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North Korean Economy Review: It Has Been A Mess Since the Late 1960s

North Korea economy

The North Korean economy has been a mess for the last fifty years. Kim Jong-un, the supreme leader since 2011, rules with an authoritarian fist. He oversees a communist economic system, a strict command economy, and isolationist country. It is well known that its per capita income and GDP tend to be among the lowest in the world. The country has been crippled by international sanctions and trade restrictions. The country’s obsession with becoming a nuclear power and appearing as a military force on the global stage has taken priority over its responsibility to save its population from starvation.

A command economy is the core principle of the failed communist economic theory. In a command economy, the government determines income, investment, and what goods to produce. Everything is controlled by the central government. There are no free market principles at work.

How Did The North Korean Economy Become Such A Mess?

After the Soviet-backed North Korea failed to bring South Korea under communist rule, North Korea followed the example of the Soviets and established its national economy based on the development of heavy industry and large scale military spending. Initially, the North Korean economy expanded and benefited from post World War II industrialization. The country heavily borrowed from the former Soviet Union, China, Germany, Japan, France, and Great Britain.

North Korean Economy followed the Soviets

The 1970s

By the 1970s, the economy was slowing down. The increase in oil prices and its enormous amount of debt led to a trade deficit and an inability to repay. The economy drifted towards stagnation.

The 1980s

By the 1980s, the North Korean economy was starting to malfunction. The command economy was clearly stifling all innovation, incentive, and progress. The country doubled down on its communist and isolationist principles and refused to open up it economy to outside nations.

By the 1990s, the North Korean economy was near collapse.

The break up of the Soviet Union, multiple natural disasters, and a national food crisis pushed the country to the brink. The country became dependent on international aid to avoid starvation.

The 21st Century

By the year 2000, North Korea finally took steps to revive its failing economy. It eased trade restrictions and began to allow semi-private markets to develop. The period showed a modest improvement over the previous decades. By 2015, the country had an estimated GDP of $40 billion. The country relies on China for 90% of its exports and foreign aid. The country still spends up to 50% of its Gross Domestic Product on the defense.

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North Korea economy

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