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BOK Working Paper No.2021-13, A Study on North Korea’s Econonic System: Actual Conditions and Evaluation

연구조정실 (02-759-5468) 2021.08.27 1120

Title : A Study on North Korea’s Econonic System: Actual Conditions and Evaluation
Author : Moon-Soo Yang(University of North Korea), Song Lim(BOK)


In this paper, we try to explain the economic system in North Korea using a conceptual  framework.  To  this  end,  we  focus  on  the  behavior  patterns  of  North Korean economic agents and their interactions, conduct a questionnaire survey of North Korean economic experts about the North Korean economic system, and then utilize the results. In North Korea’s current economic system, both similarities and differences with certain phenomena displayed at various stages of economic reform in socialist nations were observed at the same time. Experts’ evaluations were divided. There were those who emphasized the universality of North Korea’s economic reforms, and those who emphasized its peculiarities. In the former case, it was emphasized that the content of North Korean reforms is similar to that seen in other socialist countries, especially in that the resource allocation mechanism was shifting from plan-oriented to plan and market parallel. In the latter case, North Korea's peculiarity stands out because of its political aspects, such as the third generation hereditary succession, and they noted the inequality of reforms by sector, such as price/ownership economically, and the nature of post-mortem approval of changes that have already occurred. In addition, the background of economic and financial difficulties is important for the formation of these plans / market coexistence systems. However, the policy of “self-rehabilitation”  peculiar  to  North  Korea  is  also  a  core  factor  that  cannot  be ignored. In particular, it is important that companies, individuals, institutions, and provinces,  as  well  as  the  state,  form  the  five  core  economic  actors  of  the “self-rehabilitation”  policy,  and  that  they  share  an  interest  in  the  progress  of marketization.  Furthermore,  the  current  economic  system  has  a  structural  and irreversible character, rather than a temporary character, as the power class and the donju form a symbiotic relationship. Their economic activities form the core driving force behind the current economic system.

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