Korea. Direct trade between the countries began after 1990 (preceded by a meeting of the prime ministers of both countries). The volume of trade between the countries increased from 18.8 million dollars to 333.4 million dollars.

However, in 2010, after a number of military incidents and especially the shelling of a South Korean island by North Korean artillery, economic cooperation was practically terminated.

Export

According to Vesti. Economy" volume of goods exports amounted to 3160.74 million US dollars (2007), 4305.4 million US dollars (2008), 3993.05 (2009), 3623.35 (2010), 3789.24 (2011), 4203.12 (2012), 4368.01 (2013), 4051.64 (2014), 3434.66 (2015)

The DPRK's exports are dominated by seafood - 24.4% of total exports; textile industry products - 21.6%; machinery, equipment, electrical engineering - 15.1%; metals - 9.3%; minerals - 7.8%; chemical industry products - 6%. The main export items from the DPRK are also anthracite, seafood (the country is among the top twenty in the world in terms of catch of fish and other seafood), ginseng and other traditional medicines. The weapons of the DPRK are known on the foreign market, which, as a rule, are a creative development of Soviet or Chinese models. The products of the DPRK military-industrial complex are in demand in Third World countries, which, as a rule, are also under embargo, thanks to which the country remains one of the world's arms exporters.

Main trading partners: 60%, Brazil 6.2%, Netherlands 4.3%, Egypt 3.5% (2010).

Import

The volume of imports of goods is 4.8 billion US dollars (2011).

The Republic of Belarus remains one of the DPRK's regular partners in the CIS, from which Korea buys tractors, trucks, and components for them. In turn, for their production Belarus uses batteries imported from the DPRK.

Main trading partners: 81%, Egypt 9.6%, 1.1%, Dominican Republic 1.1%, 0.8% (2010).

External debt

External debt - $12.5 billion (2001).

The national debt to the USSR amounted to 11 billion dollars, more than 90% of the debt was written off by Russia.

Impact of sanctions and economic blockade

Products of North Korean origin cannot be imported into the United States, directly or indirectly, without prior notification and approval of the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. In May 2006, OFAC prohibited US citizens from "owning, leasing, operating, or insuring any North Korean-flagged vessel."

The European humanitarian organization European Union program support (EUPS), which conducts charitable projects in the DPRK, was once unable to supply solar panels intended for power supply to hospitals in rural areas of the DPRK - they were also subject to sanctions.

There are known cases of attempts by the United States to seize North Korean assets “on suspicion of money laundering.” Thus, in 2007, $25 million were seized from a Macau bank, which were returned to Korea only after the threat of withdrawal from the Six-Party Talks and the intervention of the Chinese and Russian Foreign Ministries. Since 2002, North Korea has abandoned the dollar and its official foreign trade currency is the euro. In the fall of 2012, the media published the words of Deputy Minister of Foreign Trade of the DPRK Su Kir Bok about his intentions to begin using the Russian ruble and Chinese yuan in foreign trade payments.

North Korea's closest neighbors, Japan and South Korea, prohibit the supply of goods such as shampoo and used pianos for music schools to the country, declaring them "luxury items." The category of “luxury goods” also includes cars, audio and video equipment, alcohol, coffee, cosmetics, premium beef and fish. Since 2006, there has been a ban on the import of any goods from the DPRK into Japan and the entry into Japanese ports of ships flying the DPRK flag

The import of used computers into the country is prohibited as “dual-use goods” that can be used to create nuclear weapons.

Income of the population

As of 2017, the average minimum wage was 5,000 - 10,000 won per day, which averaged $5.5 - $11.1 US dollars per day.

see also

Bibliography

• Reese D. The prospects for North Korea’s survival, London, International Institute for Strategic Studies, 1998, 95 pp.

Notes

Notes Footnotes

1. CNBC North Korea's 2016 economic growth climbs to 17-year high despite sanctions targeting nuclear program (undefined) (July 20, 2017).
2. North Korea(English) . CIA World Factbook (26 April 2010). Retrieved January 9, 2012.
3. North Korea’s economy grew 3.7% in 2017, Pyongyang professor estimates(English) . www.japantimes.co.jp. The Japan Times (13 October 2017).
4. Kang Chang Ku. DPRK Economy 2016(English) . www.nkeconwatch.com. The Bank of Korea (2017-7-22).
5. Kim Hwa Yong. DPRK Economy 2015(English) . www.nkeconwatch.com. The Bank of Korea (2016-7-22).
6. Kim Young Hwan. DPRK Economy 2014(English) . www.nkeconwatch.com. The Bank of Korea (2015-7-22).
7. North Korea (undefined) . The Observatory of Economic Complexity (2015). Retrieved May 4, 2018.
8. N.Korea Struggling Under Mountains of Foreign Debt (undefined) . The Chosun Ilbo (English Edition): Daily News from Korea (January 19, 2012). Retrieved March 31, 2012. Archived February 21, 2012.
9. Lankov A. N. Natural death of Korean Stalinism // Polit.ru, 02.22.20107
10. The state of the economy of the Democratic People's Republic of Korea // Country studies catalog of the Faculty of International Business of Omsk State University
11. UN: North Korea's policies cause the nation's food shortages - The National(English) . thenational.ae. Retrieved September 28, 2012. Archived October 23, 2012.
12. • Kiryanov O. James Morris: data on millions of famine victims in the DPRK does not correspond to reality // Seoul Bulletin, 09.22.2005
    • EUPS: there is no hunger or poverty in North Korea // Gazeta.ru, 04/05/2010
    • Lankov A. N. Andrey Lankov Is North Korea starving? About North Korean economic growth // Slon.ru, 04/29/2011
    • Lankov A. N. did not win, but lost, and not the Volga, but the bicycle // Live Journal, 01/12/2013
    • UN: Famine in the DPRK is a fiction // NEWSru.com, 05/14/2013
13. "The world factbook. Country Comparison"
14. Harris B. How North Korea is transitioning to capitalism // Vedomosti, 06/30/2017 (translation of an article from the Financial Times)
15. Lankov A. Commerce under Kim Il Sung (undefined) . Polit.ru (August 9, 2014). Retrieved August 19, 2014.
16. Mozzhukhin A. “North Korea is no longer a preserve of Stalinism” // Lenta.ru, 03/11/2015
17. • The DPRK economic reformer was executed // Rosbalt, 03/18/2010
    • The former chairman of the State Planning Committee of the DPRK was executed on charges of sabotage // Lenta.ru, 03/18/2010
18. Marcus Noland. North Korea: Witness to Transformation. Hugely important: North Korea running a current account surplus? (undefined) . (March 18th, 2013) . Retrieved July 19, 2013. Archived July 19, 2013.
19. North Korea's balance of payments surplus (undefined) . I.G.T. Institute for Global Transformations (March 20, 2013). Retrieved July 19, 2013. Archived July 19, 2013.
20. Lankov A. N. Revival of the market economy in North Korea. August 2015. - M., 2015. - 18 p. - 300 copies.
21. Lankov A. N. North Korean business in the era of Kim Jong-un: the quiet tread of change. // Carnegie Moscow Center, 02/19/2016
22. Lankov A. N. Kim Jong Dan. Why North Korea has taken the path of market reforms // Carnegie Moscow Center, 02.20.2015
23. Toloraya G. D., Yakovleva L. N. Economic strategy of the DPRK after the VII Congress of the Labor Party of Korea: conclusions for Russia // Bulletin of the Institute of Economics of the Russian Academy of Sciences, No. 4. 2016. P. 7-19
24. Gray K., Lee J. W. Following in China's footsteps? The political economy of North Korean reform //The Pacific Review. – 2017. – T. 30. – No. 1. – P. 51-73.
25. CIA Fact Book
26. Alexander Baunov. A candid conversation with a North Korean businessman (undefined) . slon.ru (December 19, 2011). Retrieved April 26, 2013. Archived April 28, 2013.
27. BUSINESS WITH DPRK. Economy and relations with Russia in 1999-2001.
28. The first machine with CNC technology // Korea Today, 20013, No. 12, p. 7.
29. Trapped by imports. What will Russia be left without if “tomorrow there is war”?
30. The state of the economy of the Democratic People's Republic of Korea // Country studies catalog of the Faculty of International Business of Omsk State University
31. The DPRK leader strengthens the civilian sector of the economy, concentrating efforts on the development of light industry
32. North Korea releases first PDA
33. North Koreans love their Achim Android tablet
34. North Korea released a tablet with a browser, but without Wi-Fi
35. Naenara
36. In the mixed technology company "Noyl" (undefined) . // naenara.com.kp. Retrieved January 16, 2014.
37. North Korea has developed its own smartphone Arirang
38. Pyongyang's solar street lamps
39. Glushko A. A., Ryabinina L. I. Territorial organization of the economy of the Asia-Pacific countries. - Vladivostok: Far Eastern State University, 2003. - P. 101. - 173 p.