Archive for the ‘Economic reform’ Category

How bad is the Kaesong shutdown for the North Korean Economy?

Wednesday, February 10th, 2016

By Benjamin Katzeff Silberstein 

The Ministry of Unification in Seoul announced today that the industrial park in Kaesong be closed as a form of retaliation for North Korea’s recent rocket launch, alleging that funds from the park have been used to finance the north’s arms buildup. Wall Street Journal (with my emphasis):

A representative of South Korea’s Unification Ministry said that the move to shut down Kaesong was an effort by South Korea, “as a key party, to show leadership in taking part in these moves.”

Kaesong is an important source of income for Pyongyang. The regime received $120 million last year, and a total of $560 million since 2004, in workers’ wages directly from the South Korean side, according to the Unification Ministry. Those payments are made directly to the regime, which is then charged with paying the workers themselves, a system that critics say allows the regime to pocket most of the money.

“It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles,” the Unification Ministry said on Wednesday.

Naturally, this is bad news for the North Korean economy. But how bad exactly?

Here are a few other figures to give some sense of the proportions:

  • The volume of trade between North Korea and China only in the January-May period of last year totalled $1.1 billion, with North Korean exports accounting for $954 million.
  • Between January and November last year, the value of North Korea’s exports to China was $2.28 billion.
  • Textile exports to China from North Korea brought in around $800 million in 2014.
  • North Korean guest workers in China’s border provinces are estimated to be raising between $140-$170 million per year.

In the overall context, it seems like losses from the closure of Kaesong could be potentially bad, but not catastrophic.

UPDATE 1: Here is the full statement from the Ministry of Unification:

Government Statement regarding the Complete Shutdown of the Gaeseong Industrial Complex

North Korea has pushed ahead with the extremely provocative act of launching a long-range missile on the heels of its 4th nuclear test, showing disregard for the repeated warnings of the international community and the suffering of its people.

North Korea’s provocations are a direct challenge to peace and stability on the Korean Peninsula and in the international community and its actions are absolutely unacceptable. Notwithstanding international efforts to deter North Korea from developing its nuclear capabilities and long-range missiles,

North Korea has declared that it would follow up on its recent provocations with additional nuclear tests and missile launches, thereby not even showing the slightest intent to forgo the development of its nuclear and missile capabilities.

The status quo is not static, as North Korea’s nuclear capabilities will be upgraded, all but leading to a catastrophic disaster. If left unattended, North Korea’s nuclear and missile development will lead to a fundamental imbalance in and threat to the security landscape of Northeast Asia, not to mention the Korean Peninsula, and the countries of this region will be left with no choice but to take measures to ensure their own survival and shore up their security, and there are concerns that this could eventually even lead to a nuclear domino effect.

Under these grave circumstances, it is clear that the existing approach will not work in discomfiting North Korea’s nuclear and missile development plans. Accordingly, what is in order is a vigorous response together with the international community that, for sure, exacts a price for North Korea’s misguided actions, as well as extraordinary measures that compel North Korea to give up its nuclear capabilities and change its ways.

At a time when the international community is seeking sanctions in the wake of North Korea’s violation of UN Security Council resolutions with its nuclear test and long-range missile launch, there is a need for Korea, as a key party, to show leadership in taking part in these moves.

Over the years, our Government has been working to continue maintaining the Gaeseong Industrial Complex despite North Korea’s repeated provocations and under extreme state of affairs, all with a view to assisting the lives of the North Korean people, providing impetus to lifting up the North Korean economy, and achieving the shared progress for both South and North Korea. We have also made every effort to move the Gaeseong Industrial Complex forward under the position that it should be developed in conformity with international norms.

However, such assistance and the efforts of our Government have ultimately been wrongly harnessed in the service of upgrading North Korea’s nuclear weapons and long-range missiles.

To date, the total amount of cash that flowed into North Korea through the Gaeseong Industrial Complex is 616 billion won (560 million dollars), with 132 billion won (120 million dollars) in cash having flowed into North Korea last year alone, and the Government and the private sector have invested a total of 1.019 trillion won. It appears that such funds have not been used to pave the way to peace as the international community had hoped, but rather to upgrade its nuclear weapons and long-range missiles.

This tramples on the efforts of the Korean Government and the 124 businesses that have set up shop in the Gaeseong Industrial Complex, and puts at risk the lives and safety of the Korean people.

Today, in order to stop funds of the Gaeoseong Industrial Complex from being used to support the development of North Korea’s nuclear and missile capabilities, and to prevent our businesses from suffering, the Government has decided to completely shut down the Gaeseong Industrial Complex.

We have notified the North Korean authorities of this decision and called on them to extend such cooperation as is rendered necessary by the complete shutdown of the Gaeseong Industrial Complex, including the safe return of our citizens.

The Government will move expeditiously forward with all steps to ensure the safe return of our citizens, and will set up a Government Task Force under the Office for Government Policy Coordination to provide the necessary whole-of-government assistance to our businesses.

We ask for the full understanding of our people that the Government’s complete shutdown of the Gaeseong Industrial Complex is an unavoidable decision, which takes into account the seriousness of the situation on the Korean Peninsula, and we call upon the people to stand with us as we seek to overcome such challenges.

UPDATE 2: Kent Boydston a the Peterson Institute offers this graph:

DPRK-China-ROK-trade-2015

Full reference to the Wall Street Journal article quoted above:
South Korea, Japan Take Steps to Penalize North Korea
Wall Street Journal 
Jonathan Cheng
02-10-2016

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Unofficial and official exchange rates in North Korea: how big is the gap?

Thursday, February 4th, 2016

By Benjamin Katzeff Silberstein

Photographer Jaka Parker, who lives in Pyongyang and runs a highly popular Instagram page with everyday life pictures from Pyongyang, recently photographed a table showing the official exchange rates of the North Korean won to several major currencies, including the US dollar and Chinese yuan. Mr. Parker has been kind enough to allow North Korean Economy Watch to publish his photographed table, seen here below:

Official exchange rates of the Foreign Trade Bank of the DPRK. Photo credits: Jaka Parker.

Official exchange rates of the Foreign Trade Bank of the DPRK, January 28th. Photo credits: Jaka Parker.

It is interesting to note how these rates compare to unofficial market exchange rates gathered by Daily NK. Their latest data covers the period of January 7th-13th, so these two sets of figures may not be fully comparable. However, they at the very least give an interesting indication of the difference between the official and unofficial rates. Below are the $1-prices at unofficial market rates given in Pyongyang, Sinuiju and Hyesan according to the latest available information (in North Korean won):

  • Pyongyang: 8190
  • Sinuiju: 8260
  • Hyesan: 8190

As Mr. Parker’s picture shows, the $1-price at the unofficial rate (in Pyongyang) was 109.60 won on January 28th. This would suggest that the unofficial USD-rate is roughly 80 times higher than the official one.

Compared with data from 2011, the discrepancy between the official and unofficial rates is significantly larger today. In 2011, the unofficial rate was $1 = 3,000 won, and the official one at $1 = 100 won. Since then, the unofficial won-rate has depreciated significantly against the dollar. (which has essentially flattened out since 2013: see graph below, based on price data from Daily NK and put together by the present author). In other words, while unofficial rates have soared, the official USD-to-won-rate has essentially stayed the same.

Inofficial market exchange rates over time, Won for USD. Data source: DailyNK. Graph created by Benjamin Katzeff Silberstein.

Unofficial market exchange rates over time, Won for USD. Data source: DailyNK. Graph created by Benjamin Katzeff Silberstein.

That’s a snapshot of late January. However, Mr. Parker has also generously allowed me to publish other pictures he has taken of exchange rate tables at institutions in Pyongyang. Below is a quick look at a few exchange rate figures from last year, with rough comparisons to the corresponding black market exchange rates (all figures for the unofficial market come from Daily NK and I include the rate in Pyongyang only). Note how smaller currencies like the Swedish krona (SEK) can be exchanged by North Korean institutions.

January 8th, 2015: USD selling at 109.520 won at the Foreign Trade Bank. Closest available unofficial data puts the USD at 8190 won – same as above.

North Korean won exchange rates as of January 8th, 2016. Photo: Jaka Parker.

North Korean won exchange rates as of January 8th, 2016. Photo: Jaka Parker.

November 24th, 2015: $1 for 111.050. Black market rate: 8600 won.

North Korean won exchange rates as of November 24th, 2015. Photo: Jaka Parker.

North Korean won exchange rates as of November 24th, 2015. Photo: Jaka Parker.

November 9th, 2015: $1 selling at 110.57 won. The closest available unofficial rate was recorded between October 21st-27th: $1 for 8600 won.

North Korean won exchange rates as of November 9th, 2015. Photo: Jaka Parker.

North Korean won exchange rates as of November 9th, 2015. Photo: Jaka Parker.

October 29th, 2015: $1 for 109.550 won. Closest available black market rate: 8600 won.

North Korean won exchange rates as of October 29th, 2015. Photo: Jaka Parker.

North Korean won exchange rates as of October 29th, 2015. Photo: Jaka Parker.

September 28, 2015: $1 for 108.29 won. Closest available black market rate: 8260 won.

North Korean won exchange rates as of September 28th, 2015. Photo: Jaka Parker.

North Korean won exchange rates as of September 28th, 2015. Photo: Jaka Parker.

One clearly visible trend is that both the official and unofficial exchange rates steadily climb throughout the fall, but decline in January. It’ll be interesting to continue following them over the course of the year.

 

 

 

 

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DPRK – China trade contracts in 2015, but inter-Korean trade increases

Monday, February 1st, 2016

DPRK – China trade is down. According to Yonhap:

North Korea’s trade with China dipped nearly 15 percent last year apparently due to a chilly bilateral relationship between the two neighboring countries, a report showed Sunday.

The North-China trade volume reached US$4.9 billion in the January-November period, down 14.8 percent from $5.76 billion a year earlier, marking the first double-digit on-year drop since 2000, according to a report by state-run think tank Korea Development Institute (KDI).

Pyongyang’s shipments to its neighbor sank 12.3 percent to $2.28 billion over the cited period, while imports from China plunged 16.8 percent to $2.63 billion.

The trade between the allies has risen an average of 22.4 percent between 2000 and 2014. Only in 2009 and 2014 did it shrink on-year.

The KDI report attributed the sharp decline to sluggish raw material exports, as shipments of anthracite coal and iron ore fell 6.3 percent and 68.5 percent, respectively.

“The chilly relationship between Pyongyang and Beijing and a slowdown in the Chinese economy seemed to affect North Korea’s sluggish trade with China,” said the report. “North Korean leader Kim Jong-un’s New Year message, which called for using home-made products and rejecting foreign-made ones, also had some influence on the downbeat trend.”

The alliance between Pyongyang and Beijing had been described as being “forged in blood,” since China fought alongside North Korea in the 1950-53 Korean War. China is the only country that provides crude oil to the reclusive North.

But their political relations have become strained since 2013, partly because of the North’s defiant pursuit of nuclear weapons and a series of purges of pro-Chinese officials in North Korea.

For 2016, the KDI report noted that there is a higher possibility that bilateral trade will contract further following Pyongyang’s nuclear tests on Jan. 6, as the global community including the United Nations is set to impose sanctions against the reclusive regime.

“North Korean trade will be dragged down by international economic sanctions sparked by the North’s latest nuclear test in the first half of this year,” the KDI said. ” North Korea-China trade has shrank to some extent, following sanctions by the U.N.”

Output at the Kaesong Industrial Complex is up in 2015. According to the Yonhap (via Korea Herald):

Production of companies at the inter-Korean industrial complex in North Korea exceeded $500 million last year for the first time since its opening in 2004, the government said Sunday.

According to the Unification Ministry, a total of 124 South Korean factories operating in the complex produced $515.49 million worth of goods in the first 11 months of last year, up more than 20 percent from the previous year and the highest yearly output even excluding the December tally.

The figure for the entire year is estimated to reach $560 million, given that their monthly production averaged around $50 million in the year, it said.

“The Gaeseong Industrial Complex managed to grow stably, recording more than a 20 percent increase in total output despite North Korea’s shelling in August across the border and various other incidents in and out of the country,” a ministry official said.

There were 54,763 North Korean workers and 803 South Korean managers at the factories in the industrial park located in the North’s border city of Gaeseong as of November.

Here is additional information in the JoongAng Ilbo.

Read the full story here:
N Korea’s trade with China contracts in 2015
Yonhap
Kim Boram
2016-1-31

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Economic reforms to come at North Korea’s Party Congress, Daily NK says

Monday, January 11th, 2016

By Benjamin Katzeff Silberstein

Daily NK today carries a piece reporting on economic reforms to potentially come at the Korean Worker’s Party Congress coming up this year:

In terms of the possibility of declaring new economic reforms, the source explained he would announce reform measures that stay within the overall framework of socialism. Taking an extra step forward from the new economic management system’s ‘June 28 Measures,’ which pertained to agricultural policies, the pending package of reforms will include provisions authorizing individuals to directly manage factories. In practice, this would enable the state to collect more taxes from the donju [newly affluent middle class] by providing them with more freedom to make money.

Aspects of these changes are already underway in select locales. “In some regions, municipal People’s Committee business offices have been granting donju increased license to earn money,” he said. “Provided that people can offer up the initial 6,000 RMB fee and build their own factories with basic infrastructure such as sanitation facilities they are relatively uninhibited in their business operations.”

Hints at reforms like these were largely absent from Kim Jong-un’s New Year’s Address, I argued in an earlier post.

Read the full article:
Major organizational changes to be announced at Party Congress
Choi Song Min
Daily NK
2016-01-11

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Hydrogen bomb project may lead state to squeeze traders, some North Koreans worry

Friday, January 8th, 2016

By Benjamin Katzeff Silberstein

Daily NK today carries a piece where interviewed North Koreans express their annoyance at how the hydrogen bomb test disturbed economic activity, and how it may get worse in the future:

News of the recent test has also angered people, with some openly criticizing the nuclear program and pointing out that money should go into providing for the people instead. “Market vendors don’t care if it’s an atom bomb or a hydrogen bomb. Most of them say they just want to make a lot of money and live a quiet life,” the source said.

A different source in North Pyongan Province reported that most people who watched the announcement out of curiosity were neither surprised nor interested, noting, “But market donju (newly affluent middle class) are worried that having blown up a massive ‘dollar bomb’, Kim Jong Un will now have a gaping hole in his coffers, making things busier for them since they’ll have to offer up more funds.”

“Loyalty funds had swelled because of the greater stability in the markets, so recently there weren’t a lot of purges of donju, but now with all the money that they’ve spent, it looks like donju will be under pressure or persecuted more to make up for the funds that went into the hydrogen bomb test,” he explained.

“After the first three nuclear tests, prominent donju were purged on ‘anti-socialist’ charges and their assets confiscated by the state. The leadership is likely to tighten its grip on donju again to make up for its expenses.”

Read the full article:
Nuclear test draws different set of concerns from North Koreans
Seol Song Ah and Choi Song Min
DailyNK
2016-01-08

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North Korea’s H-Bomb Test: The (Impossible) Economic Context

Thursday, January 7th, 2016

By Benjamin Katzeff Silberstein

Who decides what in Pyongyang? Do fierce political battles rage between hardliners and reformers, where the former group struggles to replace nuclear belligerence with liberal market economics and trade? Whenever a purge or suspicious death occurs in Pyongyang, speculations come alive about potential policy changes by the regime.

It is a fool’s errand to make guesses about how North Korea’s claimed (but unlikely) hydrogen bomb test fits into the speculative dichotomy of modernizers versus conservatives. After all, such simple divisions are rare in the political life of any country. But looking at the test in the context of the past year makes it clear that Pyongyang is pursuing a messy mix of policies that are mutually exclusive.

At the same time as one “hand” of the regime attempts to draw foreign investment, diversify its investor base to include other countries than China, and take its industrial zones from plans to reality, the other “hand” is actively working against economic progress by nuclear tests and diplomatic belligerence. Either the left hand doesn’t know what the right hand is doing, or it does, but just doesn’t want it to succeed.

Perhaps this is the way that Byungjin – Kim Jong-un’s strategy of parallel development of nuclear weapons and the economy – was intended to work. (If so, the regime seems to be dedicating much more resources and energy to the nuclear part, while the economic one still mostly consists of words.) In any case, Pyongyang is trying to achieve two goals at the same time, and it isn’t working.

For example, in 2013, the North Korean regime announced the creation of over ten special economic zones, with more added in both 2014 and 2015. Progress has been uneven. Still, the North Korean regime has continuously indicated that the zones are a priority and will continue to be improved. Just in November last year, new regulations were announced for the special economic zones. Visitors and analysts report that elite businesses have been doing better and better in North Korea, and that the economic environment has become increasingly freer.

Whatever the list of Pyongyang’s priorities may look like, January 6th was not a good day for those North Koreans tasked with planning, building and administering the country’s special economic zones and projects. North Korea is already an unlikely destination for most foreign investors. Many low-wage competitors already sit relatively close by the country, such as Vietnam and Cambodia. North Korea’s comparative advantages are really quite few. Things are already difficult and the claimed H-bomb test certainly won’t help.

The international sanctions are just one part of the problem. Even with knowledge of what the current sanctions regime permits investors to do, the test is a stark reminder that legal hurdles will keep being added as nuclear and missile tests continue. This should deter any investor without special connections, political motives or a financial death wish. Not to mention the terrible PR and public criticism that would follow any (at least western) company deciding to invest in North Korea.

And then, there is of course the China factor. Sure, Beijing doesn’t comply with sanctions the way it is obligated to do. Moreover, as the Choson Exchange blog points out, North Korean and Chinese businesses tend to find a way to get around the sanctions. Last but not least, to a large extent, Chinese investment and cooperation with North Korea is a regional issue, with much of it driven by the northeastern border regions that depend on trade and exchange with the country.

But this doesn’t mean that Beijing won’t ever take concrete action felt by Pyongyang. China’s worries about North Korea’s nuclear tests are arguably more warranted than those of any other country. Residents in Yanji, a Chinese city on the North Korean border, even felt tremors from the bomb test, and teachers and students were reportedly evacuated from schools near the border. A trend is only a trend until it is no more. At the very least, events like the nuclear test don’t exactly make Chinese officials more prone to want to facilitate economic cooperation and infrastructure investments for North Korea.

It’s almost painful to think of all those hours spent in the North Korean administration, drawing up plans for new economic development zones and projects, new laws for investments and other institutional changes to improve the economy, only to see their colleagues in another part of government work in the opposite direction. If (and this is a big “if”) there are indeed policy factions in the government, with modernizers and conservatives, the latter have scored a victory on January 6th, at the expense of the former.

UPDATE 2015-01-07: James Pearson and Ju-Min Park at Reuters have done a very interesting overview (with Michael Madden of NK Leadership Watch) of the people behind North Korea’s nuclear program. It’s an important illustration of the fact that interest groups are not just a thing of business, but also of politics and ideas. Read it here.

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New figures on markets in North Korea

Sunday, December 27th, 2015

By Benjamin Katzeff Silberstein

The last few months have seen quite the trickle of quantitative estimates on North Korea’s markets. A while back, South Korean intelligence said North Korea has 380 markets in total. Curtis Melvin counts them to 406. And then, a few days ago, Professor Lim Eul-chul of Kyungnam University put them at 750 (including street vendors).

It is unclear whether this is another intelligence branch or institution speaking, but what Yonhap terms “South Korea’s intelligence authorities” today claims that there are 306 markets. They also estimate that 1.8 million people use them every day, although those numbers are probably guesstimates more than anything else. Even though survey studies can say a lot about how often people use markets on average, it would seem almost impossible to weight these properly by region given the variation.

The report also includes a count of markets in each province:

By region, South Pyongan Province is home to the largest markets with 37, followed by South Hamgyong Province with 36 and North Pyongan Province with 34. North Korea’s capital of Pyongyang has 23 markets, the authorities said, without elaborating on how they obtained the information.

It is difficult to know what is meant by “markets” here: in other words, whether street markets are included or only formal ones. In any case, it isn’t particularly surprising that South Pyongan Province comes out as number one: the province has a major advantage for market trade in that it is close to Pyongyang. Traders that don’t have entry permits to Pyongyang can come and sell their goods to Pyongyang citizens who only live a relatively short bus ride away, or to other traders that will ship the goods for sale there.

Read the full article here:
S. Korea says up to 1.8 mln N. Koreans use markets per day 
Yonhap News
2015-12-27

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750 markets in North Korea, one scholar says

Monday, December 21st, 2015

By Benjamin Katzeff Silberstein

UPI reports that Lim Eul-chul of Kyungnam University puts the number of North Korean “gray” markets at 750. This number includes “alley vendors”, according to Lim, presumably another term for street markets:

There are now more than 750 “gray markets” in North Korea and one million people now make up the country’s consumer elite, a South Korean analyst said Tuesday.

Lim Eul-chul of the Institute for Far Eastern Studies at Kyungnam University said at a seminar for South Korean lawmakers grassroots enterprises in North Korea have increased, and businesses are diversifying.

“North Korean authorities also are involved in the markets,” Lim said.

On average, a North Korean city, county or region has an average of two marketplaces, bringing the national total to 500. If alley vendors are included in the tally, the total is 750, Lim said.

In larger cities like Chongjin, near the China border, there are about 12,000 vendor stalls and one city in South Pyongan Province is home to a marketplace that is more than 1 mile across, the analyst said.

The North Korean regime is an active participant in the unofficial marketplaces that began developing after the collapse of the state’s distribution system. Authorities enjoy a monopoly over the mobile phone market and related services, Lim said.

Other sought-after products in North Korean marketplaces include South Korea-made products that are smuggled into the country, as well as pizza and burgers.

It is unclear exactly how these numbers have been compiled. Lim appears to be using a very wide definition for what to count as a market. South Korean intelligence has previously put the number of markets at 380, while Curtis Melvin counts them to 406.

Read the full article:
More than 700 North Korea ‘gray’ marketplaces have emerged, analyst says
Elizabeth Shim
UPI
12-21-2015

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The limits of agriculture reform in North Korea

Friday, December 18th, 2015

By Benjamin Katzeff Silberstein 

Agricultural reforms in North Korea became a hot topic of discussion almost right away when Kim Jong-un took power in 2011. Only a number of months into his tenure, news began to come out of the country about attempts at agricultural reforms. It is unclear when (or even if) the June 28th Measures were finally extended to the whole country.

At the very least, three years in, it seems beyond reasonable doubt that North Korean agriculture has undergone major changes. These have been aimed at boosting production by creating better incentives for farmers to produce and sell more of their output to the state rather than diverting it to the market. The most important aspects of these reforms are the decreased size of work teams and new rules that let farmers keep 30 percent of their production plus any surplus above production targets, while the state takes the remaining 70.

These changes have been met with optimism among some. However, no one really knows exactly what impact these reforms have had. North Korean agriculture may be faring better than it used to – although this is also doubtful – but even so, it is too simplistic to assume that government reforms in agricultural management are doing all the work. As long as North Korea’s agriculture continues to be centrally planned by the state, there will be limits to how much better it can get no matter what reforms the state implements.

To see why, consider some of the news that have been coming out of North Korea in the past few months, as reported by Daily NK. In late November, the online daily reported that in despite by multilateral aid organizations, North Korea had seen relatively good harvests this year. However, the increased harvests, according to people inside the country, were not caused by changes in the agricultural management system of state-operated collective farms.

Rather, the North Koreans interviewed for the story claimed that private plot farmers had been better able to protect their crops from adverse weather impacts by using water pumps and other equipment. Even though trends like these alone probably have a limited impact, this shows that many circumstances other than state management matter.

A few weeks later, Daily NK published another interview carrying a similar message. According to sources inside the country, harvests from collective farms have declined, while private plot production has gone up (author’s emphasis added):

The amount of food harvested this year from the collective farms has “once again fallen short of expectations,” he said, adding that the farmers who work on them have criticized the orders coming down from the authorities, saying that “if we do things the way they want us to, it’s not going to work.”

Although the regime has forced people to mobilize, the source asserted that farm yields are not increasing. So, then, “the best thing to do would be to further divide the land up among individuals,” he posited.

Our source wondered if individual farms were not more successful because each person tending them personally grew and watered their plants. Currently, farmers must follow directives regarding the amount of water they can use on collective farms. He warned that if the system is not completely overhauled, crop yields will fail to improve.

In other words: as is so often the case, management orders from above often do not align with the reality on the ground.

One should be careful not to draw too many general conclusions based on individual interviews, but this is a well known general problem in all planned economies. Even with the best intentions, the state can never be fully informed about conditions and resources on the ground in an entire society.

This is one of the many reasons why economic central planning falters. We have seen this, too, with Kim Jong-un’s forestry policies. The state gives orders that have unintended consequences on the ground, because information is lacking. No central planning team can be fully informed about the reality prevailing throughout the system. The information problem becomes particularly dire in authoritarian dictatorships like North Korea, where people at the lower end of hierarchies often have strong incentives not to speak up about implementation problems when orders come from the top.

Ultimately, no matter what management reforms the North Korean regime implements, the country’s economic system remains the basic stumbling block. As long as central planning continues to be the ambition of economic and agricultural policies, there will be a limit to the success that agricultural policies can reach. We may expect to see agricultural reforms continuing, but as long as the system remains, they can hardly be revolutionary.

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A 2014 visit to Rajin’s old marketplace

Wednesday, December 2nd, 2015

National Unification Broadcasting (국민통일방송) published this video of the old Rajin Marketplace (filmed in Spring of 2014).

Since filming, the North Koreans have opened a new marketplace to replace this one. Here is a satellite image I published with RFA showing the old market and the new:

RFA-Rajin-Market-2015

The old marketplace is inside the yellow box on the left. The new market is inside the yellow box on the right.

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