NK on slippery end of economy
By Kim Jae-won
North Korea‘s economy constricted significantly as inter-Korean relations turned sour.
According to a report released by the Sejong Institute, a private think tank specializing in North Korean affairs, the Stalinist regime’s economic conditions have worsened over recent years partly due to strained inter-Korean relations that have resulted in less trade and aid from the South.
When the North's economic conditions are scaled against a benchmark 100 in 1995, they worsened to 86.5 in 2009, after peaking in 2007, according to the report commissioned by Statistics Korea, the South's statistics agency.
The index is based on 10 major economic factors including food supply, electricity production, trade and the financial situation of North Korea, the institute said.
The report showed the index peaked at 104.7 in 2007 just before inter-Korean relations became frosty. In that year, South Korea also expanded its aid to Pyongyang under the progressive Roh Moo-hyun administration. The late President Roh held a summit with his North Korean counterpart Kim Jong-il in the North’s capital city in October 2007.
But conditions have worsened over the past few years since the conservative and hawkish Lee government took office in February 2008. Compared with the benchmark year of 1995, South Korea's aid to the North dropped to 36.2 in 2009, according to the report.
Inter-Korean ties are currently at one of their lowest levels in years. In a series of hostilities against South Korea in 2010, North Korea sank a South Korean warship the Cheonan and launched an artillery attacked on a border island off the west coast, killing a total of 50 South Koreans, including two civilians. The South countered with economic sanctions shutting down most economic activities with the North.
The institute expects overall economic conditions in the North to worsen under the leadership of the inexperienced and untested Kim Jong-un, who is supposed to rule following the death of his father Kim Jong-il last month.
“Kim Jong-un, who lacks a power base and experience in running state affairs, could face significant economic challenges down the road. Even with a full-scale opening policy, it seems too late to provide a driving force for its economy," the report said.
It argued that the North’s pro-military policy remains an obstacle for the economic development of the country.
"It would be impossible to attain economic advancement in a society like the North, where politics take precedence over everything as long as the dictatorship and power succession continue."
The North’s economic condition index was the lowest in 1998 at 70.3 after it was hit by big floods. The nation’s founder and longtime leader Kim Il-sung’s 1994 death was also a factor in the poor economic conditions, experts say.
The North's food production grew to 119 during the 1995 to 2009 period, but its steel output shrank to 81.8, the report showed.
Coal and electricity production rose to 107.6 and 102.2 respectively. The total length of roads in the North increased to 110.8, while its trade volume grew to 166.3 over the cited period.
The North maintains a military presence that far outnumbers the South. North Korea had 1.19 million troops as of 2010, compared with 650,000 in the South, the report showed.
North Korea's spending on its military came to $810 million, far less than the South's $25.56 billion. But the ratio of the North's spending to its gross national income stood at 3.1 percent, compared to the South's 2.52 percent.