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The official launch of marketization in North Korea started from the "July 1 Measures" in 2002. Since then, 3,000 markets have been set up nationwide since 2003. The North Korean authorities liberalized market prices and expanded freedom in the field of distribution in order to vitalize market activities.
From the year 2005, the North Korean authorities tried to regulate market activities partially, such as the restoration of public food distribution systems, prohibition of business activities in markets if a person was under 40, and prevention of trade industrial products in markets. Prime Minister Park Bong-ju who led the introduction of markets in North Korea was executed in April 2007 and Kim Young-il was named as a new prime minister of North Korea. Prime Minister Kim strengthened restrictions on markets and the North Koreans who were actively participating in those markets.
In December 2009, currency reform was introduced in an air blitz way in order to control markets and beef up the planned socialist economy. During that time markets were closed regionally and businesses in the markets were forbidden. However, because not only consumer goods, but also the produced goods have been distributed in the markets, if market activities were to stop, the North Korean economy would not function. More than half of the population in North Korea is involved in market activities nowadays.
The marketization would influence various spheres of life in North Korea, such as the increase of private economic activities, the spread of individual values, the weakening of social control, and the expansion of information circulation, as well as the deepening tendency of the wealthy to become wealthier and the poor to become poorer. After North Korea introduced markets, the North Korean people's living conditions have somewhat stabilized, However, reform in the field of industry in North Korea has not even started as it was expected to begin in 2014. That was a serious setback in North Korea as a whole.
North Korea announced in 2011 a 10-year plan for national economic development which comprised agricultural development, the five distribution clusters, including the creation of free trade areas in Rajin-Seonbong and Sinuiju, Wonsan, Hamheung, Cheongjin, as well as the development of oil energy, the production of electricity, the establishment of a national development bank, and highway construction in order to overcome economic difficulties.
Policy guidelines so-called "When to establish a new regime of economic management in our own way" were announced on June 28, 2012. According to these new guidelines, cooperatives can sell their goods after they provide the North Korean government with a land use fee, and expenses for irrigation and fertilizers.
Cooperatives could decide in their own way the provision of goods and installations which were needed to manage them. Cooperatives can be divided into several divisions, composed of 10-25 persons, and divisions could be divided into sub-divisions, composed of three-five farmers. Farmers in the sub-divisions decide the whole process of farming from seeding to harvesting as their own responsibilities. And according to the result, products can be distributed to the farmers which belong to the sub-divisions.
It is difficult to know exactly what situation North Korea is in now. Recently, South Korean intelligence authorities said that Hyon Yong-chol and 15 senior military and party officials were purged. Some guess there might be intrigue against Kim Jong-un in North Korea. Others speculate that Kim is still grappling with consolidating power, and therefore he needs more executions and purges to the military and the party whenever necessary. It means in North Korea there are still many uncertainties and unstable factors.
With the inexperienced and young leader leading North Korea to the third-generational hereditary power, it is certain that North Korea is faced with enormous challenges and difficulties domestically as well as internationally in order to consolidate power and maintain the third generational hereditary power.
On Oct. 10, North Korea's Workers' Party marks its 70th anniversary of the founding day. To successfully celebrate this year's 70th anniversary is the most important task for North Korean authorities. In order to demonstrate worldwide that the Kim Jong-un regime's power transfer has been successful North Korea should hold the Oct.10 event with great success.
North Korea should give up its two-track policy of developing its economy as well as nuclear armaments and make a strategic decision to abandon nuclear arms and join the international community in order to develop its economy. This is the only way for North Korea to sustain itself and continue on as a normal state.
The writer is director-general of the department of international economy and trade studies at the Korea National Diplomatic Academy.
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