What does the DPRK export? What does North Korea produce for export?

North Korea is one of the most totalitarian countries in the world today. But it turns out that this closed state has quite a lot of export items, and very unusual ones.

1. Coal

As everyone knows, China is the world's largest importer of coal. But where does the Celestial Empire get millions of tons of this fuel? It turns out that North Korea has recently become China's main supplier. Despite the overall drop in Chinese imports, supplies from North Korea increased by 25 percent—in May 2015, the country exported 1.8 million tons of coal to China.

Exporting natural resources is a fairly easy way for a totalitarian regime to make money without weakening its control over the population. Another advantage is that the export of natural resources from Korea is not included in the UN sanctions list, so the country can make money from coal exports quite legally.

2. Ballistic missiles

North Korea is also known for its provocative ballistic missile launches, which are usually attributed to the “machinations of evil capitalists.” But North Korean ballistic missiles are used not only for this, they are also exported, bringing tens of millions of dollars a year to the DPRK budget. Exporting ballistic missiles also allows the government to continue producing missiles for domestic use due to economies of scale.

3. Weapons factories

North Korea is one of the most militarized countries in the world, its army consists of more than a million people, who, accordingly, need to be armed. North Korea's huge weapons industry is another way for the cash-strapped nation to earn foreign currency. The country not only exports heavy weapons, including missile launchers and anti-aircraft missile systems, but also offers assistance in building weapons factories for its clients.

Over the past 30 years, North Korea has been involved in the construction of two Ethiopian arms factories and the supply of industrial equipment to that country. Given that the factories were developed in North Korea, only North Korea can provide spare parts for industrial equipment, thereby forcing Ethiopia to continue to cooperate with it. North Korea has also built military facilities in other African countries such as Nigeria and Madagascar.

4. Statues

There are simply a colossal number of statues built in North Korea, since they are one of the means of propaganda in the country. Given North Korea's extraordinary experience in creating statues, other countries have even begun to order sculptural works from it.

Thus, Zimbabwe recently paid $5 million to order two statues of the country's President Robert Mugabe. Also in North Korea, statues were made to order for Angola, Egypt, Equatorial Guinea, Ethiopia and even Germany. North Korea's largest customer is Namibia, with which a $60 million contract was signed in the early 2000s to build a giant war memorial in Windhoek.

5. Restaurants

Restaurants that offer "authentic North Korean food" and traditional dancing and singing as entertainment can be found throughout Asia. Interestingly, these restaurants are really Korean - in the 1990s, North Korea opened an entire chain of Pyongyang Restaurants throughout Asia. This made it possible to kill three birds with one stone: earning money for the treasury, financing North Korean embassies in countries where restaurants operate, and money laundering. ъ

6. Textiles

The China-North Korea border is bustling with economic activity. It is believed that about a quarter of all residents of the Chinese province of Dandong do joint business with North Koreans. One example of such economic activity is textile factories, which employ only North Koreans. The products from these factories are then transported across the border, where they are stamped with a “Made in China” label. Such a demand for manufacturing products in North Korea is not surprising - after all, this country has one of the cheapest labor forces in the world.

7. Counterfeit US bills

North Korea is the undisputed leader in the production of counterfeit banknotes. The US has previously claimed that its $100 banknotes are among the most secure in the world. But this did not stop North Korea, which purchased equipment from Japan, paper from Hong Kong and ink from France. The new counterfeit money was so good that the United States had to introduce a new $100 banknote in 2013.

8. Labor

What North Korea has in abundance is people. But how can you monetize this “product”? Before North Koreans go abroad, their families are effectively taken hostage to ensure that the money they earn is transferred back to their homeland, as well as the return of workers home. About 50,000 North Korean workers now work abroad, sending home remittances totaling almost $2 billion a year.

9. Methamphetamines

North Korea has been trading drugs since 1970, when the country defaulted on its international debts. Initially, Korea accepted contracts to transport drug shipments with the help of diplomats, using diplomatic immunity. Later, North Korea began producing its own drugs, primarily methamphetamine, which it began trading through its embassies. North Korean methamphetamine is known for its high purity (99 percent).

This is not surprising, given that drugs are produced in state-owned enterprises under the supervision of professional chemists. However, since the mid-2000s, the purity of Korean drugs has decreased sharply, but the volumes are still increasing.

10. Nuclear reactors

Perhaps North Korea's most surprising export was its attempt to build a fully functioning nuclear reactor for Syria, which Israel bombed in 2007. If the reactor had not been bombed, it could have produced enough plutonium to create one or two atomic bombs every year.

In North Korea there is also one that is worthy of being included in tourist guides.

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.

Yesterday, President Donald Trump and North Korean leader Kim Jong-un met, at which US Secretary of State Mike Pompeo last month said US companies would be able to invest in the isolated country if the summit was a success. Who will invest in North Korea?

There are major doubts about whether the terms of the agreement will be honored, but even if the meeting leads to a breakthrough, experts say investors should be especially wary of North Korea. And if anyone is moving faster in this direction, it is most likely China.

"Potentially profitable"

According to the securities, North Korea has some attractive features for foreign companies. It is located in the middle of Asian countries including China, South Korea and Japan.

“There are many potentially profitable and very interesting areas for investment in North Korea”, said Peter Ward, a researcher at Seoul National University who studies North Korea.

North Korea's population is poor but reasonably well educated, and labor costs are much lower than those of its neighbors, country experts say. Some analysts say it is a potential hub for electronics and textiles.

But these advantages pale in comparison to the many obstacles for foreign investors, especially the brutal Kim regime.

“The prospect of large investments that the regime in North Korea will allow is unlikely,” said Go Myung-hyun, a research fellow at the Asan Institute for Policy Studies, a think tank in Seoul. — The regime is deeply suspicious of the international market.”

China will lead

As North Korea's largest trading partner and the regime's main donor, China could take the lead in investing in the country.

Researcher Peter Ward said North Korea looked like a natural candidate for the Belt and Road Initiative, a grand plan to invest hundreds of billions in developing roads, ports and railways from Asia to Africa. According to experts, the infrastructure in most of North Korea is in a dilapidated state.

"North Korea may be reluctant to allow China to forcibly take possession of future 'troubled assets,'" said Ward.

Bad reputation

In the 1980s, Pyongyang defaulted on loans from European and Australian banks. More recently, companies that have tried to work with it have encountered problems.

In the late 2000s, Egyptian conglomerate Orascom was invited to form a joint venture with the North Korean government to build the first cellular network.

The company faced difficulties for several years, including preventing profits from being transferred from North Korea and Pyongyang. In its 2015 financial report, Orascom simply wrote that “control over the activities of the joint venture has been lost.” Few details have been made public about his fate. Orascom did not respond to a request for comment on the matter.

South Korean companies also struggled. In 1998, Hyundai Group began operating a mountain resort for tourists in North Korea. The complex attracted 2 million South Korean visitors over 10 years before a North Korean attendant killed a tourist, prompting the resort's closure. The project has since been confiscated by Pyongyang.

"They've lost everything Go Myung Hyun said, referring to Hyundai. — The company no longer has access to North Korea."

Despite this experience, the Hyundai group has created a task force to prepare for a potential return to the country. And Samsung Securities, the investment arm of another major South Korean conglomerate, said Thursday it is setting up a research group to analyze potential future investments in North Korea.

Prize catch?

The two Koreas also cooperated in Kaesong, a special economic zone where North Korean workers produced goods for South Korean companies. But Ward said many South Korean companies agreed to operate in the zone on the North Korean side of the border because of guarantees and support from the government in Seoul.

On February 10, 2016, South Korea announced the cessation of work in the Kaesong industrial zone after the DPRK tested a long-range missile.

Experts offer several reasons why the North Korean regime may scare off foreign investors.

Some say authorities are concerned that the spread of free-market capitalism is eroding the regime's power or that companies could launch a gang fight against the government.

Others say North Korea's closed economy means officials don't know what constitutes acceptable practice for business partners.

« They think of themselves as winning in international markets, said Ward. — They don't seem to understand that alienating investors willy-nilly will lead to a very bad reputation».