A Brief And Fascinating Guide To North Korea's Economy

Kim Jong Un North KoreaKim Jong-un

Photo: AP

North Korea’s economic practice of self reliance has resulted in one of the world’s most isolated economies with minimized trade relations and  discouraged foreign investment.As North Koreans took off work to mourn Kim Jong-il and the world observed the enigma of Kim Jong-un take over as Supreme Leader, inquiring minds wonder what he might do in an attempt to revive North Korea’s stagnant economy. 

North Korea's GDP is $28 billion.

North Korea's GDP per capita is $1,800 and ranks 194 in comparison to other countries. North Korea's GDP is barely 3% of South Korea's estimated $1 trillion GDP.

Source: CIA Factbook

47.8% of North Korea's GDP comes from the industry sector.

Machine building and manufacturing of metallurgical products, military products, and textiles are responsible for a large part of the industry sector. The metallurgy production is supported by North Korea's vast mineral resources.

Source: U.S. Department of State

31.5% of North Korea's GDP comes from the services sector.

Service industries such as financial services and tourism are government run in North Korea. In November, the North Korean government tried to increase its revenue by opening the Mount Kumgang tourist resort.

Source: The Washington Post

20.7% of North Korea's GDP comes from agriculture.

North Korea's exports include fishery products and agricultural products such as rice, corn, potatoes, soybeans, cattle, pigs, pork, and eggs.

Source: U.S. Department of State

Kim Jong-Il put a strong emphasis on North Korea's munitions production.

He established a military-first policy and insisted that North Korea could be strong in ideology and economy only when its military was strong.

Source: Congressional Research Service

15% to 25% of North Korea's GDP is spent on national defence.

In 2005, North Korea stated that its defence budget was 15.9% of its GDP. The 2006 budget was estimated $2.3 billion. South Korea, on the other hand, estimated that North Korea spent as much as $5 billion on military expenditures in 2003.

Source: Congressional Research Service

North Korea spends about $2000 a year per member of its military.

The $2.3 billion defence budget is actually not that high considering that it is used to maintain 1.17 million member military. That's about $2000 a member compared to $40,000 per soldier spent in China and $420,000 per soldier spent in the U.S.

Source: Congressional Research Service and China - US Focus

North Korea receives about 75,000 tons of food assistance every year.

In 2009, North Korea's food assistance requirements were estimated at 800,000 tons. World Food Program has been supplying food for more than a quarter of North Koreans. The malnourishment among children fell from 62% in 1998 to 37% in 2004.

Food scarcity in North Korea has caused the youth to not grow as tall as their counterparts in other East Asian nations and North Korea has had to reduce its high requirement for military recruits.

Source: Congressional Research Service

North Korea has an industrial park that houses 121 factories.

Instead of an amusement park filled with rides, North Korea has an industrial park - Kaesong Industrial Complex. In this park, South Korean businesses can open factories and manufacture products using North Korea's labour. Hyundai Asan paid North Korea $12 million for a 50 year lease on the entire Kaesong site. The North Korean government also collects leasing fees and its share of wages of North Korean workers.

The facility's 121 firms produced goods in 2010 totaling $323.3 million. The complex can accommodate two to three times as many firms.

Source: Congressional Research Service

North Korea's crab exports have been thriving since 2001.

In 2001, North Korea exported 1,879 tons of crab to China. The $7.8 million worth of crab was a sixfold increase over the previous year. A similar amount of crab was sent to Japan.

Source: Asia Times

Flaky fishermen are viewed as a liability to North Korea's booming crab industry.

As fishermen took off to mourn 'Dear Leader' Kim Jong-Il, Chinese traders were left without a supply of North Korean crab. This is not the first time that these fishermen proved to be unreliable. They seem to operate a private enterprise, which is unusual for North Korea's state run economy, and often go with the highest bidder, disregarding previous agreements, said three Chinese merchants.

A catch of crab can fetch as much as $1,580.

Source: Financial Times

North Korea's gold mine is its $6 trillion mineral wealth.

The mining industry includes coal, iron ore, limestone, magnesite, graphite copper, zinc, lead and precious metals.

Source: The Washington Post

North Korea tried to pay off a $500,000 debt in ginseng.

In the summer of 2010, North Korea offered to pay off 5% of its $10 million Cold War-era debt to the Czech Republic in ginseng. Czech officials declined, noting that the proposed payment of ginseng would last the country 200 years. Instead, they suggested that North Korea pay up in zinc ore if cash was not an option.

Source: The Korea Times

North Korea's trade deficit in 2008 was $1.3 billion.

North Korea exported approximately $2.8 billion in goods that year with 60% going to China and South Korea. The imports in 2008 totaled $4.1 billion with 71% coming from China and South Korea.

Source: Congressional Research Service

North Korea executed finance official over failed currency reform.

In November 2009, North Korea carried out a currency reform that equaled confiscation of wealth. The reform was intended to punish those who accumulated wealth by trading on private markets with illegal merchants. Each household was only allowed to exchange about $200, which left many North Koreans with worthless money.

Pak Nam Gi, the ruling Workers' Party finance and planning department chief, spearheaded the currency reform and was later accused of ruining the nation's economy. He was executed by firing squad in March 2010.

Source: Congress Research Service and NY Daily News

Fishermen were not the only ones mourning Dear Leader.

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