Download - The north korean economy (castro)
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The North Korean Economy
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Kim II Sungism• Ideology arose from struggling against the
United States and competing with South Korea while trying to remain independent of the competing USSR and China.
• JUCHE, self-reliance
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Kim II Sungism is Stalinism
- With elements of Maoism and Korean Confucianism.
- Classical Stalinism elements:- Strong central planning without
free markets or privatization- Heavy industry and
militarization- “socialism in one country”- Cult of Personality
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• Maoist elements- “moral incentives”- “flying horse”
• Confucianist elements- Filial piety- Disdain of commerce- Hard work- Respect for education- Isolationism
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• Juche elements
- Chaju (political independence)
- Charip (economic self-sustenance)
- Chawi (military self-defense)
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Stages of North Korean Economy
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Early economic success
• Political consolidation• Equalization• Mass mobilization• Moral incentives
Did NOT work in the long run
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1946
“Sovietized” North Korean economy
1953-58Agriculture collectivized
Private industry nationalized
1946-1949
Two short-term plansTripling of industrial output40% agricultural
production
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Performance of the Post-1953 North Korean Plans
PLANS NATIONAL INCOME INDUSTRIAL PRODUCTION
GRAIN PRODUCTION
YEARS TARGET ACTUAL TARGET ACTUAL TARGET ACTUAL
1953-56 20.5 30.1 37.5 41.8 10.8 7.1
1957-60 17.1 20.9 21.1 36.6 5.6 7.2
1961-70 15.2 7.5 18.1 12.8 8.2 2.7
1971-76 10.3 n.a. 14.0 16.3 5.8-7.0 8.2
1978-84 9.6 8.8 12.1 12.2 2.3 2.3
1987-93 7.9 - 1.8 n.a. n.a. n.a. n.a.
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Performance of the Post-1953 North Korean Plans
1954-56• Reconstruction, successful• North Korea rapid growth stage
begins
1957-60 FIVE-YEAR PLAN• Completed in three years• Continued rapid growth• Socialization drive completed• Mass mobilization began
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1961-70 FIRST SEVEN-YEAR PLAN• Extended due to difficulties from expanding juche
policy after the Soviets reduced aid• Heavy industrial development• Mechanization of agriculture• Military spending increased, maintained level, then
declined.
1971-76 SIX-YEAR PLAN• Technical advancement• Foreign debt crisis, DPRK cut-off from
easy access to Western technology
1977 Buffer year to delay announcing a new plan
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1978-84 SECOND-SEVEN YEAR PLAN• Modernization and “scientification”• First attempt for LIGHT rather than heavy industry• Increase material incentives for workers• Energy extraction (coal)• Nature-remaking (massive land reclamation)
THREE YEAR INTERIM• No plan followed• To reform and decentralized• “North Koreas Joint Venture Law”
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1987-93 THIRD SEVEN-YEAR PLAN• Modernization• Light industry• Collapse of socialism in USSR
created crisis
1996 “period of adjustment”
reemphasized heavy industry
Note: North Korea’s crisis is the crisis of the last and purest command socialist economy.
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2013 Index of Economic Freedom• North Korea is largely
isolated and disengaged from the world’s economy.
• its economy the least free in the 2013 Index
• unreformed and essentially closed dictatorial state
• “military first” policy• Worker’s Party
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Rule of Law
• Property rights are not guaranteed.
• Almost all property belongs to the state.
Government
• No effective tax system.
• Commands and dictates almost every part of the economy.
• State directs all significant economic activity
• Large military spending.
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State control
• State regulates the economy heavily through central planning and control.
• State determines wages.
• Tightly controls the labor market and the movement of people
Market
• Formal trade is minimal.
• main trading partners: China and South Korea
• Inter-Korean trade remains constrained
• Limited foreign participation is allowed
• financial sector is firmly controlled by the state.
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• The only significant source of light is the capital Pyongyang, and a few other dots that are probably military bases.
The Korean Peninsula on September 24, 2012. Image via NASA Earth Observatory