Korea, North Economy
Is Korea, North a wealthy country?
The economy of North Korea operates as a centrally planned and autarkic system, heavily influenced by the ideological principles of Juche (self-reliance) and state socialism. Its structure is characterized by state ownership of production, centralized decision-making, and limited integration with the global economy. This overview examines the key aspects of the North Korean economy, including its historical development, current composition, external relations, and challenges.
1. Historical Context
The foundation of North Korea's economic system was laid after its establishment in 1948, under the leadership of Kim Il-sung. The economy initially benefited from Soviet aid and technical assistance, along with access to industrial resources left by Japan after World War II. During the 1950s and 1960s, North Korea experienced rapid industrialization, particularly in heavy industries such as steel, chemicals, and machinery. However, the economy began to stagnate in the 1970s due to inefficiencies in central planning, declining external support, and an overemphasis on militarization.
2. Economic Composition
North Korea's economy is divided into several key sectors:
Agriculture: The agricultural sector operates under a system of collectivized farming. The country faces chronic food shortages due to a lack of arable land, outdated technology, and climate challenges. Key crops include rice, corn, and potatoes.
Industry: Heavy industry, such as mining and metallurgy, remains a priority. The country possesses significant reserves of coal, iron ore, and rare earth minerals, which form the backbone of its export economy.
Services: The service sector is underdeveloped, with limited commercial activity outside state-controlled enterprises. Black markets, often referred to as the "jangmadang," play an increasing role in informal economic exchanges.
3. Trade and International Relations
North Korea's foreign trade is highly constrained by international sanctions imposed due to its nuclear weapons program. The country relies heavily on trade with China, which accounts for approximately 90% of its imports and exports. Primary exports include coal, textiles, and labor services, while imports consist of fuel, machinery, and food.
4. Challenges and Vulnerabilities
The North Korean economy faces significant structural and external challenges:
Sanctions: Multilateral and unilateral sanctions have restricted North Korea's access to international markets and financial systems, severely impacting its ability to sustain economic growth.
Resource Dependence: Over-reliance on China for trade and limited diversification in exports make the economy vulnerable to external shocks.
Food Security: Chronic food shortages and undernourishment remain pressing issues, exacerbated by climatic conditions and inefficiencies in agricultural production.
Technological Stagnation: The lack of access to modern technology and infrastructure hampers productivity across all sectors.
Militarization: A disproportionate allocation of resources to military and defense sectors detracts from potential investments in social and economic development.
5. Recent Developments and Prospects
In recent years, North Korea has shown sporadic interest in limited market reforms and engagement with foreign investors, though these efforts remain tightly controlled and have yet to result in significant economic liberalization. The COVID-19 pandemic has further isolated the country, disrupting trade and exacerbating its economic challenges.
Korea, North Economy Data
What is the GDP of Korea, North?
| Currency Name and Code | North Korean Won (KPW) |
| GDP - Gross Domestic Product (PPP) | $40,000,000,000 (USD) |
| GDP - note | North Korea does not publish reliable National Income Accounts data; the data shown here are derived from purchasing power parity (PPP) GDP estimates for North Korea that were made by Angus MADDISON in a study conducted for the OECD; his figure for 1999 was extrapolated to 2011 using estimated real growth rates for North Korea's GDP and an inflation factor based on the US GDP deflator; the results were rounded to the nearest $10 billion. |
| GDP - official exchange rate | $28,000,000,000 (USD) |
| GDP - real growth rate | 1% |
| GDP Per Capita | $1,800.00 (USD) |
| GDP by Sector- agriculture | 22% |
| GDP by Sector- Industry | 47% |
| GDP by Sector- services | 31% |
| GDP - composition, by end use |
exports of goods and services: 5.9% imports of goods and services: 11.1% |
| Labor Force | 12,200,000 |
| Labor Force By Occupation- agriculture | 35% |
| Fiscal Year | calendar year |
| Annual Budget | $3,200,000,000 (USD) |
| Budget Surplus or Deficit - percent of GDP | -0.4% |
| Taxes and other revenues - percent of GDP | 11.4% |
| Major Industries | military products; machine building, electric power, chemicals; mining (coal, iron ore, magnesite, graphite, copper, zinc, lead, and precious metals), metallurgy; textiles, food processing; tourism |
| Agriculture Products | rice, corn, potatoes, soybeans, pulses; cattle, pigs, pork, eggs |
| Exchange Rate per US Dollar | North Korean won (KPW) |
| Labor Force By Occupation - industry and services | 65% |