North Korean Economy Watch

According to KCNA (2012-1-25):

The gross industrial output value grew 1.2 times for twenty days of January this year as against the same period last year.

This is the result of the high-pitched drive waged by all the workers of the country since the first day of this year after receiving with excitement the joint calls of the Central Committee and the Central Military Commission of the Workers’ Party of Korea, the joint New Year editorial for this year and the letter of the working people in South Hamgyong Province.

In the period, the Ministry of Light Industry increased the production 1.4 times and the Ministry of Food and Daily Necessities sharply boosted the production.

Thermal and hydropower stations have increased the ratio of operating the generating equipment.

Much effort is being concentrated on supplying coal to the thermal power plants and chemical and metal plants and developing more coal beds.

The Ministry of Coal Industry produced 12,000 more tons of coal than planned for the 20 days.

Iron mills and steelworks also increased the production.

The freight transport volume increased by 12 percent from the same period last year.

Innovations were made in the production of vinalon and fertilizer by the industrial establishments in the field of chemical industry and in the production of custom built equipment and mining machines by the industrial enterprises of the field of machine industry.

The forestry stations and pit wood stations increased the timber production.

Progress has been reported on a daily basis from the important projects including the building of apartments in Mansudae areas and the Paektusan Songun Youth Power Station.

For the uninitiated, this is about as close as the DPRK gets to releasing economic statistics. Note there are no base numbers–only [some] % increases. Also, despite the measure being officially named “output value”, it is really just a claim of increased physical production.  There is no value (prices) or mention of “services” included in these measures.

Unfortunately without more solid numbers, and the proclivity to ascribe productivity gains to effective propaganda, these reports cannot be taken seriously.

Although we all talk about the DPRK’s GDP and per capita income as if the numbers are solid, the reality is quite the opposite.  In addition to the general lack of information, there are all sorts of methodological problems with assessing the value of the DPRK’s economy.  Here are some helpful sources if you want to learn more:

1. DPRK Economic Statistics Report

2. G. Warren Nutter papers:

- (JSTOR) “Soviet Industrial Growth”, Source: Science, New Series, Vol. 130, No. 3370 (Jul. 31, 1959), pp. 252-255

-(JSTOR) “Industrial Growth in the Soviet Union”, The American Economic Review , Vol. 48, No. 2, Papers and Proceedings of the Seventieth Annual Meeting of the American Economic Association (May, 1958), pp. 398-411

-(JSTOR) Some Observations on Soviet Industrial Growth”, The American Economic Review , Vol. 47, No. 2, Papers and Proceedings of the Sixty-eighth Annual Meeting of the American Economic Association (May, 1957), pp. 618-630

3. The North Korean Economy by Nicholas Eberstadt

4. Assessing the economic performance of North Korea, 1954–1989: Estimates and growth accounting analysis

5. Bank of Korea’s assessment fo the DPRK economy in 2010.

6. My North Korean Economic Statistics Page

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-02-08
2011-02-08

In last month’s New Year’s Joint Editorial, North Korean authorities reaffirmed the national drive to strongly develop the country’s light industrial sector by 2012, the 100th anniversary of the birth of Kim Il Sung. On February 2, the Choson Sinbo, the newspaper of the pro-North Korean residents’ league in Japan, proclaimed that all efforts were being focused on delivering high-quality light industrial goods by April of next year.

North Korea’s minister of light industry, forty-seven year old Hu Chul San, was interviewed by the paper’s Kook Jang Eun. Hu stated that light industrial zones already in operation would be further bolstered and the provision of raw materials would be prioritized for celebrations surrounding the 100-year birthday of the country’s founder.

The North Korean regime has set 2012 as the year in which it will “open the doors to a great and prosperous nation,” and Kim Il Sung’s April 15 birthdate has been set as the first target for economic revival. Just as in 2010, this year’s Joint Editorial called for light industrial growth and improvements in the lives of the North Korean people as the ‘strong and prosperous nation’ goal is pursued.

Minister Hu gave one example of the expected boost in production, stating that all students, from elementary school to university, would receive new school uniforms by next April. “Originally, school uniforms were issued to all students once every three years, but as the nation’s economic situation grew more difficult, [the regime] was unable to meet the demand.” He promised that for the 100-year anniversary, “Rationing would take place as it did when the Great Leader was here.”

The minister also explained that all preparations for distributing light industrial goods to the people next April needed to be completed by the end of this year, since Kim Il Sung’s birthday fell so early in the spring. He stated that a strong base had already been established for the production of high-quality goods, and that many organizations had already mass-produced high-quality goods for the celebration of the 65th anniversary of the Korean Workers’ Party founding last year, offering the Pyongyang Sock Factory, the Sinuiju Textile Mill, the Botong River Shoe Factory, and the Pyongyang Textile Mill as examples.

When asked how North Korea would resolve raw material shortages, the minister explained that since the February 8 Vinalon Complex began operations last year, Vinalon and several other types of synthetic materials were available. The Sunchon Chemical Complex and other industries were also providing synthetic materials to light industrial factories throughout the country, strongly supporting indigenous efforts to increase production. He added, “Raw rubber, fuel and other materials absent from our country must be imported,” but that “national policies were being implemented” to ensure steady supply.

Minister Hu admitted that there was no shortage of difficulties, but that every worker was aware of the importance of meeting the April deadline, and that because raw material shortages were being resolved, light industries were now able to press ahead with full-speed production.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-14-2
6/14/2010

During the third session of the 12th Supreme People’s Assembly, convened on June 7, Kim Jong Il promoted his brother-in-law Jang Sung Thaek to vice-chairman of the National Defense Commission (NDC), named a new premier, and replaced several department heads and ministers. This appears to be an attempt to shore up the regime as it seeks to “open the door to a strong and prosperous nation” by 2012, the 100th anniversary of the birth of Kim Il Sung. Kim Jong Il made a personal appearance at this latest assembly meeting, unlike the SPA meeting held in April. The leader’s presence hints at the importance of the latest gathering.

This promotion of Jang Sung Thaek and shake up of Cabinet positions appears to be part of efforts to realize the quickly approaching goal of establishing a ‘strong and prosperous nation’ by 2012, assigning those most able to positions of responsibility, regardless of age or experience. Most notably, Jang, widely thought to be second-in-command in North Korea, was promoted to vice-chairman of the NDC. He was first appointed to the NDC at the first meeting of the 12th SPA in April 2009, making his climb to vice-chairman in a mere 14 months.

Before the latest promotion, Jang held the position of vice-director of the Workers’ Party of Korea, a newly created position that he was the first to hold. In this position, Jang oversaw national security offices, police, and the courts, putting him in a position of power difficult for anyone else to achieve. Having traveled to both South Korea and China, Jang Sung Thaek was likely promoted to present the image of a strong military and, at the same time, establish stable relations with the international community in order to ensure a smooth transition of power as well as to resurrect the economy by 2012. When Kim Jong Il led a delegation to China last May, the Chinese government treated Jang very well, ignoring standard protocol for someone in his position.

In addition, Choe Yong Rim was named the North’s new premier, and eight new vice-ministers were appointed. Regional Party secretaries were allowed to participate directly, allowing those who are most knowledgeable of local conditions to impact the decisions of the administration. Most of the new appointments were very experienced elites, including Choe Yong Rim (80) as premier, and Kang Neung Su (80), Kim Rak Hui (77), Ri Thae Nam (70), and Jun Ha Chul (82). The regime is promoting a number of veterans who are making their “last stand for the motherland” as part of the effort to ensure stable transformation of power after Kim Jong Il.

With Kim Rak Hui’s appointment as vice-premier and new appointments to the Ministry of Foodstuff and Daily Necessities Industry as well as the head of the Light Industry Ministry, North Korea seems to be pursuing the improvement of standards of living promised in the 2010 New Year’s joint editorial. Pyongyang Party officials appear to be attempting to reassert a centrally planned economy in the aftermath of botched currency reform efforts; however those witnessing regional economic conditions appear much more able to come up with appropriate economic policies. North Korea has been unable to make any significant progress in resolving its food shortages or its inability to provide daily necessities to the public, leading the regime to scapegoat some high-ranking officials. Now, many in and outside of North Korea are watching closely to see if the regime can launch economic efforts capable of successfully ‘opening the door to a Strong and Prosperous Nation’ in the next two years.