Lecture IV North Korean Economy today

Lecture 4: North Korean Economy - Current Status and Issues in the future North Korean Economy: Current Status

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 the OECD

North Korean Economy with Numbers GDP S. Korea $ 2.03 Trillion (2017 est) N. Korea $ 40 Billion (2015 est) Russia Germany China Poland Hungary Mali $ 4.00 Trillion (2017 est) $ 4.15 Trillion (2017 est) $ 23.12 Trillion (2017 est) $ 1.12 Trillion (2017 est) $289 Billion (2017 est) $ 41 Billion (2017 est)

Avg Family of Mali

Avg Life of NK Small Cities

North Korean Economy with Numbers GDP/person S. Korea $ 39,400 (2017 est) N. Korea $ 1,700 (2015 est) Germany $ 50,200 (2017 est) Russia $ 27,800 (2017 est) Poland $ 29,500 (2017 est) China $ 16,600 (2017 est) Hungary $29,500 (2017 est) Mali $2,200 (2017 est)

Night scene of N. Korea from Satellite

North Korean Economy with Numbers Population - 24.7 million

North Korean Economy with Numbers GDP Growth Rate S. Korea 3.0% (2017 est) 2.7% (2016) N. Korea -1.1% (2015 est) 1% (2014) Germany 2.1% (2017 est) 1.7% (2016) Russia 1.5% (2017 est) -0.2% (2016) Poland 4.6% (2017 est) 2.9% (2016) Hungary 4.0% (2017 est) 2.2% (2016) China 6.8% (2017 est) 6.6% (2016) Mali 5.3% (2017 est) 5.8% (2016)

North Korean Economy with Numbers Unemployment Rate S. Korea 3.8% (2017) N. Korea N.A. Germany 3.8% (2017) Russia 5.5% (2017) Poland 4.8% (2017) Hungary 4.4% (2017) China 4.0% (2017) Mali 8.1% (2016)

North Korean Economy with Numbers Inflation Rate S. Korea 1.9% (2017 est) N. Korea N.A. Germany 1.6% (2017 est) Russia 3.7% (2017 est) Poland 2.0% (2017 est) Hungary 2.4% (2017 est) China 1.8% (2017 est) Mali 1.8% (2017 est)

Korean Economy with More Numbers GDP by Industrial Sector 32.6% 24.6% Agriculture and Fisheries Manufacturing Service 42.8%

Korean Economy with More Numbers Labor Force by Industrial Sector 37.00% Agriculture and Fisheries 63.00% Manufacturing+Service

Korean Economy with More Numbers Income Distribution (2011) - Lowest 10%: N.A. - Highest 10%: N.A. Gini Index China 1.8% (2017 est) China 1.8% (2017 est) Germany 27 (2008) Russia 41.2 (2015) Poland 30.8 (2015) Hungary 28.2 (2015) China 47.4 (2016) Mali 40.1 (2001)

Korean Economy with More Numbers Export: $ 2.99 Billion (2016 est) - China (86.3%) minerals, metallurgical products, manufactures (including armaments), textiles, agricultural and fishery products Import: $ 3.75 Billion (2016 est) - China (91.9%) petroleum, coking coal, machinery and equipment, textiles, grain

Lecture 4: North Korean Economy - Current Status and Issues in the future North and South Korean Economic Cooperation

Location of Kaesung Industrial Complex

Scene of Kaesung Industrial Complex

About the Kaesung Industrial Complex Symbol of N-S Korea Economic Corporation Started in 2004 between Hyundai (South) and Chosun-Asia Pacific Committee (North) Gross Area is about 281 km 2 (HK s geo size: 1,104 km 2 ) South Korean companies direct investment in North Korea Over 124 S-Korean companies on labor intensive industries like Textile, Food, Paper, Electronics, Machineries, and etc.

About the Kaesung Industrial Complex Annual revenues exceeds $ 100 million More than 50,000 N-Korean workers Weekly 48 working hr from Monday to Saturday Salary is about $70/month 2008 s crisis between N-S Koran Govnts FTA with US

Shutdown of the Kaesung Industrial Complex in 2016 NK s continuous nuclear bomb experiments NK continuous long range missile tests UN s official sanction on NK Park s government s conservative attitude

North Korean Economy with Numbers Foreign Debt: - $ 5 Billion (2013 est) Exchange Rate: - 135 Won/$ (end of 2017est) - 130 Won/$ (end of 2016est) - 130 Won/$ (end of 2016est)

Lecture 4: North Korean Economy - Current Status and Issues in the future Current Economic Problems

Current Economic Problems in North Korea Lessen the acute food problem? After decades of economic mismanagement and resource misallocation, North Korea since the mid-1990s has relied heavily on international aid to feed its population. It is estimated that domestic agricultural product only supplies 70%~80% of domestic demand for food. High probability of public outbreak

Current Economic Problems in North Korea Facing this problems from inside and outside, north Korea s diplomatic strategy has been very simple. By threatening countries around Korean peninsula, win more economic aids and foods Therefore North Korea s current nuclear crisis and tensions between surrounding countries can be economically reinterpreted as a way to increase foreign economic support

North Korea s Economic Privatization North Korea began to ease restrictions to allow semi-private markets, starting in 2002. Approved private ownership, repeal distributional system, repeal price control on rice positive effects on national savings and hard working Really huge shock to N. Korean economy: rice price increased by 500 times, exchange rate increased by 70 times while labor income has been increased by 18 times

North Korea s Economic Privatization Income differences between people Therefore N. Korea decided to go back to the socialist countries style of the scale of economic reforms in 2005 and 2009.

North Korea s Economic Privatization

Better North Korean Economy under Kim Jungeun s Leadership?

Recent New Economic Trend in N-Korea Under Kim, JungEun s leadership Economic growth shows 1% per year since 2011 Faster economic growth is led by rich people in private sector (money owner: 돈주 ) Who are the money owners?: Owns over $10,000 cash. Over tens of thousand money owners. The money owners began to invest in apartments in Pyungyang, transportation (taxi and bus companies), and mines. Faster privatization But not in the govnt led key industries

Lecture 4: North Korean Economy - Current Status and Issues in the future New Economic Trend in North Korea

Is NK Economy picking up? Disagreement between researchers on current trend of N. Korea Economy Some: greatly improving, Others: still under downturn According to Bank of Korea s estimate, N. Korea s eco growth stays around 1%/yr with 2009 and 2010 s negative (-) growth It is better than 1990s disastrous situation, but it is facing profound problems.

Bank of Korea s N. Korean Economic Growth Forecasts (2009-14) 2009 2010 2011 2012 2013 2014 종합 -0.9-0.5 0.8 1.3 1.1 1.0 농림어업 Ag + Fish ( 단위 : %) -1.0-2.1 5.3 3.9 1.9 1.2 Manufacturing 광공업 -2.3-0.3-1.4 1.3 1.5 1.1 % Industry 부문별 Utilities 전기가스수도업 0.0-0.8-4.7 1.6 2.3-2.8 Construction 건설업 0.8 0.3 3.9-1.6-1.0 1.4 서비스업 Service 0.1 0.2 0.3 0.1 0.3 1.3 Bank of Korea Data Archive 자료 : 한국은행경제통계시스템 (http://ecos.bok.or.kr, 검색일자 : 2015. 7.31)

Is NK Economy picking up? Some other researchers argue that N. Korean economy is rapidly growing for the following 4-reasons. 1) New scenes of Pyung Yang (cell phone, cars, amusement facilities, and etc) 2) Stabilized inflation and exchange rate after 2013 indicate increased supply of G&S. 3) Increased food production and improved nutrition 4) Rapidly increased mkt activities. Almost every civilian is involved in mkts.

Is NK Economy picking up?

Rice Price (2009.12 2015. 6) US dollar, NK Won Monthly Minimum Maximum

Exchange Rate (NK Won/$) US dollar, NK Won Monthly Minimum Maximum

Is NK Economy picking up?

Is NK Economy picking up? However, the above positive observations on N. Korean economy are only limited to Pyung Yang area. The rural regions economic status is now much known to out of country. Continuously increased trade with China began to decrease from 2014 (90% of N. Korean trade except the trade with S. Korea). Also the price of anthracite s international P decreased quickly. (major EX item)

NK s Coal EX to China

Is NK Economy picking up? NK-China Trade (2010 ~ 2015) Thousand dollar, % Export Import Total

Is NK Economy picking up? It is also expected that N. Korea s industrial production and energy production have been decreased in 2015. Droughts decreased power production at Hydro power plants given China and KEDO s decreased oil supply. Droughts also decreased agricultural production by over 10% in 2015.

Is NK Economy picking up? Private mkt activities are increasing quickly in 2015. Also N. Korean govnt s control became weaker and privatization is widespread in production and distribution. N. Korean govnt tries to reap more tax from privatized economic activities. This is also related more corruption of govnt.

Lecture 4: North Korean Economy - Current Status and Issues in the future North Korea s Jobs: Labor Market

The Most Popular Jobs in N Korea Government officials and police officer

The Most Popular Jobs in N Korea Flight Attendant

The Most Popular Jobs in N Korea Tour operator

The Most Popular Jobs in N Korea Diplomat

The Principle of N. Korean Job Matching According to N. Korean General Civil Law, it is required that every man and woman should work as long as worker s physical condition allows. Female workers: from 16 years old to 55 years old Male workers: from 16 years old to 60 years old

The Principle of N. Korean Job Matching According to N.Korea s Communism Labor law, every worker is allowed to choose job depending on his/her preference and talent. However, in real terms, N. Korean government s labor allocate job depending on workers loyalty to communist party and the makeup of workers ancestry.

The Principle of N. Korean Job Matching Deploying workers in different jobs are decided by two levels. Deploying college graduates and government officials is determined by the committee of regional communist party. Deploying general workers and farmers is determined by regional government s department of labor.

The Principle of N. Korean Job Matching N. Korean government s defines three job categories. 1) office job 2) technical job 3) general working job Office job: government official, professor, teacher, scientist, doctor, reporter, painter, musician and etc Technical job: technician, sailor, driver, chef, plumber and etc

The Principle of N. Korean Job Matching General working job: movie actor, dancer, mine worker, farmer, and etc In each job category, workers are differently compensated depending on worker s grade. For promoted to a higher level of grade, they need to take and pass qualification exam. The exam is mostly about testing worker s loyalty on communist party and the ruler s family.

Lecture 4: North Korean Economy - Current Status and Issues in the future End