North Korean Economy Watch

NK Choson.com

Kimchaek University of Technology, the top college of science and engineering as well as a central higher educational institution of North Korea, is located in Pyongyang, not in Kimchaek.

Colleges and universities in North Korea are classified into two: central and regional. But criteria for the classification differ from those of the South. It’s wrong to assume that those located in the capital are central institutes of higher education, and those housed in provincial cities and towns are regional ones.

Central higher educational institutions as referred to in the North denote “central-grade institutions of higher education founded in Pyongyang and elsewhere in the provinces for the purpose of educating prospective national leaders, engineers and scientists.” Accordingly, colleges and universities located in Pyongyang are not necessarily central institutions of higher education; nor those situated in the provinces are all regional colleges and universities.

Chongjin Mining and Metallurgy College, the only one of its kind not only in the North but in Asia, and Wonsan Agriculture College, the first of its kind in the North, for example, are definitely central colleges, though the former is located in North Hamgyong Province, and the latter in Kangwon Province, respectively. The same applies to Shinuiju Light Industry College located in North Pyongan Province; Sariwon College of Koryo Pharmacy in North Hwanghai Province; and Hamhung Hydrographic and Power College in South Hamgyong Province. Though located in provincial cities, they are all central colleges founded with regional features taken into account.

On the other hand, Pyongyang Machinery College, Pyongyang Agriculture College, Pyongyang Printing Industry College, though all are located in the capital, are classified as regional colleges. Each province or special city under the direct jurisdiction of the central government in the North has two normal and teachers colleges and one arts and physical education colleges, all of which are typical regional ones. Factory, farm and fishing farm colleges attached to industrial entities also belong to the regional category.

What is the central criterion separating central high educational institutions from their regional counterparts? It depends on who administers and manages them. Those administered directly by the Education Ministry are central institutions of higher education; those administered by the Education Department of the People’s Committee of a relevant province or special city placed directly under the jurisdiction of the central government are regional colleges or universities. Needless to say, no regional institutions of higher education are free from Education Ministry guidance; the guidance is only given indirectly through the People’s Committee Education Department of a pertinent province or special city. In an exception, Kim Il Sung University, the most prestigious higher educational institute in the North, is placed under the direct jurisdiction of the cabinet.

Central colleges and universities, wherever they are located, recruit students from across the land, and their graduates are assigned to any agencies, factories, corporations or research institutes in the country. On the other hand, only seniors and graduates from senior high schools in pertinent provinces and special cities are eligible to enter regional institutes of higher education, whose graduates, when given job assignments upon graduation, are confined to offices or factories in their respective administrative areas.

North Korea has quite a few institutes of higher education that are called colleges, entirely unrelated to central and regional colleges, but whose nature and curricula are totally different. The Yalu River College trains espionage agents sent to the South under the jurisdiction of the Reconnaissance Bureau of the Ministry of People’s Armed Forces; Pyongyang College of Technology, also called the State Security Agency Political College, produces prospective leaders of the intelligence agency.

The Automation College, once called Mirim College, is a special college founded for the purpose of turning out manpower needed for waging electronics information warfare, placed under the jurisdiction of the Ministry of the People’s Armed Forces. The College of People’s Economics and International Relations College are institutes retraining leading staff of the party headquarters; the College of Communism run by each province or special city is a special educational institute retraining junior leaders of regional chapters of the Workers’ Party.

Yonhap
4/4/2007

South and North Korea will open their first joint college later this year in a show of warming ties between the two sides, officials said Wednesday.

The Pyongyang Science and Technology College is scheduled to open in the North’s capital on Sept. 10 and will initially house 150 graduate students for such courses as master of business administration (MBA).

“We had originally planned to open it in April but strained inter-Korean ties delayed the project. The favorable environment will make the project go smoothly this time,” said Lim Wan-geun, a boarding member of the Northeast Asia Foundation for Education and Culture.

Kim Jin-kyong, dean of Yanbian Science and Technology College, will be the first dean of the inter-Korean college, the official said. The college will consist of a five-story building for lectures, a four-story building for a library, dining facilities and research and five dormitory buildings.

Inter-Korean relations have warmed considerably since the 2000 summit of their leaders, but tension persists since the rival states are still technically in a state of war, as no peace treaty was signed at the end of the Korean War.

South Korea suspended its food and fertilizer aid to North Korea after it conducted missile tests in July. A possible resumption of the aid was blocked due to the North’s nuclear bomb test in October.

But the relationship was revived after North Korea promised to end its nuclear weapons program in return for energy aid, and the two sides held the first ministerial talks in seven months in March.

Koreas to open first joint university
Korea Herald
Cho Ji-hyun
3/15/2007

The first joint university between South and North Korea will open in Pyongyang in September, a senior member of the founding committee told The Korea Herald.

South Koreans including Park Chan-mo, president of POSTECH in Pohang, visited Pyongyang yesterday to discuss the establishment and operation of Pyongyang University of Science and Technology, or PUST.

Early last year, the Northeast Asia Foundation for Education and Culture, a Seoul-based nonprofit organization, agreed with the North’s education authorities to open PUST as early as last October.

The schedule has been delayed due to the lack of progress in their talks amid tensions caused by North Korea’s missile and nuclear tests last year.

Their contacts have recently resumed as the ties between the two Koreas improved following the six-party agreement on the North’s nuclear programs in Beijing.

In an interview with The Korea Herald, Park, a member of the founding committee, said the school will open in September and that further discussions will take place before the opening.

The visiting delegation includes Kim Chin-kyung, president of Yanbian University of Science and Technology, who assumes the post of founding president of the Pyongyang university.

Choi Kwang-chul, professor of Seoul’s Korea Advanced Institute of Science and Technology, also joined the trip.

For the four-day trip, they are to inspect the progress of construction work, and discuss the cross-border passage of faculty and internet connections for the school.

“We will raise two demands – constructing a land route between the two Koreas to allow professors to travel across the borders and providing internet connection,” Park said.

A Seoul government official also confirmed that the school will open in September.

The project was first initiated in 2001. The Northeast Asia Foundation for Education and Culture plans to expand the school into a university with 240 professors and more than 2,000 students from both countries.

However, the university plans to open with 50 professors and 200 students participating in master’s and doctoral programs in its first year, university officials wrote on their school website.

The university project is led by Park, Lee and Malcolm Gillis, former university president of Rice University in Texas.

In a separate effort, POSTECH has worked on a joint project with the Pyongyang Informatics Center, or PIC, since April 2001, according to Park.

Using PIC’s three dimensional computer aided design program, POSTECH has completed the development of a software called “Construction,” which offers a virtual walk through the construction site to detect errors, he said.

Korea Times
Andrei Lankov
4/1/2007

Where is science produced? A typical Western answer would be: “in a university, of course.” Actually, it is not really the case these days, since an average teaching routine at most universities is increasingly incompatible with serious research, so a growing share of research is conducted in the corporateowned or independent research centers supported by industry, and by private and/or government money.

Somewhat surprisingly, the communist world was first in separating pure research from a teaching-oriented university. This was initially a Soviet approach, widely accepted by all communist countries, including North Korea.

Most Communist countries had a special academic body whose staff was responsible solely for conducting scientific research. This body was and is called an Academy of Science. In its original Soviet form it could be best described as a self-governing Ministry of Science and Humanities.

The Soviet Union inherited this institution from the old Russia of the tsars. Historically, in pre-Soviet times, the Academy used to be a prestigious closed club of prominent scholars and scientists.

The Communist government took on its payroll, but the institution retained a lot of its ingrained traditions and established privileges. The Soviet Academy of Science was governed by a council of full members, usually well-known scholars and/or academic administrators, who periodically voted new scientists into their circle. Government interference in the process could be serious, but elections still remained contested.

Full membership was a tenured position that could not be withdrawn, even if the bearer was engaged in acts the authorities did not like. Soviet authorities, incidentally, tolerated a high level of critical expression among academy members.

The academy ran a huge network of research centers that formed the backbone of the Soviet research community: the academy always had the best people and the best equipment.

North Korea acquired its own academy in 1952. The preparations began in spring, and on the 1st of December 1952, the academy was officially established. This date became its official foundation day and is regularly celebrated.

At the time of its foundation, the North Korean Academy of Science included 10 full and 15 candidate members and was responsible for 9 “research institutes” and 43 smaller “research laboratories.” Hong Myng-hi was elected as the first President of the Academy, but this aged man was hardly a good administrator. In all probability, Hong was chosen for his background and longstanding reputation as a leftist intellectual of high integrity. In 1956 he was replaced by Paek Nam-un, a prominent historian and another defector from the South (such defectors were very prominent in the North Korean intellectual circles of the 1950s). Unlike his predecessor, Paek was willing to become a real administrator.

Nowadays, the North Korean academy is a large institution. It runs 40 research institutes, about 200 smaller research centers of various kinds, a factory which produces research equipment and 6 publishing houses which issue books and about 40 periodicals. In 1982 the Academy became a ministry, unlike its Soviet counterpart which always had some trappings of an independent “scientists’ club.” But at the same time, the North Korean Academy never even gave a hint of the intellectual, let alone political, independence which was a hallmark of its Soviet counterpart in earlier times.

In the USSR, academies proliferated in the 1940s and 1950s when minor fields began to lobby the government for permission to acquire an academy of their own. Not least, they were attracted to the prestige associated with the name of an “Academy” (and, of course, leading authorities in their respective fields also wanted to be styled a “full member of such-and-such academy”). Thus, the Academy of Medical Science, the Academy of Agricultural Science and even the Academy of Pedagogical Science were born. Each had its own autonomous network of research centers.

A similar process was witnessed in the DPRK where there are minor academies as well. Following the Soviet example, North Korea established an Academy of Medical Science and an Academy of Agricultural Science. Nothing was heard about pedagogy, but the North did create two academies with no Soviet analogue: the Second Academy of Natural Sciences, responsible for military research; and the Academy of Social Science, responsible for the humanities. In 1992 the minor academies, with the exception of the second scademy, fused with the major Academy of Science, but in 1998 the old Soviet-style structure of one major and a number of minor academies was restored.

In better times, a much-coveted job with an academic research institute provided a North Korean scientist with some equivalent of an ivorytower life. Being a staff member of the academy meant good wages, good rations (in North Korea, the latter was more important than the former) and a lot of prestige. In some cases, especially in the natural sciences, the scientists could be even somewhat protected from ongoing political campaigns. However, over the last 15 years, the positions of the academy and its personnel have undergone a dramatic decline.

Daily NK
Han Young Jin
3/29/2007

North Korean inside source informed that authorities had been asserting control over illegal selling and use of mobile phones at the markets near the border regions. National Security Agents have also been conducting in-depth investigations on illegal acts such as drug smuggling and slave trade.

In a telephone conversation with a reporter on the 28th, Park Jong Run (pseudonym) of Musan, North Hamkyung said, “Authorities came to the People’s Units and said furtively, ‘Rations will be distributed in April. In future, you will live a good life. So, stop engaging in illegal trade.’ Why would we listen to them when they tell us to stop selling especially since they aren’t going to give us distributions anyway?”

Park relayed, “They said, don’t sell our confidential information about our country through the mobile phone. People already in possession of mobile phones will be forgiven if they self-confess at the National Security Agency.” Since last year, North Korean authorities have been keeping a close watch on mobile phone use particularly in the border regions.

He said, “They threaten us with a declaration, so that we will report cases of illegality or corruption such as slave trade and drug trade.” For example, large amounts of drugs were found in the home of a Chairwoman for the Women’s Union of Hoiryeong City, late February.

According to Park, authorities will directly carry out the procedures at Jangmadang (markets) themselves, with assistance from Hoiryeong Security Agency and various police departments. Some goods found to be linked to illegal trade are in part taken away by the sudden wave of control. In particular, these authorities have a keen eye for goods made overseas such as Chinese items.

National Security Agents and the police confiscate the items arguing that, “now we have a gap between the rich and poor, as well as the richer getting richer and vice versa, because you, tradesmen have tasted some money. Now, socialism has been infected by capitalism.” However, even the security agents are acting tactful by removing only some of the goods as a mere example of punishment.

Goods confiscated are locked up at the security agency and kept in provision. The endless lines in the waiting rooms of the security agency make up the people ready to pay a fine and recollect their items, says Park. Nonetheless, security agents are reluctant to return the goods back to the traders and so bribes must be ready at hand also.

“I barely got my goods back after bribing them with 10 packets of cigarettes, but there was only half the goods left remaining in the bundle” Park criticized and said that the security agents sarcastically remarked, ‘Hey, let us eat and live a little.”

Following the nuclear experiment, authorities have been trying to gather regime support and elevate the nation’s pride arguing the nation had become a strong militaristic country. They proclaim, “The world is cooperating with us and is throwing their goods at us. In future, you will live well.” It will be difficult for North Korean authorities to prohibit trade, especially with the people’s strong will power to make money.

KCNA
3/27/2007

The Central Physical Prospecting Group under the State Bureau of Natural Resources Development is successfully carrying on the survey of underground resources by advanced physical prospecting methods, thus greatly contributing to the economic progress of the country and the land construction. Recently, the prospecting group has introduced the advanced methods in the geological survey and developed modern facilities to explore a new phase for surveying the underground resources. 

The prospecting group, founded in January Juche 46 (1957), has already registered great achievements in the survey of underground resources and the land development. 

Over the last five decades, it has powerfully propelled the development of the national economy with its successful survey of valuable raw materials and fuel resources and greatly contributed to the geological development and the land development in the country with scientific geological survey and the confirmation of the geological foundation. 

It has found out many geological layers and systematized their formation periods and geological composition in a well-arranged way.

They, on the basis of their success, have discovered the law on the distribution of valuable minerals and surveyed and registered scores kinds of minerals, several hundreds of mineral deposits, thousands of mineral bodies and outcrops, and a thousand and several hundreds of heavy mineral streams and metal diffusion zones.

They have achieved many successes not only in the prospecting of abundant iron ore, coal resources and the new graphite deposits but also in the confirmation of the amounts for nonferrous metals, rare metallic mineral resources, nonmetallic mineral resources and magnesite mineral resources. 

The survey of groundwater, hot springs, subterranean heat and the foundations of many construction projects including the Kumsong dam and the Samsu Power Station dam are associated with the efforts of the Central Physical Prospecting Group.

KCNA
3/27/2007

A protocol of the fourth meeting of the Inter-governmental Committee for Cooperation in Trade, Economy and Science and Technology between the DPRK and Russia was signed in Moscow on Mar. 23. It was signed by Rim Kyong Man, minister of Foreign Trade who is chairman of the DPRK side to the committee, and Konstantin Pulikovski, director of the Supervision Bureau of Ecology, Engineering and Atomic Energy who is chairman of the Russian side to the committee.

Joong Ang Daily
Lee Sang-il
3/26/2007

North Korean bank allegedly gave counterfeit U.S. $100 notes to a foreigner working for the United Nations Development Program when he cashed a check at a bank in Pyongyang in 1995, a diplomatic source in Washington told the JoongAng Ilbo.

A spokesman for the UN agency confirmed the suspicion, adding that the bills will be handed over to the U.S. Treasury Department for verification.

In 1995, the UNDP’s Pyongyang office issued a check to an Egyptian consultant for his services on a North Korea project.

The consultant claimed that he cashed the check at the Foreign Trade Bank in Pyongyang and that the bank gave him 35 $100 bills.

After returning home, the consultant attempted to exchange the bills for Egyptian currency, but the bills were rejected as fakes, the source said.

The Egyptian sent the bills back to the UNDP office in Pyongyang, and the UN officials confronted the Foreign Trade Bank and asked for real money, the source said. The request was turned down, and the UN agency has been holding the bogus bills for 12 years.

The revelation of the incident highlights charges by the American government that North Korea has been passing so-called “supernotes” ― fake $100 bills ― for many years. Washington’s claim that Banco Delta Asia in Macao was a conduit for the release of the notes was one reason for the freezing of $25 million in North Korean funds in September 2005.

That money is now due to be released as a precondition for progress in the six-party talks. The U.S. has cut the suspect bank’s access to the American financial system.

In an e-mail interview with the JoongAng Ilbo, David Morrison, spokesman for the United Nations Development Program, said the agency is in the process of giving the notes to the Treasury Department. Mr. Morrison said he was not aware of any other incidents.

Mr. Morrison added that the Egyptian consultant has not provided further evidence that the bills were passed by the Pyongyang bank. He also said that UNDP had used Banco Delta Asia to send money to the North to finance projects from January 2000 to December 2002. He said they chose the bank for its convenient financial services.

Asked if North Korea asked the agency to use Banco Delta Asia, Mr. Morrison said it was an independent decision. He said the UN body stopped transactions with the Macao bank when the settlement currency was changed from dollars to euros.

UNDP opened its office in Pyongyang in 1980 and has carried out public hygiene, agricultural, energy and environmental projects.

KCNA
3/21/2007

Kim Chaek University of Technology has developed a new kind of water quality improver.   The machine is made with the application of the cutting-edge science and technology such as nano technology.  The kernel of the improver is a filter bar. A bar is capable of refining 2,500 liters of water as “spring water”.

The filter bar, made with nano materials, consists of a layer for removing floating matters and microorganism, a layer for deodorizing smell, a layer for absorbing heavy metals and two physical filter layers. 

The new improver is superior to other kinds of water purifiers in various points.  It eliminates heavy metals, floating matters and microorganism harmful to the human body.  The water purified by the improver is clean and low in chemical combination. It supplements microelements to and improves the digestion function of the human body, thus effectively preventing various diseases.

Daily NK
Kim Min Se
3/19/2007

Today, a rich person in North Korea is someone who can spend roughly US$100~$500 (300,000~1.5mn North Korean won) a month. This amount is so large, that it is a figure unfathomable to the average North Korean.

Nowadays, a small number of lower class North Koreans sell noodles at the markets and earn 1,500~2,000won a day. On average, this equates to 50,000~60,000won a month. Additionally, the living costs of a family of 4 in Pyongyang normally costs about 50,000~100,000won.

While a laborer with a stable job earns about 2,000~3,000won (approx. US$0.66~1) a month, spending more than 100,000won (approx. US$32.2) a month is an extravagant figure. Simply put, it has become difficult to live only on selling noodles.

Anyone who spends more than 100,000won a month is probably eating rice and can afford to eat nutritious vegetables. This is the middle class of North Korea today.

The distinctive nature of this middle class is the disparity of the work as well as their past background being rather simple. This class has naturally appeared simply because of their genuine skills. These people know exactly the flow of the market and know how to make money. The only thing important to them is finding the opportunity to make money. In all, they have come to an understanding that money is needed in order to buy goods and live a life to the envy of others.

This middle class is closely linked to power. If a person only takes pride in the sense that he/she can money, then that person will be hit with a severe fall. It is a characteristic of North Korean society that power is critical in living a life making lots of money without trouble.

With money, these people are earning even more by buying the supervision of low ranking safety and security agents and local administrative officers. Simply put, the small amount of money invested as bribery in securing a good location at the markets is petty compared to the income reaped. In other words, whenever a new market is established at a village, a person can be confident in having the best spot by winning over the person in charge. For example, the bidding for the best spot at the Sunam Market, Chongjin is 900,000~1.5mn won (approx. US$290~$490).

Entrepreneurs may become the rich after regime reform

In 2002, the North Korean government passed the July 1st economic reforms which gave more freedom to marketers with less control by authorities and hence, trade became more active.

The mindset of the middle are so fixated on money, that they believe that money can solve anything even if a war was to break out the following day or North Korea was to be completely overturned. Though these people conspire with those in power in order to make money, they are unconcerned with what happens or rather does not happen to the Kim Jong Il regime.

There is a definitive difference between the middle class who are rubbing hands and the central class just in case the Kim Jong Il regime did collapse, compared to the upper class. The middle class are not from any particular special background, but with the skills and guile of making wealth, they are confident that there will be no problems irrespective of regime change.

People from this class even have the freedom to save and keep some food and daily necessities in preparation of this incident. Furthermore, currency is undoubtedly being saved, this also being foreign currency such as dollars. This, they call emergency relief in preparation for the time the North Korean regime does collapse, as well as a safe deposit to use whenever trade needed.

In addition, with the change of the North Korean regime, this class will be able to celebrate and radically transform from being an entrepreneur to the newly-rich with all the wealth acquired during the Kim Jong Il regime.

Daily NK
Kim Min Se
3/18/2007

In socialism, the laborer and the peasant dominate the nation and society. However, since the late `60’s, the role of the laborer and peasant has decreased with the bureaucracy taking power, to the extent that a country can no longer remain in traditional socialism.

Currently, North Korea’s leader Kim Jong Il with a minority of the central class surround this core power. In North Korea, the laborers and peasants are rather subject to extortion.

Amidst a North Korean market economy, a middle class is being established. The middle class comprises of people who have assets that the average citizen cannot afford and own medium-sized businesses or engage in wholesale trade.

Undoubtedly, this group of people are dominating the middle class as well as playing a vital role in the lifeline of North Korean citizens and market, a fact that could not have been fathomable in North Korea’s past.

Until the 80’s, North Korea’s economy was a planned economy. Supply and demand of goods was distributed according to the national plan. However, in the late-80’s, small holes began to emerge in the socialist planned economic system and with a lack of daily necessities, people began to rely on the black market.

Arising from the major cities, goods were secretively traded in the black market and eventually the majority of North Koreans acquired their needed goods through this system. This system operated evading the control and regulation of North Korean authorities, but when caught, a person was condemned to severe punishment and the goods confiscated.

However, the mass food crisis of the mid-90’s completely collapsed the remnants of a socialist planned economy that had subsided unto the time. What had happened was the end of the national food distribution system.

In particular, the collapse of the food distribution meant the death sentence. Tens and hundreds of thousands of North Koreans began to die of starvation and as a means to live, people became active in the market and trade began to emerge in different regions of North Korea.

Mass starvation which created expert tradesmen

The immobilization of a socialist planned economy activated Jangmadang (North Korea’s integrated markets) which then led to the formation of a new class within North Korea’s own expert tradesmen. North Korean authorities who had no other countermeasures had little choice but to comply as the lives of the citizens were now left to the hands of trade.

In the mid-90’s, North Korean authorities approved personal trade to occur between North Korea and China and then permitted markets to exist along the border districts. Simply put, the mass food crisis created a new class which actually gave North Koreans an opportunity to trade.

At first, people would sell goods that they already had such as household appliances, television, recorder and bicycle. Furthermore, any type of stock accessible, particularly clothing, candy and other foods coming from China such as rice, flour and corn were also traded.

As people gained more experience and came to know the basics of marketing, tradesmen became more specialized. People who sold rice, only sold rice, whereas people who traded fabric only sold fabric.

North Koreans began to realize that specializing in a particular field was the way to make money and the people who were unable to assimilate to this culture broke away penniless.

Accordingly, the market gradually became a center for specialized tradesmen to provide goods and daily necessities. The goods sold by these tradesmen eventually became the mark for the middle class merchant. During this time, stabilized distributors began to dominate the market and more individualized entrepreneurs surfaced.

People skilled at cooking, baked decorative and delicious bread in their homes and then sell them at the markets. In addition, candy distributors have made a mark at the markets with candy making having become an advanced skill. People who once made candy in their homes now brag that they have been able to produce a small-scale sugar factory. In particular, clothes making and candy making has become enterprises leading to great money.

Today, 50% of candy, home-made clothing and 30% of uniforms, sold at North Korean markets are products made from home. Through goods such as these, Chinese merchants, tradesmen and the middle class are earning money through North Korea’s markets supplying the customers, the majority of the lower class.