Chapter 11: The Role of Markets in North Korea
Curtis Melvin Though many in the media, policy and academic worlds casually describe the DPRK as a monolithic Stalinist dictatorship, this description has been inaccurate for at least the last decade. It was during the mid-1990s, a period of time known domestically as the ‘Arduous March’, that the DPRK suffered a famine in which it is estimated that nearly a million people perished.1 This famine was a fundamental feature of the erosion of the DPRK’s political and economic control mechanisms which resulted from a combination of both external aggregate supply shocks and longterm internal economic mismanagement. As resources at the disposal of the North Korean leadership evaporated, the state failed in its historical capacity to feed and control the general population. After nearly 50 years of communist central planning a spontaneous grassroots network of markets began to grow outside the state infrastructure which allowed individuals to engage directly in widespread trading networks to meet private needs. Paradoxically, the growth of these markets has both challenged and sustained the DPRK regime’s legitimacy. This chapter will examine this paradox and discuss its implications for policymakers. MARKETIZATION CHANGING THE DPRK’S ECONOMIC AND POLITICAL LANDSCAPE How has marketization changed the country’s economy? We cannot answer this question with scientific accuracy using traditional macroeconomic techniques for a number of reasons. To begin with, there has been tremendous debate on the size of the official North Korean economy. The first tools developed to estimate the national income (in market terms) of socialist systems were quite innovative...
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