Due to the strengthening of capitalism and competition in North Korean society, it appears that the status of consumers has risen considerably.
In the North Korean economy — which has clung to a supply-oriented, planned economic model — it is extremely rare to see production change in response to consumer demands and preferences.
The Rodong Sinmun, the official newspaper of the Central Committee of the Workers’ Party of Korea, published an editorial on August 3, 2014, calling for the “Brisk Opening of the August Third Consumer Goods Production Movement.” This editorial encourages the public by assuring that the consumer products will be made according to the needs and demands of the people.
“A socialist society cannot think about the production of consumer goods that are above the reaches of the people,” the editorial emphasizes, and that “the peoples’ demands and interests are [the Party’s] absolute top priority, and it is the noble duty of the Party to create these desired consumer goods for the people to enjoy.”
Through the use of various media, North Korea has propagandized the “consumer-focused” policy, claiming to have spurred competition and the increase in quality of products and services throughout the nation.
Joguk (Motherland), a media outlet of the pro-North Korean General Association of Korean Residents in Japan, published an article in their August 2014 issue entitled, “The Standard of Competition Is Determined by the People.” The article emphasizes production tailored to consumer demands, saying that “Product evaluation is something which can be done only by those who demand and directly use the product; it can only be done by the general public.”
The article further states that “Products popular among the general public and used by the masses are evaluated accordingly for their high quality.” It also mentions the cosmetic brands “Eunhasu” and “Pomhyanggi” as examples.
In a July 30, 2014 article, the Choson Sinbo introduced the Potong River Shoe Factory, which is responsible for the production of popular products such as the so-called “kill heel” high-heeled shoes, wedge-heeled shoes, and pointed stilettos. By working together with a department store and periodically reviewing customers’ feedback, the Potong River Shoe Factory can produce shoes to cater to shoppers’ preferences.
This method of setting the focus on consumer evaluation can also be found in North Korea’s education system.
On August 7, 2014, the Rodong Sinmun introduced the “bottom-up evaluation” system at Kim Jong Suk Middle School. This process, touted as one of the successes of educational reform, allows students to evaluate their teachers once per semester. By creating competition among educators, this system is expected to have effects all across the nation.
These types of changes are said to have close relations to the Kim Jong Un regime’s policy focusing on light industry, which also accounts for the improvement of standards of living for the people.
It appears that unlike the heavy chemical industry previously emphasized by the Kim Il Sung and Kim Jong Il regimes, light industry must consider not only production amounts, but the quality of the products as well. This inevitably leads to the emphasis being put on consumer product reviews.
Through consumer reviews, competition arises and productivity is increased, leading to the production of consumer goods with higher added value. Despite being called a “Socialist Competition,” in reality this system may not be so different from capitalism.
The latest issue of the quarterly publication of North Korea’s Social Science Institute – published on Nov. 15, 2013, and viewed on Jan. 19 – included an article titled, “Major Issues Pertaining to Making the North Korean Economy Stronger by Establishing and Expanding Economic Development Zones.”
According to the North Korean article, there are five important tasks that must be accomplished if the new Zones are to be successful.
1. building infrastructure such as roads and railroads
2. enacting laws for the special economic zones that take into account the profit of the government and of investors
3. providing benefits for foreign investors
4. operating and managing projects in a way that is suitable to the characteristics of the zones
5. creating the right political and military environment
Read more here:
N. Korea connects politics and military to economic development Hankyoreh
North Korea is encouraging “localization” of raw materials in light industry and construction from this year to improve the lives of the North Korean people.
On January 7, RodongSinmun reported that various cabinet organizations were espousing the New Year’s address of Kim Jong Un. It reported that the Ministry of Light Industry’s executives and employees are engaging in discussions to explore ways to increase localization of raw materials in light industry factories.
A rally was held in Pyongyang earlier this month at Kim Il Sung Square where people pledged to accomplish the national tasks put forward by Kim Jong Un. Tong Jong Ho, Minister of Construction and Building-Materials Industry,delivered a speech that vowed to “make an unprecedented leap in localization of building materials (cement, glass, metals, and other construction materials),” by repairing building materials factories in all provinces.
The Choson Sinbo, pro-North Korean newspaper in Japan,reported on January 2 that at the New Year meeting at the Pyongyang Socks Factory, the plant manager, Lee Sung Hui, made a speech and promised to “raise the level of socks production and localization of raw materials to a higher level in Vinalon and PP fibers (synthetic) this year.”
North Korea is promoting light industry and construction as the key sectors to improve the living standards of the people and asserting localization of raw materials as a priority to make advancements in these fields.
In his New Year message, Kim Jong Un emphasized that lighting industry must play a “major part in improving the people’s standard of living” and that the construction sector is “an important front for solidifying the foundations of a thriving country and creating bases for the people’s happy life.” He called for modernization of factories in light industry and normalization of production, placing importance on increasing the proportion of locally-available raw materials.
Many experts analyze this year’s rising emphasis on the localization of raw materials as reflecting the intentions of the North Korean authorities to focus on pragmatically achievable policy goals first. Of course, increasing the proportion of locally-available raw materials requires the construction of domestic production base, which remains complicated because of international sanctions and lack of foreign currency — issues that cannot be easily resolved– among other limitations.
From 2012, North Korea’s launch of a long-range rocket and third nuclear test was accompanied with rising emphasis on the importance of localization. On December 3, 2013, Rodong Sinmun carried an article entitled, “Localization and National Pride,” that reported on the onsite inspection visits by Kim Jong Un to various economic sectors where he underscored the importance of “equipment, materials, and elements of localization” and “our strengths and technology.”
North Korea acclaimed that the launch of the long-range rocket in December 2012 was a “successful launch of a satellite based on 100 percent domestic science and technology.” Then in February last year, immediately following the nuclear test, it boasted that “Thrilling clap of independent nuclear thunder broke out based on 100 percent of our own wisdom and technology.”
A new year has begun, so most DPRK watchers are analyzing Kim Jong-un’s new year address (a return to a practice established by Kim Il-sung which was replaced by the “joint editorial” in the Kim Jong-il era). I have compiled most of the good analysis of the speech below.
First of all, you can watch the full speech here (in Korean):
North Korea is focusing more on diversified development of its economy and pushing regional industries to play a greater role in earning foreign capital, Pyongyang watchers said Sunday.
Observers in Seoul said that the Oct. 31 issue of “economic research” published in the North highlighted the need for regional governments to generate more revenue, bolster industrial output and earn more foreign capital.
According to papers in the research journal that offer a glimpse into how Pyongyang wants to run the country, factories in the provinces must strive to modernize and form close knit alliances with industries located in the capital city and with laboratories.
This call is similar to a speech given by Vice Premier Ro Du-chol on Wednesday at a ceremony marking the 40th anniversary of regional governments being given authority to generate profits and manage their respective budgets.
The senior official stressed that all cities and counties need to do their utmost to improve their economies and come up with necessary policy plans.
Such a move calls for redoubled efforts to attract overseas investments in mineral mines and other manufacturing facilities.
Ro’s remarks have been interpreted as Pyongyang paying more attention to regional economies and getting local authorities to take charge of providing for its citizens, instead of relying on the central government.
Related to such calls, the North recently announced that it will set up a total of 14 special economic zones across the country to pursue economic growth and bring in more investments. At present the communist country only has four such special zones, including those set up in Kaesong and the Mount Kumgang resort.
“There has been a trend coming into this year of the North paying closer attention to building up its regional economy,” said Cho Bong-hyun, an analyst at the IBK Economic Research Institute. The North Korean expert said that this may be a move by the North to bring about results on the economic front under the Kim Jong-un leadership.
Kim, who took over running the country following the sudden death of his father in late 2011, has called for the simultaneous development of the country’s nuclear capability and its economy.
This move is seen as a departure from the “songun,” or military-first politics, pursued by his late father, Kim Jong-il.
Read the full story here:
N. Korea focusing more on regional development: research journal
UPDATE 3 (2013-11-14): North Korea accelerating economic reforms? Wages and prices to be self-regulated (IFES):
North Korea appears to be pushing for internal economic improvement measures. Chosun Sinbo, the pro-North Korean newspaper in Japan, released an article on November 6 that discussed various performance-enhancing management and operational changes that took place at the Pyongyang Essential Foodstuff Factory this year.
Chosun Sinbo referred to Kim Jong Un’s speech made last March at the plenary meeting of the Central Committee of the Workers’ Party about improving economic management and named the recent changes at the food factory as a pilot project for this purpose. The news article added that “There are studies to bring fundamental changes in economic management and specific measures are being made to turn this into a reality.”
The main systemic changes made at the Pyongyang Essential Foodstuff Factory were the increase in autonomy of the company and the enforcement of wage differential based on performance. Based on the principle of cost compensation, prices of products produced with raw materials at the factory may be freely adjusted after consulting with the state.
The news article further explained that “The principle of socialist distribution is a simple system of distributing as much as you earn and the cost of living is determined by labor productivity.” It also reported that some of the employees’ wages increased. Such news is likely intended to advertise to the outside world about North Korea’s changing domestic economic policies.
The North Korean economic journal Kyongje Yongu has also been increasingly reporting on the principle of distribution based on economic performance. In the recent issue published on October 30, 2013 (issue No. 4), an article titled “The Principle Problem of Properly Implementing the Socialist Labor Wage System” criticized the equalization of product distribution as it decreases the enthusiasm of workers toward production: “The strength and life used during the process of labor must be compensated through the principle of earning the amount of your labor.” The article stressed that wages must increase with production and rationalized the need for such wage increase.
Chosun Sinbo and Kyongje Yongu articles reveal the long-term efforts by the North Korean government in enhancing research about economic improvement measures and expanding projects in various factories, companies, and cooperative farms to implement these measures.
Recently, North Korea launched the State Economic Development Commission and organized a number of international forums on special economic zones. These can be construed as possible signals toward economic reform, as North Korea continues to make various changes in its internal economic policies.
UPDATE 2 (2013-11-7): Another story of note in the Daily NK ties factory wage increases to the ability of enterprises to negotiate prices with the state:
Choson Sinbo, the regular publication of the pro-North Korea General Association of Korean Residents in Japan (Chongryon), has published news of a Pyongyang-based food factory being used as a testing ground for independent economic management. The enterprise fixes prices semi-independently in discussion with the state and pays increased wages, the piece, published yesterday, explained.
The publication conveyed, “Pyongyang Essential Foodstuff Factory became a test unit and conducted research in order to enact changes to overall economic management. They are currently implementing these.”
It continued, “Of particular note is the organization of production and economic management based on cost compensation principles and the socialist rules of division. Pyongyang Essential Foodstuff Factory has enacted the measures for themselves and prepared the collateral to allow for expansion and reproduction.”
“This factory has shed the state planning model and sources its own materials, and in discussion with the state it has been able to set its own prices as it sees fit. There is also a measure currently being adopted that provides monthly allowances in consideration of the labor of the employees,” it further emphasized.
However, a high-ranking defector was skeptical when asked about the piece, telling Daily NK, “These factories produce things like soybean paste, soy sauce, salt and side dishes. They have always played the role of distributor to the people, so there is no way that they would be able to just set prices how they wish on these products. It’s likely that the measures focus on work teams making apple and pear beverages, liquor and beer; things that do not relate to improving the lives of the people.”
UPDATE 1 (2013-11-7): The Daily NK follows up on the DPRK’s strategy to bring official wages in line with the price level:
North Korea’s decision to drastically increase the wages of workers in parts of the heavy industrial sector is designed to boost morale and improve productivity, the better to expand the country’s capacity to generate foreign currency income from investments in the exploitation of its mineral resources.
As exclusively reported yesterday by Daily NK, major industrial concerns in North Hamkyung Province such as Kim Chaek Iron and Steel Complex have raised wages by a factor of approximately one hundred, from a derisory 3,000 won per month, around half the market price of a kilo of rice, to 300,000 won. Thus far, 100,000 won of the total has been paid in cash and the remainder in kind in an attempt to head off the very real danger of dramatic price inflation that would result from 100% cash payments.
That such a substantial wage rise was only deemed feasible in enterprises with the potential to export primary or secondary resources for foreign exchange should not come as a surprise. Smaller domestic enterprises don’t have the liquid resources to take such a step. As with the Kaesong Industrial Complex, wages in cash and kind have always been more generous for workers in joint venture enterprises than elsewhere. The latest move reflects an extension of that reality.
At this early stage, experts believe that the measure is designed to create a business model for North Korea not unlike that on show at Kaesong, under which each province can improve its economic performance and attract greater quantities of foreign capital. By actively nurturing those rare businesses that are competitive in the regional environment, the country hopes to raise productivity overall.
A researcher with Industrial Bank of Korea, Cho Bong Hyun told Daily NK, “Raising salaries for enterprises in the minerals sector looks like an inevitable choice, since productivity couldn’t have been expected from light industrial enterprises when the operational level of most of those factories is so low.
Cho continued, “The Kim Jong Eun regime, which is currently concentrating on producing results in the economic sphere, made this decision based on the fact that for some time it has been earning foreign currency quite easily by exporting its mineral resources. They also hope that by raising salaries they can induce greater productive effort, since workers have not wanted to work properly since the public distribution system collapsed [in the 1990s].”
Yoon Deok Ryong, a senior research fellow with the Korea Institute for International Economic Policy added, “Kim Jong Eun has granted this autonomy to firms and raised wages in order to earn foreign currency and firm up his system. He wants to right the economy by discriminating in favor of businesses that are somewhat competitive.”
However, despite cautious enthusiasm for the latest step, the two experts cautioned that unless North Korea moves further in the direction of a market economic system, the measure might not prove effective.
Cho explained, “No matter how tightly the North Korean authorities seek to control economic activity, they will find it almost impossible to stop these wage rises inciting inflation and causing the value of the North Korean Won to nosedive even more. There is also the danger of conflict with between military and Party-Cabinet elements over the management of mineral resource enterprises that can be used to produce military goods.”
Yoon added that workers in enterprises excluded from the latest wage rises will not see the bigger economic picture, and will simply be aggrieved at there being no improvement in their own conditions. “Conflict is unavoidable,” he concluded.
ORIGINAL POST (2013-11-6): According to the Daily NK:
Wage levels for workers in some larger industrial enterprises have risen by a factor of approximately one hundred times, Daily NK has learned. The move, which was put forward as part of the “June 28th Policy” in mid-2012 and is designed to bring wages more into line with market price levels, appears designed to improve the productivity and competitiveness of major industrial concerns.
According to a source from North Hamkyung Province, the monthly wage of people working at Musan Iron Mine, Kim Chaek Iron and Steel Complex and Sungjin Steel Mill rose from an average of just 3000-4000 won up to 300,000 won in September and October. In an attempt to forestall the inflation that such a step would otherwise guarantee, 200,000 won of the payment is issued in goods, with just 100,000 won provided in cash.
The source explained to Daily NK on the 5th, “In September the order was handed down in the name of the State Economic Development Commission to Musan, Kim Chaek and Sungjin; it was about guaranteeing independence in terms of production and the authority to set salary levels. At the time most workers did not believe that they were going to be given a wage of 300,000 won, and are really surprised now that they are actually getting it.”
The source went on to assert that the same instructions have been handed down to all provinces, not only North Hamkyung. “Relatively more competitive” industrial enterprises in each province have been selected, he said, and are resetting wages at a higher level.
Explaining the system of payments in kind, the source said, “Because they are concerned about the danger of inflation being created by the wage rises, they give 200,000 won of it in rice, vegetables, side dishes, other necessities, and electronics. Only the remaining 100,000 won is given in cash.” Workers have been told “not to make purchases in public markets since the state is now providing for your daily needs,” although the instruction is not likely to be adhered to.
Predictably, the source revealed that the move has attracted attention from surrounding enterprises. “Workers who had been ‘off sick’ are coming back,” he said, “and workers from other enterprises have been descending on us after hearing that we are getting a lot of wages and other stuff.”
The move appears designed to increase the competitiveness of major industrial enterprises in North Korea, and to improve the attractiveness of joint ventures to companies in China.
At the time of writing, the dramatic wage increase has not generated rice price inflation in public markets in the North Hamkyung Province region. For example, the price of rice in Musan is currently stable at around 5,800 won/kg.
On this, the source concluded, “Because some of the wages have been given in kind, demand in markets will not rise for the time being.” However, he cautioned that later, when workers attempt to buy and sell the products they have received, instability and inflation could result.
Read the full story here:
Wages Rise 100x in Heavy Industry Daily NK
Lee Sang Yong
North Korea is emphasizing the importance of science and technology in the agricultural sector.
The Rodong Sinmun, the official newspaper of the Workers’ Party of Korea (WPK), recently featured an article written by Ri Yong Gu, director of the Ministry of Agriculture, titled “Key Issues to Pay Attention for Introducing Technology Products in Farming Operations.” The article emphasized the importance of science and technology in the WPK’s policies and claimed technology products, such as farm machineries, fertilizer, pesticides, and soil conditioners must be introduced to promote agricultural production.
In addition, the article called for accurate assessment of economic benefits to be gained by introduction of technology products and for evaluation of scientists, technicians, and farmers to mobilize the public and to integrate science and technology with production in all units of the agricultural sector.
Technology products were explained as an important factor for reducing agricultural production costs, making crucial the selection of appropriate technology based on the experience and skill level of farmers and soil conditions of each farm.
Choson Sinbo, the Japan-based pro-North Korean newspaper, featured an article on February 27 that scientific farming methods were incorporated in the Samji River Collaborative Farm that linked with the Center for Agricultural and Technology Dissemination through a computer network.
It is not new for North Korea to emphasize the use of science and technology in agriculture; however, in recent years, more emphasis is being placed on this factor.
In the 2013 New Year’s speech by North Korean leader Kim Jong Un, agricultural and light industries were named as the frontline industries for economic construction. In the speech, Kim stressed that “incorporating science and technology into agricultural production and increasing the level of integration must be accomplished in order to reach wheat production target for this year.”
In time for rice planting season in May, North Korea is hoping to increase fertilizer production and to promote agricultural technology in order to boost production countrywide.
This emphasis is in line with the successful launch of the long-range rocket launch last December, preferential atmosphere toward scientists, and promotion of science and technology in the economic sector.
Increased grain production last year may be due to improved fertilizer supply. Production is expected to improve this year as scientific farming continues to be emphasized.
To shed light on the inner workings of policymaking in North Korea, this study examined the process behind economic policy change through an analysis of the official state economics journal (Journal of Economic Research 경제연구). Semantic networks are used to trace the introduction and evolution of policies during four distinct economic periods in North Korean history between 1986 and 2009. Although reform is catalyzed by political and economic crises, the emergence of new policy topics occurs incrementally prior to change. Specifically, new policy discourse tends to emerge in gradual and cautious ways but policy change occurs swiftly in periods of crisis. During periods of stability, the state retreats to the centralized socialist economic system, often through coercion and force. This view of the policy process suggests that foundations of economic reforms in North Korea are yet weak and instable, and policy reform will continue to be vulnerable to the political influence of conservatives.
Kim Jong-un ditched the new year “Joint Editorial” of the Kim Jong-il era and has personally taken on the role of reading a new year speech (appx .5 hrs)–as was done by his grandfather, Kim Il-sung. Here is a video of the speech (in Korean..no subtitles):
Having read it all, I can understand why Kim Jong-il did not want to give these speeches. If I had absolute power I would not want to either. Here is some analysis that others have provided:
The New York Times highlighted Kim jong-un’s softening tone towards South Korea:
“A key to ending the divide of the nation and achieving reunification is to end the situation of confrontation between the North and the South,” Mr. Kim said. “A basic precondition to improving North-South relations and advancing national reunification is to honor and implement North-South joint declarations.”
He was referring to two inter-Korean agreements, signed in 2000 and 2007, when two South Korean presidents, Kim Dae-jung and Roh Moo-hyun, were pursuing a “Sunshine Policy” of reconciliation and economic cooperation with North Korea and met Mr. Kim’s father in the North Korean capital, Pyongyang.
And on economics:
In his speech, Kim Jong-un, echoed themes of previous New Year’s messages, emphasizing that improving the living standards of North Koreans and rejuvenating the agricultural and light industries were among the country’s main priorities.
But he revealed no details of any planned economic policy changes. He mentioned only a need to “improve economic leadership and management” and “spread useful experiences created in various work units.”
According to the Ministry of Unification in Seoul, “Overall there was no new policy; they stuck to the existing line.”
In last year’s New Year’s Joint Editorial, the Kim Jong Il era equivalent of this morning’s address, a North Korean regime conscious of the risks of succession emphasized little more than the need to adhere closely to the last instructions of Kim Jong Il as a means of promoting social stability. Kim Jong Il’s name was mentioned a total of 34 times in that editorial.
This year, Kim Jong Eun focused on propagating the accomplishments of his first year, predominantly the December 12th rocket launch success, which he set up as an example for all sectors of the North Korean economy to promote growth. He even put forward a rocket-inspired slogan for 2013, calling for overall economic development based on the “spirit that conquered the universe.”
Cho Bong Hyun, a researcher with IBK’s economic research arm, told Daily NK today, “The core characteristic of this year’s New Year’s Address was emphasizing the Unha-3 launch and linking it to the economy. Kim Jong Eun seems to be planning to use the success of the rocket launch as a tool with which to vitalize the economy.”
However, the list of major achievements mentioned in the address included the military parade that marked the 100th anniversary of Kim Il Sung’s birth, the completion of Huichon Dam and its affiliated power plant, and the construction of athletic facilities around Pyongyang. It is hard not to regard such projects as indicators of North Korea’s fundamental economic weakness rather than strength.
Kim made references to reunification and improving relations with South Korea as well, but did not appear to offer a compromise position that could spur dialogue. Indeed, he appeared also to confirm that Kim Jong Il’s military-first political line is set to continue in 2013 and on into Kim Jong Eun’s rule.
Regarding the softer tone with South Korea, the Daily NK had this to say:
The message for South Korea in North Korea’s statement for the New Year was considerably more gracious than that of last year. Kim Jong Eun stated in his address, as per the subsequent official translation, “An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the north and the south.”
Despite the fact that the “unity of the Korean people” has been a constant theme of North Korean discourse over several decades now, the reaction to Kim’s words was abnormally enthusiastic. Some experts even believe that the speech revealed Kim Jong Eun’s ardent wish to restore inter-Korean relations, and say that North Korea is sure to put more weight on dialogue with South Korea going forward. The state-run Korea Institute for National Unification (KINU) concluded that North Korea has returned to a gentler South Korea policy.
Yet the reality is that North Korea has been going back and forth between dialogue and provocation over many years. This was even true under the left wing Kim Dae Jung and Roh Moo Hyun administrations. Lest we should forget, at the launch of the Lee Myung Bak administration in 2008, the first conservative administration for ten years, North Korea expressed great anticipation that progress in inter-Korean relations was impending.
At that time, North Korea called for the creation of “a new history of peaceful prosperity” and the promotion of legal and institutional mechanisms to prepare for unification. However, as inter-Korean relations went astray and Kim Jong Eun moved closer to the driving seat, North Korea embarked on a set of extreme provocations. Mind you, even then North and South were still discussing the possibility of a summit behind the scenes.
North Korea has chosen to limit its attacks on the new administration for one major reason; to test it. This happened in the 2003 and 2008 addresses (then known as the New Year’s Joint Editorial); indeed, it happens each time a new administration is launched down in Seoul.
The Daily NK also reports that the new year speech’s treatment of economic issues is nothing new:
[...] Promoting the development of light industry has been a key feature of a number of recent New Year’s Joint Editorials, the keynote editorial carried across North Korea’s three main publications; Rodong Shinmun (for the Chosun Workers’ Party), Chosun People’s Army (for the military) and Minju Chosun (for the Cabinet).
Stephan Haggard confesses to being worn down (as am I), but offers some thoughtful comments nonetheless:
The basic economic message seems to be “do everything,” which is really equivalent to not prioritizing anything at all. But it is possibly worse than that. The slogan for the year is “Let us bring about a radical turn in the building of an economic giant with the same spirit and mettle as were displayed in conquering space!” This approach suggests that the regime’s thinking is still locked into the idea of leapfrogging, “100 day battles,” and monumentalism; indeed, the first reference to economics in the speech is to “Juche-oriented and modern factories and enterprises and reconstructed major production bases in key industrial sectors on the basis of advanced science and technology…”
If there is any logic to the speech—a big assumption—it sounds like heavy industry comes first. (“By adopting decisive steps to shore up the vanguard sectors of the national economy and the sectors of basic industries, we should develop coal-mining, electric-power and metallurgical industries and rail transport on a preferential basis and provide a firm springboard for the building of an economic giant.”) This is disheartening to say the least, but who knows? In the next section, the speech says the country should concentrate on people’s livelihoods, agriculture and light industry “too,” and also with the increasing emphasis seen in recent speeches on “science and technology” as a panacea.
We see three things in the speech, editorials and posters that are discouraging. The first is the ongoing confusion between ends (being a strong and prosperous nation) and the strategy of getting there (heavy industry first, technological leap-frogging, vague injunctions to focus on people’s livelihoods). Second, the emphasis on technology as a form of economic deliverance is everywhere (“Today’s era is an era of science and technology, and we should open up an epoch-making phase in building an economically powerful state with the power of science and technology. The key to crushing the sanctions and blockades by the imperialists and leaping forward into an economically powerful state lies in science and technology.”) A single-minded focus on technology can put a missile in space, and the launch has to be seen as an achievement. But a single-minded focus on technology can’t produce economic growth in the absence of policies that promote ongoing innovation and provide incentives to using technology in an efficient way.In our humble opinion, it is a greater–if more mundane–achievement to grow at 3-4 percent a year than to waste hundreds of millions of dollars on a non-functioning satellite and military posturing.
Which brings us to the final problem: what we call the exhortatory approach to economic growth. The endless exhortation in important speeches is not coincidental. In the absence of meaningful incentives, the only way to squeeze more juice out of the workforce is hope that they respond to nationalist appeals by increasing effort. But a country’s workforce can work very hard and remain poor if what it is doing destroys value, as forced-march economic campaigns typically do. As we know from past socialist collapses, a surprising share of the capital stock in the former Soviet Union and Eastern Europe was essentially worthless when the final reckoning came. Effort cannot substitute for fundamentals, if anyone is even paying attention to these campaigns any more.
Evans Revere, writing for Brookings, made some interesting observations:
Kim Jong-un’s choice of venue for the New Year’s speech was important. He delivered his remarks at the Korean Workers’ Party (KWP) Central Committee building, a site selected to reinforce another theme of his year-old leadership: the primacy of the Party over other institutions and the role of the KWP as the main vehicle for his rule. It was no accident that the Party flag was displayed prominently next to Kim as he spoke.
Having sought to convey that he is a leader in his grandfather’s mold, and having reminded the nation (particularly the military) that the Party under his leadership is in the driver’s seat, Kim spent much of the speech holding forth on another central theme of his reign: economic growth. Looking through this section of the speech, one is hard pressed to find details about future economic plans or concrete new ideas aimed at boosting the DPRK’s anemic economy. In fact, its hortatory calls for making new “advances,” “building an economic giant,” and “breaking through the cutting edge” resemble the timeworn, empty exhortations of past New Year’s editorials. Thin gruel indeed.
For those of you with an interest in empirical measurements, Kim Jong Il’s “Songun” only got six mentions this year. Kim Il Sung’s “Juche” got 13. But as much as the content of Kim’s speech is important, the very fact that he made a speech at all demonstrates his continuing efforts to associate himself with the pre-Songun era of his grandfather. Implicit in Kim’s style is a return to the relative stability and prosperity that Kim Il Sung oversaw.
The Institute for Far Eastern Studies issued two reports on the new year speech:
In the New Year’s address delivered by Kim Jong Un, emphasis was placed on easing the hostile inter-Korean relations and implementation of the June 15 inter-Korean joint declaration.
An intriguing point of this year’s speech was its format, as Kim Jong Un’s delivery of the New Year’s Address was televised — a rare occurrence, considering the last one to be televised was that given by Kim Il Sung in 1994, some nineteen years ago. The Korean Central News Agency and Korean Central Television broadcasted this year’s speech.
The highlight of the speech was Kim Jong Un’s declaration, “To end the state of division of the country and achieve reunification, we must remove confrontations between North and South.” He added, “Respecting and thoroughly implementing the north-south joint declarations is a basic prerequisite to promoting the inter-Korean relations and hastening the country’s reunification.”
This can be interpreted as an effort by the North as a hopeful message to the newly elected South Korean president Park Geun-hye for improved relations and to urge her administration to depart from her predecessor’s North Korea policy and implement the June 15 and October 4 Joint Declarations.
In the 2008 New Year address, North Korea made a similar statement encouraging the then Lee Myong-bak administration to fulfill the joint declarations.
As for North Korea’s foreign relations, Kim stressed that it will expand and develop relations with those countries that are friendly and cooperative to North Korea and affirmed to “strive actively to realize independence in the world and safeguard peace and stability in the region.” However, there was no mention of North Korea’s position on the nuclear issue or US-DPRK relations.
As for the economy, Kim stressed that “the entire Party, the whole country and all the people should wage an all-out struggle this year to effect a turnaround in building an economic giant and improving the people’s standard of living.” The importance of economy and the improvement of the lives of its people were reiterated and agriculture and light industry was named as frontline industries.
Similarly, last year’s New Year joint editorial called for revolution in light industry and agriculture. This year’s message stressed that economic guidance and management must be improved to reflect the realities of development. It also stressed that the North “hold fast to the socialist economic system of our own style, steadily improve and perfect the methods of economic management on the principle of encouraging the working masses to fulfill their responsibility and role befitting the masters of production, and generalize on an extensive scale the good experiences gained at several units.”
In 2012, North Korea announced its ‘June 28 policy’. There is speculation that changes are taking place in various parts of the country to pilot changes in its economic system.
The New Year address also emphasizes the military. “The military might of a country represents its national strength; only when it builds up its military might in every way can it develop into a thriving country and defend the security and happiness of its people.” Kim Jong Un also emphasized that “The sector of defense industry should develop in larger numbers sophisticated military hardware of our own style that can contribute to implementing the Party’s military strategy.”
South Korean government showed a lukewarm response to North Korea’s New Year address. While the format of the address was relatively novel in that it was televised, most North Korea watchers see the content and format of the joint editorial as similar to past addresses. Kim Jong Un placed heavy emphasis on the economic sector, but the method of improvement revealed no major changes from the current policy. Likewise, no concrete measures were suggested for the improvement of inter-Korean relations except for a general suggestion to open the doors for dialogue.
North Korea’s National Science and Technology Council calls the New Year’s Address, “A Shortcut Measure to Become an Economic Powerhouse”
In the 2013 New Year speech by Kim Jong Un, plans to strengthen the National Science and Technology Council can be noticed to serve as a driving force for the future economic construction of North Korea.
According to the Chosun Shinbo, a pro-North Korean newspaper in Japan, the National Science and Technology Council assessed the New Year speech to substantiate, “The teachings of our leader Kim Jong Un, to stipulate the power of science and technology in order to provide a shortcut in constructing a strong economic nation.”
The news evaluated 2012 as a year of revolutionary achievement for succeeding in the satellite launch as it was the last year of the “Third Five-Year Plan” of scientific and technological development.
According to the newspaper, the National Science and Technology Council was acclaimed as an esteemed mechanism in conducting scientific research contributing to the nation’s economic development and in creating a new foundation for various scientific research sectors to carry out its projects.
As a result, the news claimed noteworthy achievements were made in state-of-the-art scientific research, with over hundreds of studies conducted in reconstruction and modernization projects in factories and enterprises across the country.
The 2013 marks the first year of the “Fourth Five-Year Plan of Scientific and Technological Development” and the National Science and Technology Council outlined its major goals and tasks of this year: “Our scientists and technicians will carry out the tasks put forth by the New Year speech to realize the modernization of our economy and build a strong nation from advancement in science and technology.”
The Presidium of the Supreme People’s Assembly decided last month to award the Medal of Kim Jong Il to the Korean Committee of Space Technology (KCST) for the successful launch of the Kwangmyongsong 3-2 satellite and commended it as the “paramount event and celebration in our national history of 5,000 years and of our people.”
The successful launch of the long-range rocket was lauded as a major national achievement to North Koreans, with the opportunity to embark on the building of a new satellite named “Kim Jong Un.”
In addition, Rodong Sinmun, the official newspaper of Workers’ Party of Korea, declared that the era of President Kim Il Sung and Kim Jong-il should be known as the “100 Years of Juche,” while the newspaper referred to Kim Jong Un’s era as the “new 100 Years of Juche.”
For Kim Jong Un, it is critical that his regime improve the North Korean economy in order for him to fully consolidate his power and win the hearts of the North Korean people. Kim is likely to continue to push forward with economic development efforts in 2013, through promoting political stability.
In this year’s New Year’s message, the year 2012 was named as the “year of the people” while agriculture and light industry were said to be major fronts for economic construction of a kangsong taeguk, or strong and prosperous nation. Food shortage and livelihood of the people were also named as major challenges to be resolved to realize kangsong taeguk.
From this year, “June 28 Policy” is likely to continue and already, pilot measures were implemented in selected rural areas to improve economic management and expand autonomy of factories and work sites. Depending on the outcomes of the pilot measure, changes in economic policy is likely to occur this year.
Some new measures likely to take place are as follows: in the agricultural sector, the expansion of farmers’ right to dispose of grain yield; in the industrial sector, the increase of incentives via increasing the autonomy of each company.
In preparation for the first anniversary of Kim Jong Il’s death, North Korea is calling attention to its economic achievements.
North Korean media announced that workers in each production sector met the goals of this year to commemorate the death of Kim Jong Il.
The Korean Central News Agency (KCNA) reported on December 7, “To honor the oath of bloody tears made before our Dear Leader Kim Jong Il, with burning hopes to charge ahead to meet the annual People’s Economic Plan, industrial production output reached 100 percent and production of daily necessities reached 113.7 percent, as of December 5.”Specifically, the machinery industrial sector was said to have reached its annual production goal by 107 percent as of the end of November.
Rodong Sinmun, the mouthpiece of the Workers’ Party of Korea (WPK), also mentioned that a product exhibition was held from December 3rd to 6th in the Pyongyang Department Store No. 1.
In addition, KCNA reported that many hydroelectric power plants across the nation have already exceeded the annual electricity production plan. The KCNA claimed that Sodusu power plant exceeded the annual goal by 120.3 percent, while the Hochon River power plant and Jangjin River power plant reached 107.6 and 109.3 percent, respectively.
North Korean media boasted its economic development and spoke of its economic revitalization strategy. In the KCNA commentary: “We have developed our own economic revitalization strategies for economic development and devotion for this goal is deepening with time.”
North Korea’s recent announcement and actual launch of the Kwangmyongsong-3 satellite is also claimed to be an essential process for North Korea’s economic development.
“Unha-3rocket carryingthe satellite Kwangmyongsong-3, was developed by North Korean scientists and engineers by its own technology, and it is a noble achievement for its scientific and technical advancement to realize the goal of economic revival,” stated Choson Sinbo, a Japan-based pro-North Korean newspaper.
Analysts see North Korea’s recent moves (that is, its stressing of economic achievements and the rocket/satellite launch) as Pyongyang’s effort to emphasize the Kim Jong Un regime’s intent to uphold the teachings of the late leader Kim Jong Il through strengthening the economy.
The year 2012 was propagated by North Korea to be the first year of its kangsong taeguk (“strong and prosperous nation”). North Korea is trying to prove to its people that, despite Kim Jong Il’s death, this effort is still continuing under the Kim Jong Un leadership.
In the December 7th article of the KCNA, annual evaluation was made of the various economic achievements. The article called the past year “a historical miracle of a new era,” and “first year of new centennial of juche.” It also stated that a “new historical miracle was created to mark the new era of strong Korea (Chosun) upholding the great teachings of General Kim Jong Il.”
The KCNA mentioned the ‘Day of the Sun’ celebrations and other various celebrations, WPK conference, Kim Jong Un’s onsite visits to military bases, completion of the Huichon Power Station, Pyongyang city park construction, and Moranbong band performances as major achievements of the year.
In addition, the new 12-year compulsory education policy, outstanding performance by North Korean athletes at the 2012 London Olympics (i.e., four gold and one bronze medal), and the commissioning of the new State Culture and SportsGuidance Commission were also mentioned as main accomplishments of the year.