NKorea Struggles to Control Changing Economy

27 08 2008
Snack stall and bicycle repairing station in Ryongang county, Nampo

Snack stall and bicycle repairing station in Ryongang county, Nampo

By Becky Branford , BBC News

In international media coverage of North Korea, its nuclear programme and the country’s extreme form of leader worship often dominate. Less remarked on are the economic changes being seen in the country – and the political effects they are having.

Despite years of economic crisis, the country’s leadership has so far managed to weather the storms. Nevertheless, key changes in North Koreans’ daily lives are leading analysts to wonder how long the leaders in Pyongyang will be able to keep power in one of the world’s remaining nominally socialist economies.

“I’ve visited North Korea in 1999, 2004, 2005 and then the last time in October 2007 – so I can see the dynamic of this change,” Leonid Petrov, a North Korea historian at the Australian National University, told the BBC. “In 1999, even in Pyongyang, people were exhausted, malnourished, feeble… In 2004, the situation was very different – the whole city looked like one big market.”

“There was activity everywhere, on streets, under the bridges, from the windows of apartments,” he said. Analysts agree that the North Korean state responded to this change in various ways. Some attempts were made to capitalise from it, such as an amendment to the constitution in 1998, pledging to guarantee the proceeds from some types of private economic activity.

In July 2002, the government also unveiled a series of measures bringing prices and wages closer to black-market levels, and introducing additional material incentives and autonomy for industrial workers and managers. In areas designated “special economic zones”, North Korea now invites foreign investors – mainly South Korean – to take advantage of cheap North Korean labour.

Meanwhile, at the northern frontier with China, trade is thriving, and bribes can often buy passage across the border for North Koreans wishing to buy goods, visit family or flee the country. Chinese and Russian traders now move more or less freely around the country, though North Koreans remain subject to stringent travel restrictions. (See the full text here…)


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