President Donald Trump met with North Korean leader Kim Jong-un yesterday US Secretary of State Mike Pompeo said last month that American companies will be able to invest in an isolated country if the summit is successful. Who will invest in North Korea?

There are big doubts about whether the terms of the agreement will be honored, but even if the meeting results in a breakthrough, experts say investors should be especially wary of North Korea. And if anyone is moving faster in this direction, it is most likely China.

"Potentially Profitable"

Securities in North Korea have some attractive features for foreign companies. It is located in the middle of Asian countries including China, South Korea and Japan.

“There are many potentially profitable and very interesting areas for investment in North Korea”, said Peter Ward, a researcher at Seoul National University who studies North Korea.

North Korea's population is poor but fairly well-educated, and labor costs are much lower than those of its neighbors, according to country experts. Some analysts say it is a potential hub for electronics and textiles.

But these advantages pale in comparison to the many obstacles to foreign investors, especially the brutal Kim regime.

“The prospect of large investments that the regime in North Korea will allow is unlikely,- said Go Myung-hyun, a researcher at the Institute political research asana, analytical center in Seoul. — The regime is deeply suspicious of the international market.”

China will lead

As North Korea's largest trading partner and a major sponsor of the regime, China could take the lead in investing in the country.

Researcher Peter Ward said that North Korea looks like a natural candidate for the Belt and Road Initiative, a grandiose plan to invest hundreds of billions in roads, ports and railways from Asia to Africa. According to experts, the infrastructure in most of North Korea is in a dilapidated state.

“North Korea may be very reluctant to allow China to forcibly take possession of future “troubled assets,” Ward said.

Bad reputation

In the 1980s, Pyongyang defaulted on loans from European and Australian banks. More recently, companies that have tried to work with him have run into problems.

In the late 2000s, the Egyptian conglomerate Orascom was invited to enter into a joint venture with the North Korean government to build the first cellular network.

For several years, the company faced difficulties, including the fact that the transfer of profits from North Korea and Pyongyang was not allowed. In its 2015 financial report, Orascom simply wrote that "control over the activities of the joint venture was lost." Few details have been made public about his fate. Orascom did not respond to a request for comment on this matter.

South Korean companies also struggled. In 1998, the Hyundai Group began operating a mountain resort for tourists in North Korea. The complex attracted 2 million visitors from South Korea for 10 years before a North Korean attendant killed a tourist, prompting the closure of the resort. The project has since been confiscated by Pyongyang.

"They've lost everything. Go Myung-hyun said referring to Hyundai. — The company no longer has access to North Korea.”

Despite this experience, the Hyundai group has set up a task force to prepare for a potential return to the country. And Samsung Securities, the investment arm of another major South Korean conglomerate, said Thursday it is setting up a research team to analyze potential future investment in North Korea.

Prize catch?

The two Koreas also cooperated in Kaesong, a special economic zone where North Korean workers produced goods for South Korean companies. But Ward said many South Korean companies have agreed to operate in the zone on the North Korean side of the border because of guarantees and support from the government in Seoul.

On February 10, 2016, South Korea announced the cessation of work in the Kaesong Industrial Zone after North Korea tested a long-range missile.

Experts offer several reasons why the North Korean regime might scare away foreign investors.

Some say the authorities are concerned that the spread of market capitalism is destroying the power of the regime, or that companies may start a group fight with the government.

Others say North Korea's closed economy means officials don't know exactly what is considered acceptable practice for business partners.

« They think of themselves as winning in international markets, Ward said. — They don't seem to understand that alienating investors willy-nilly lead to a very bad reputation.».

North Korea is today one of the most totalitarian countries in the world. But it turns out that this closed state has a lot of export items, and very unusual ones.

1. Coal

As everyone knows, China is the world's largest importer of coal. But where does China get millions of tons of this fuel from? It turns out that recently North Korea has become the main supplier of China. Despite an overall drop in the level of Chinese imports, shipments from North Korea increased by 25 percent - in May 2015, the country exported 1.8 million tons of coal to China.

Export natural resources- a fairly simple way for a totalitarian regime to make money without weakening control over the population. Another benefit is that Korea's natural resource exports are not on the UN sanctions list, so the country can make money from coal exports quite legally.

2. Ballistic missiles

North Korea is also known for its provocative ballistic missile launches, which are usually attributed to "evil capitalist machinations." But North Korean ballistic missiles are used not only for this, they are also exported, bringing tens of millions of dollars a year to the DPRK budget. The export of ballistic missiles allows the government to also continue to manufacture missiles for domestic use thanks to economies of scale.

3. Arms factories

North Korea is one of the most militarized countries in the world, with an army of more than a million people who, accordingly, need to be armed. North Korea's huge arms industry is another way to earn foreign exchange for a cash-strapped nation. The country not only exports heavy weapons, including rocket launchers and anti-aircraft missile systems, but also offers assistance in the construction arms factories for their clients.

Over the past 30 years, North Korea has taken part in the construction of two Ethiopian weapons factories and the supply of industrial equipment to this country. Given that the factories were developed in North Korea, only North Korea can provide spare parts for industrial equipment, thus forcing Ethiopia to continue to cooperate with them. North Korea has also built military installations in other African countries such as Nigeria and Madagascar.

4. Statues

North Korea has built a colossal number of statues, as they are one of the means of propaganda in the country. Considering North Korea's outstanding experience in creating statues, other countries even began to order sculptural works from her.

For example, Zimbabwe recently paid $5 million to commission two statues of President Robert Mugabe. Also in North Korea, statues were made to order for Angola, Egypt, Equatorial Guinea, Ethiopia and even Germany. North Korea's largest customer is Namibia, which was awarded a $60 million contract in the early 2000s to build a giant war memorial in Windhoek.

5. Restaurants

Restaurants serving "authentic North Korean food" and traditional dances and songs as entertainment can be found throughout Asia. Interestingly, these restaurants are really Korean - in the 1990s, North Korea opened a whole chain of Pyongyang Restaurant restaurants throughout Asia. This made it possible to kill three birds with one stone: making money for the treasury, funding North Korean embassies in countries where restaurants operate, and money laundering. b

6. Textile

The border between China and North Korea is bustling with economic activity. It is believed that about a quarter of all residents of the Chinese province of Dandong do joint business with the North Koreans. One example of such economic activity is textile factories, which employ exclusively North Koreans. The products of these factories are then transported across the border, where they are labeled "Made in China". Such a demand for manufacturing products in North Korea is not surprising - after all, this country has one of the cheapest labor forces in the world.

7. Counterfeit US banknotes

North Korea is the undisputed leader in the production of counterfeit banknotes. The US has previously claimed that its $100 banknotes are among the most secure in the world. But that hasn't stopped North Korea, which has bought equipment from Japan, paper from Hong Kong and ink from France. The new counterfeit money turned out to be of such high quality that the US had to introduce a new $100 banknote into circulation in 2013.

8. Labor force

What North Korea has in abundance is people. But how can you monetize this “product”? Before North Koreans go abroad, their families are effectively taken hostage to ensure that the money they earn is transferred back to their homeland, as well as the return of workers home. About 50,000 North Korean workers now work abroad, sending remittances totaling nearly $2 billion a year back home.

9 Methamphetamines

North Korea has been dealing drugs since 1970, ever since the country defaulted on its international debt. Initially, Korea took contracts for the transport of drug shipments with the help of diplomats, using diplomatic immunity. Later, North Korea began producing its own drugs, primarily methamphetamine, which it began to trade through its embassies. North Korean methamphetamine is known for its high purity (99 percent).

This is not surprising, given that drugs are produced on state enterprises under the guidance of professional chemists. However, since the mid-2000s, the purity of Korean drugs has drastically declined, but volumes are still on the rise.

10. Nuclear reactors

Perhaps North Korea's most surprising export was its attempt to build a fully functioning nuclear reactor for Syria, which Israel bombed in 2007. Had the reactor not been bombed, it could have produced enough plutonium to make one or two atomic bombs Every year.

In North Korea, there is also one of those that is worthy of being included in tourist guides.

Reviews
foreign trade of Russia

Foreign trade of Russia with the DPRK (North Korea) in the 1st half of 2018

Prepared by Foreign Trade of Russia website
based on data from the Federal Customs Service of Russia

Report on Russia's foreign trade with the DPRK (North Korea) in the first half of 2018: trade turnover, exports, imports, structure, goods, dynamics.

Trade between Russia and the DPRK (North Korea)

In the 1st half of 2018, the trade turnover between Russia and the DPRK (North Korea) was $10,985,426, down 82.04% ($50,185,618) compared to the same period in 2017.

Russian exports to the DPRK (North Korea) in the 1st half of 2018 was $10,081,548, down 83.00% ($49,237,201) compared to the same period in 2017.

Imports of Russia from the DPRK (North Korea) in the 1st half of 2018 was $903,878, down 51.20% ($948,417) compared to the same period in 2017.

Trade balance of Russia with the DPRK (North Korea) in the 1st half of 2018 was positive in the amount of USD 9,177,670. Compared to the same period in 2017, the surplus decreased by 84.03% (USD 48,288,784).

The share of the DPRK (North Korea) in foreign trade turnover Russia in the 1st half of 2018 amounted to 0.0033% against 0.0228% in the same period in 2017. According to the share in the Russian trade turnover in the 1st half of 2018, the DPRK (North Korea) took 148th place (in the 1st half of 2017 - 109th place).

The share of the DPRK (North Korea) in Russia's exports in the 1st half of 2018 amounted to 0.0047% against 0.0355% in the same period in 2017. By share in Russian export in the 1st half of 2018, the DPRK (North Korea) took 132nd place (in the 1st half of 2017 - 92nd place).

The share of the DPRK (North Korea) in Russian imports in the 1st half of 2018 amounted to 0.0008% against 0.0018% in the same period in 2017. In terms of the share in Russian imports in the 1st half of 2018, the DPRK (North Korea) ranked 139th (in the 1st half of 2017 - 127th place).

Russian export to the DPRK (North Korea)

In the structure of Russian exports to the DPRK (North Korea) in the 1st half of 2018 (and in the 1st half of 2017), the main share of deliveries fell on the following types of goods:

• Mineral products (TN VED codes 25-27) - 63.27% of Russia's total exports to the DPRK (North Korea) (in the 1st half of 2017 - 86.23%);
• Food products and agricultural raw materials (TN VED codes 01-24) - 28.25% of Russia's total exports to the DPRK (North Korea) (in the 1st half of 2017 - 9.85%);
• Products of the chemical industry (HS codes 28-40) - 6.94% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 0.58%);
• Metals and products from them (TN VED codes 72-83) - 1.37% of the total volume of Russian exports to the DPRK (North Korea) (in the 1st half of 2017 - 1.63%);
• Machinery, equipment and vehicles (TN VED codes 84-90) - 0.15% of Russia's total exports to the DPRK (North Korea) (in the 1st half of 2017 - 1.25%).

The largest increase in Russian exports to the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Pharmaceutical products (TN VED code 30) - an increase of $524,900;
• Fats and oils of animal or vegetable origin and their cleavage products; prepared edible fats; waxes of animal or vegetable origin (HS code 15) - an increase of USD 223,890;
• Oilseeds and fruits; other seeds, fruits and grains; medicinal plants and plants for technical purposes; straw and fodder (TN VED code 12) - an increase of $172,751;
• Ferrous metal products (TN VED code 73) - an increase of USD 116,231.

The largest reduction in Russian exports to the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following commodity groups:

• Mineral fuel, oil and products of their distillation; bituminous substances; mineral waxes (TN VED code 27) - reduction by USD 44,653,533;
• Fish and crustaceans, molluscs and other aquatic invertebrates (HS code 03) - reduction by USD 2,327,000;
• Ferrous metals (TN VED code 72) - reduction by $929,898;
• Products of the flour-grinding industry; malt; starches; inulin; wheat gluten (HS code 11) - a reduction of $780,876;
• Nuclear reactors, boilers, equipment and mechanical devices; their parts​ (HS code 84) - reduction by USD 373,921;
• Means of land transport, except for railway or tram rolling stock, and their parts and accessories (TN VED code 87) - reduction by USD 222,501;
• Wood and products from it; charcoal (TN VED code 44) - a reduction of $199,795;
• Cereals (TN VED code 10) - reduction by USD 158,366;
• Electrical machines and equipment, their parts; sound recording and reproducing equipment, equipment for recording and reproducing television image and sound, their parts and accessories (HS code 85) - reduction by USD 123,644;
• Salt; sulfur; earth and stone; plastering materials, lime and cement (TN VED code 25) - a reduction of $120,984;
• Fertilizers (TN VED code 31) - reduction by USD 94,050;
• Alcoholic and non-alcoholic beverages and vinegar (HS code 22) - reduction by $67,828;
• Rubber, rubber and articles thereof (HS code 40) - reduction by USD 41,620;
• Sugar and sugar confectionery (TN VED code 17) - reduction by USD 31,322.

Russian exports to the DPRK (North Korea) in the 1st half of 2018 by commodity groups

The code TN VED	Product group name	Export in 1st half. 2018, USD	Share in total exports, %	Export in 1st half. 2017 USD	Changes in 1 floor 2018 relatively 1 floor 2017 %
02	Meat and edible meat offal	70	0,00	0	∞
03	Fish and crustaceans, mollusks and other aquatic invertebrates	0	0,00	2 327 000	-100,00
04	Milk products; bird eggs; natural honey; food products animal origin, not elsewhere specified or included	0	0,00	16 440	-100,00
09	Coffee, tea, mate, or Paraguayan tea, and spices	4	0,00	0	∞
10	Cereals	25 432	0,25	183 798	-86,16
11	Products of the flour-grinding industry; malt; starches; inulin; wheat gluten	921 471	9,14	1 702 347	-45,87
12	Oilseeds and fruits; other seeds, fruits and grains; medicinal plants and plants for technical purposes; straw and fodder	183 251	1,82	10 500	1 645,25
15	Fats and oils of animal or vegetable origin and their cleavage products; prepared edible fats; waxes of animal or vegetable origin	1 658 117	16,45	1 434 227	15,61
17	Sugar and sugar confectionery	49 988	0,50	81 310	-38,52
21	Miscellaneous food products	8 928	0,09	17 874	-50,05
22	Alcoholic and non-alcoholic drinks and vinegar	261	0,00	68 089	-99,62
24	Tobacco and industrial tobacco substitutes	131	0,00	0	∞
25		80 592	0,80	201 576	-60,02
27	Mineral fuel, oil and products of their distillation; bituminous substances; mineral waxes	6 298 189	62,47	50 951 722	-87,64
28	Products of inorganic chemistry; inorganic or organic compounds of precious metals, rare earth metals, radioactive elements or isotopes	0	0,00	207	-100,00
29	organic chemical compounds	0	0,00	14 318	-100,00
30	Pharmaceutical products	643 773	6,39	118 873	441,56
31	fertilizers	0	0,00	94 050	-100,00
32	Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other coloring matter; paints and varnishes; putties and other mastics; printing ink, ink, ink	0	0,00	1 322	-100,00
34	Soaps, organic surfactants, detergents, lubricants, artificial and prepared waxes, cleaning or polishing compounds, candles and the like, modeling pastes, plasticine, "dental wax" and plaster-based dental preparations	18 984	0,19	42 055	-54,86
38	Other chemical products	2 438	0,02	10 116	-75,90
39		24 239	0,24	13 036	85,94
40		10 712	0,11	52 332	-79,53
42		0	0,00	202	-100,00
44	Wood and products from it; charcoal	0	0,00	199 795	-100,00
48	Paper and cardboard; articles of paper pulp, paper or paperboard	0	0,00	17 654	-100,00
52	Cotton	0	0,00	540	-100,00
54	Chemical threads; flat and similar threads of chemical textile materials	0	0,00	3 174	-100,00
59		0	0,00	5 728	-100,00
62		2 119	0,02	4 001	-47,04
63		0	0,00	10 993	-100,00
64		0	0,00	3 967	-100,00
65	Hats and their parts	0	0,00	193	-100,00
68		0	0,00	2 549	-100,00
70	Glass and glass products	0	0,00	3 195	-100,00
72	Black metals	21	0,00	929 919	-100,00
73	Ferrous metal products	137 468	1,36	21 237	547,30
74	Copper and products from it	202	0,00	13 132	-98,46
76	Aluminum and products from it	0	0,00	38	-100,00
82		0	0,00	1 024	-100,00
83	Other articles of base metal	0	0,00	2 180	-100,00
84		5 000	0,05	378 921	-98,68
85		0	0,00	123 644	-100,00
86	Railway or tramway locomotives, rolling stock and parts thereof; track equipment and devices for railways or tramways and their parts; mechanical (including electromechanical) signaling equipment of all kinds	0	0,00	7 081	-100,00
87		0	0,00	222 501	-100,00
90		10 158	0,10	8 895	14,20
94	Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name or address or address plates and the like; prefabricated building structures	0	0,00	15 103	-100,00
96	Miscellaneous finished products	0	0,00	1 891	-100,00

Russian imports from the DPRK (North Korea)

In the structure of Russian imports from the DPRK (North Korea) in the 1st half of 2018 (and in the 1st half of 2017), the main share of deliveries fell on the following types of goods:

• Products of the chemical industry (HS codes 28-40) - 19.68% of Russia's total imports from the DPRK (North Korea) (in the 1st half of 2017 - 31.01%);
• Machinery, equipment and vehicles (TN VED codes 84-90) - 14.32% of Russia's total imports from the DPRK (North Korea) (in the 1st half of 2017 - 10.72%);
• Metals and products from them (TN VED codes 72-83) - 0.85% of Russia's total imports from the DPRK (North Korea) (in the 1st half of 2017 - 19.78%);
• Textiles and footwear (HS codes 50-67) - 0.70% of Russia's total imports from the DPRK (North Korea) (in the 1st half of 2017 - 22.39%).

The largest increase in Russian imports from the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• musical instruments; their parts and accessories (TN VED code 92) - an increase of USD 297,685;
• Plastics and articles thereof (HS code 39) - an increase of USD 9,052.

The largest reduction in Russian imports from the DPRK (North Korea) in the 1st half of 2018 compared to the 1st half of 2017 was recorded for the following product groups:

• Articles of clothing and clothing accessories, except knitted or crocheted (TN VED code 62) - reduction by USD 371,554;
• Other chemical products (TN VED code 38) - reduction by USD 358,061;
• Products from ferrous metals (HS code 73) - reduction by USD 189,475;
• Ferrous metals (TN VED code 72) - reduction by USD 164,335;
• Essential oils and resinoids; perfumes, cosmetics or toilet preparations (HS code 33) - a reduction of USD 46,767;
• Articles of clothing and clothing accessories, knitted or crocheted (HS code 61) - reduction by USD 35,059;
• Means of land transport, except for railway or tram rolling stock, and their parts and accessories (TN VED code 87) - reduction by USD 29,679;
• Electrical machines and equipment, their parts; sound recording and reproducing equipment, equipment for recording and reproducing television image and sound, their parts and accessories (HS code 85) - reduction by USD 24,471;
• Nuclear reactors, boilers, equipment and mechanical devices; their parts​ (TN VED code 84) - reduction by USD 12,152;
• Salt; sulfur; earth and stone; plastering materials, lime and cement (TN VED code 25) - a reduction of $8,265;
• Nickel and articles made from it (HS code 75) - reduction by USD 3,676;
• Articles made of stone, plaster, cement, asbestos, mica or similar materials (TN VED code 68) - reduction by USD 3,097;
• Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; their parts and accessories (TN VED code 90) - reduction by USD 2,826.

Imports of Russia from the DPRK (North Korea) in the 1st half of 2018 by commodity groups

The code TN VED	Product group name	Import in 1st floor 2018, USD	Share in total import, %	Import in 1st floor 2017 USD	Changes in 1 floor 2018 relatively 1 floor 2017 %
25	Salt; sulfur; earth and stone; plastering materials, lime and cement	0	0,00	8 265	-100,00
33	Essential oils and resinoids; perfumery, cosmetic or toilet preparations	445	0,05	47 212	-99,06
35	Protein substances; modified starches; adhesives; enzymes	4 200	0,46	4 809	-12,66
37	Photo and film products	0	0,00	62	-100,00
38	Other chemical products	0	0,00	358 061	-100,00
39	Plastics and products made from them	173 048	19,15	163 996	5,52
40	Rubber, rubber and articles thereof	197	0,02	341	-42,23
42	Leather products; saddlery and harness; travel accessories, handbags and similar goods; products from animal intestines (except silkworm fibroin fiber)	426	0,05	183	132,79
55	Chemical fibers	1 527	0,17	0	∞
56	Wadding, felt or felt and non-woven materials; special yarn; twine, cordage, ropes and cables and articles thereof	0	0,00	237	-100,00
59	Textile materials, impregnated, coated or laminated; technical textiles	0	0,00	7	-100,00
60	Knitted or crocheted fabrics	0	0,00	1 613	-100,00
61	Articles of clothing and clothing accessories, knitted or crocheted	4 549	0,50	39 608	-88,51
62	Articles of clothing and clothing accessories, other than knitted or crocheted	0	0,00	371 554	-100,00
63	Other finished textile products; sets; used clothing and textiles; rags	244	0,03	585	-58,29
64	Footwear, gaiters and similar articles; their details	0	0,00	1 207	-100,00
68	Articles of stone, plaster, cement, asbestos, mica or similar materials	0	0,00	3 097	-100,00
69	Ceramic products	49	0,01	310	-84,19
72	Black metals	3 618	0,40	167 953	-97,85
73	Ferrous metal products	4 089	0,45	193 564	-97,89
74	Copper and products from it	0	0,00	70	-100,00
75	Nickel and products from it	0	0,00	3 676	-100,00
82	Tools, utensils, cutlery, spoons and forks of base metal; their parts of base metal	0	0,00	1 033	-100,00
84	Nuclear reactors, boilers, equipment and mechanical devices; their parts	1 348	0,15	13 500	-90,01
85	Electrical machines and equipment, their parts; sound recording and reproducing apparatus, apparatus for recording and reproducing television images and sound, parts and accessories thereof	25 041	2,77	49 512	-49,42
87	Means of land transport, other than railway or tram rolling stock, and their parts and accessories	102 292	11,32	131 971	-22,49
90	Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; their parts and accessories	744	0,08	3 570	-79,16
92	musical instruments; their parts and accessories	581 376	64,32	283 691	104,93
95	Toys, games and sports equipment; their parts and accessories	313	0,03	1 778	-82,40
96	Miscellaneous finished products	372	0,04	830	-55,18

Russian foreign trade statistics
Federal customs Service Russia

Due to natural conditions and lack of arable land [ ], as well as the policy of the country's leadership, the DPRK is experiencing a significant food shortage, but not hunger, which, according to some experts, has not been in the DPRK since the early 2000s .

GDP per capita . Researchers cite the Juche policy and the excessive militarization of the country as the reason for the economic underdevelopment.

Story

GDP

The DPRK belongs to a number of the world's poorest countries, ranking 213th out of 230 in terms of GDP per capita. According to the CIA, the GDP of the DPRK at purchasing power parity is the equivalent of $40 billion, or $1,700 per capita.

GDP by industry is distributed as follows [ ] :

Work force

Workers from North Korea in Russia

Forced labor in the camps

Branches of the economy

Private sector of the economy

According to Korean scholar A. Lankov, according to various estimates, the private sector of the economy accounts for from 30 to 50% of the GDP of the DPRK, and its role in last years is growing rapidly. Private capital is most common in the service sector, in transport and in fisheries.

Officially, the government of the DPRK does not recognize the existence of the private sector, but in practice, the authorities tolerate its activities.

Finance

Currency

Budget

The total amount of the state budget is not officially announced. For the media, only the distribution of expenses in percentages for various industries is announced. According to the data, the share of defense expenditures of the DPRK relative to GDP is 43% (about $ 7.7 billion, according to information for 2007).

According to the Stockholm Peace Research Institute, in 2011, the DPRK's military spending amounted to 90 billion won.

According to the KCNA agency (DPRK), in the budget for 2013, expenditures were distributed as follows:

Development National economy, including agriculture - 45.2% social spending (including health care, education, culture and sports) - 38.8% national defense - 16%

In the budget - 2014, the following changes in expenditures are planned:

For agriculture (including fishing) - an increase of 5.1%; on the capital construction- by 4.3%; for science and technology - by 3.6%; on and the sphere of heavy and light industry and the avant-garde sectors of the national economy - by 5.2%; for education - by 5.6%; for healthcare - by 2.2%; for culture - by 1.3%; for social insurance and social security - by 1.4%; for sports - by 17.1%; defense spending will remain almost at the same level - 15.9%.

It is also planned to finance scholarships and study expenses for Korean children in Japan.

It is known that the DPRK has accounts abroad. On June 15, 2007, the US confirmed the transfer of money from North Korean accounts from a bank in Macau to a Russian bank. According to the Japanese broadcaster NHK, a US administration official said that the transfer of more than $20 million was made through the US Federal Reserve and the Russian Central Bank. The funds were transferred to Dalcombank in Khabarovsk.

Allegations of counterfeiting

The United States has repeatedly accused North Korea of ​​producing and selling counterfeit US dollars. The son-in-law of North Korean Prime Minister Kang Moon To, who fled to the West, stated back in 1995 that the DPRK annually prints from 8 to 19 million counterfeit US dollars and sends them by diplomatic mail to China and the Middle East, where this money is put into circulation. A US Department of Justice statement (2005) states that “high-quality counterfeit banknotes that began to appear in world circulation starting in 1989 were manufactured in the DPRK with the assistance of local authorities. Forgeries were distributed around the world by persons acting under the guise of Pyongyang officials. According to the US government, the DPRK began counterfeiting dollars in 1989 and by 2006 had printed banknotes totaling $50 million. (According to some reports (for 2005), Pyongyang earned about $ 250 million a year from the sale of counterfeit American currency. According to The Guardian, in 2003, the DPRK annually produces 500 million high-quality counterfeit dollars.) . The leadership of the DPRK refuted these allegations. In 2008, a shipment of $100 counterfeits worth about $1 million was seized in South Korea. In 2010, counterfeit hundred dollar bills were widely distributed in the border areas of the DPRK and China. Andrey Lankov, in his 2001 article, pointed out: “in recent years, the special services of the DPRK have begun to actively engage in illegal economic activity. The North Koreans produce high-quality counterfeit dollars, which are then sold through the countries of Southeast Asia ... such operations are an important source of currency for the DPRK.”

Foreign economic relations

External economic relations in the DPRK are governed by the Law on Joint Ventures (1984), the Law on foreign investment- (1992), the Law on Foreign Economic Contracts, the Law on Land Lease and others regulations.. In 1991, the first Special Economic Zone (SEZ) was created. To create joint ventures, foreign investors can receive land leased to their enterprises for up to 50 years. North Korea maintains trade relations with more than 100 countries. The volume of trade in 2008 amounted to 2.8 billion dollars. The DPRK's key trading partner is China, which accounts for most of both the country's exports and imports.

While maintaining the undisputed dominance of China, the North Korean market is also being developed by European entrepreneurs. A number of foreign companies doing business in the DPRK are united in the European Business Association (EBA) in Pyongyang.

Twice a year, Pyongyang hosts International Exhibitions and Fairs with the participation of European and other enterprises

In recent years, there has been a steady increase in exports and imports of the DPRK. From 1999 to 2011, exports of goods from the DPRK increased 6 times, and imports - 4 times. In 2013 alone, imports of crude oil from China to the DPRK increased by 11.2% and amounted to 578,000 tons. In general, the trade turnover between the DPRK and China grew by 8.9% in 2013, amounting to $6.54 billion. At the same time, exports of North Korean goods to China increased by 18% and amounted to $2.91 billion.

The volume of international aid is gradually being reduced as the food situation in the DPRK returns to normal. In 2011, assistance from the International Food Program amounted to about 46,000 tons, with a total consumption of about 5-6 million tons for rice alone.

Economic ties with South Korea

In the post-war history, economic ties between North and South Korea have alternately weakened, then again improved. At the beginning of the 21st century, relations between the countries warmed up, which led to a significant increase in investment by South Korean firms in North Korean industry. However, despite this, economic ties between the two countries are still quite weak.

After the South Korean government allowed trade with its northern neighbor, North Korean goods began to be imported into South Korea. Direct trade between the countries began after 1990 (this was preceded by a meeting of the prime ministers of both countries). The volume of trade between the countries increased from $18.8 million to $333.4 million.

However, in 2010, after a series of military incidents, and especially the shelling of the South Korean island by DPRK artillery, economic cooperation was practically terminated.

Export

According to News. Economics, the volume of exports of goods amounted to 3160.74 million US dollars (2007), 4305.4 million US dollars (2008), 3993.05 (2009), 3623.35 (2010), 3789.24 (2011), 4203.12 (2012), 4368.01 (2013), 4051.64 (2014), 3434.66 (2015)

The DPRK's exports are dominated by seafood - 24.4% of total exports; textile industry products - 21.6%; machinery, equipment, electrical engineering - 15.1%; metals - 9.3%; minerals - 7.8%; products of the chemical industry - 6%. The main export items from the DPRK are also anthracite, seafood (the country is in the top twenty in the world in terms of the catch of fish and other seafood), ginseng and other traditional medicines. The foreign market knows the weapons of the DPRK, which, as a rule, are a creative development of Soviet or Chinese models. The products of the military-industrial complex of the DPRK are in demand in Third World countries, which, as a rule, are also under embargo, thanks to which the country remains one of the world's arms exporters.

Main trading partners: 60%, Brazil 6.2%, Netherlands 4.3%, Egypt 3.5% (2010).

Import

The volume of imports of goods - 4.8 billion US dollars (2011) .

One of the permanent partners of the DPRK in the CIS remains the Republic of Belarus, from which Korea buys tractors, trucks and accessories for them. In turn, for their production Belarus uses batteries imported from the DPRK.

Main trading partners: 81%, Egypt 9.6%, 1.1%, Dominican Republic 1.1%, 0.8% (2010) .

External debt

External debt - $12.5 billion (2001).

The state debt to the USSR amounted to 11 billion dollars, more than 90% of the debt Russia wrote off.

Impact of sanctions and economic blockade

Goods of North Korean origin may not be imported into the United States, directly or indirectly, without prior notice and approval from the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury. In May 2006, OFAC prohibited US citizens from "owning, leasing, operating, or insuring any vessel flying the North Korean flag".

The European humanitarian organization European Union program support (EUPS), which is leading charitable projects in the DPRK, at one time was unable to supply solar panels intended for power supply to hospitals in rural areas of the DPRK - they were also subject to sanctions.

There are known cases of attempts by the United States to seize North Korea's assets "on suspicion of money laundering". Thus, in 2007, $25 million were arrested in the Macau Bank, which were returned to Korea only after the threat of withdrawal from the Six-Party Talks and the intervention of the Chinese and Russian Foreign Ministries. Since 2002, the DPRK has abandoned the dollar and its official foreign trade currency is the euro. In the autumn of 2012, the media published the words of the Deputy Minister of Foreign Trade of the DPRK, Su Kir Bok, about the intention to start using foreign trade settlements Russian ruble and Chinese yuan.

North Korea's closest neighbors Japan and South Korea are banning goods such as shampoo and used pianos from entering the country. music schools, declaring them "luxury items". The category of "luxury goods" also includes cars, audio and video equipment, alcohol, coffee, cosmetics, beef and fish of the highest grades. Since 2006, there has been a ban on the import to Japan of any goods from the DPRK and the entry into Japanese ports of ships flying the flag of the DPRK

The import of used computers into the country is prohibited as "dual-use goods" that can be used to create nuclear weapons.

Population income

For 2017 minimum size wages averaged 5,000 - 10,000 won per day, which is an average of $5.5 - $11.1 USD per day.

see also

Bibliography

• Reese D. The prospects for North Korea's survival, London, International Institute for Strategic Studies, 1998, 95 pp.

Notes

Notes Footnotes

1. CNBC North Korea's 2016 economic growth climbs to 17-year high despite sanctions targeting nuclear program (indefinite) (July 20, 2017).
2. North Korea(English) . CIA World Factbook (April 26, 2010). Retrieved January 9, 2012.
3. North Korea’s economy grew 3.7% in 2017, Pyongyang professor estimates(English) . www.japantimes.co.jp. The Japan Times (October 13, 2017).
4. Kang Chang Ku. DPRK Economy 2016(English) . www.nkeconwatch.com. The Bank of Korea (2017-7-22).
5. Kim Hwa Yong. DPRK Economy 2015(English) . www.nkeconwatch.com. The Bank of Korea (2016-7-22).
6. Kim Young Hwan. DPRK Economy 2014(English) . www.nkeconwatch.com. The Bank of Korea (2015-7-22).
7. North Korea (indefinite) . The Observatory of Economic Complexity (2015). Retrieved 4 May 2018.
8. N.Korea Struggling Under Mountains of Foreign Debt (indefinite) . The Chosun Ilbo (English Edition): Daily News from Korea (January 19, 2012). Retrieved March 31, 2012. Archived from the original on February 21, 2012.
9. Lankov A.N. The natural death of Korean Stalinism // Polit.ru, 22.02.20107
10. The state of the economy of the Democratic People's Republic of Korea // Country Studies Catalog of the Faculty of International Business of Omsk State University
11. UN: North Korea's policies cause the nation's food shortages - The National(English) . thenational.ae. Date of treatment September 28, 2012. Archived from the original on October 23, 2012.
12. • Kiryanov O. James Morris: data on millions of victims of famine in the DPRK do not correspond to reality // Seoul Bulletin, 09/22/2005
    • EUPS: there is no hunger and poverty in North Korea // Gazeta.ru, 04/05/2010
    • Lankov A.N. Andrey Lankov Is North Korea starving? On North Korean economic growth // Slon.ru, 04/29/2011
    • Lankov A. N. did not win, but lost, and not the Volga, but the bicycle // LiveJournal, 01/12/2013
    • UN: Famine in the DPRK is a fiction // NEWSru.com, 05/14/2013
13. The world fact book. Country Comparison»
14. Harris B. How North Korea is transitioning to capitalism // Vedomosti, 06/30/2017 (translated article from the Financial Times)
15. Lankov A. Commerce under Kim Il Sung (indefinite) . Polit.ru (August 9, 2014). Retrieved 19 August 2014.
16. Mozzhukhin A. “North Korea is no longer a reserve of Stalinism” // Lenta.ru, 03/11/2015
17. • The reformer of the DPRK economy was executed // Rosbalt, 03/18/2010
    • The former chairman of the Gosplan of the DPRK was executed on charges of sabotage // Lenta.ru, 03/18/2010
18. Marcus Noland. North Korea: Witness to Transformation. Hugely important: North Korea running a current account surplus? (indefinite) . (March 18th, 2013) . Date of treatment July 19, 2013. Archived from the original on July 19, 2013.
19. North Korea's balance of payments surplus (indefinite) . IGT. Institute for Global Transformations (March 20, 2013). Date of treatment July 19, 2013. Archived from the original on July 19, 2013.
20. Lankov A. N. Revival of the market economy in North Korea. August 2015 . - M., 2015. - 18 p. - 300 copies.
21. Lankov A.N. North Korean business in the era of Kim Jong-un: the quiet pace of change. // Carnegie Moscow Center, February 19, 2016
22. Lankov A.N. Kim Chen Den. Why North Korea embarked on the path of market reforms // Carnegie Moscow Center, 02/20/2015
23. Toloraya G. D., Yakovleva L. N. The economic strategy of the DPRK after the VII Congress of the Workers' Party of Korea: conclusions for Russia // Bulletin of the Institute of Economics of the Russian Academy of Sciences, No. 4. 2016. P. 7-19
24. Gray K., Lee J. W. Following in China's footsteps? The political economy of North Korean reform // The Pacific Review. - 2017. - V. 30. - No. 1. - P. 51-73.
25. CIA Factbook
26. Alexander Baunov. Candid conversation with a North Korean businessman (indefinite) . slon.ru (December 19, 2011). Date of access 26 April 2013. Archived from the original on 28 April 2013.
27. BUSINESS WITH THE DPRK. Economy and relations with Russia in 1999-2001.
28. At the first machine tool with CNC technology // Korea Today, 20013, No. 12, p. 7.
29. In the import trap. What will Russia be left without if “tomorrow is a war”?
30. The state of the economy of the Democratic People's Republic of Korea // Country Studies Catalog of the Faculty International business Omsk State University
31. The leader of the DPRK strengthens the civilian sector of the economy, concentrating efforts on the development of light industry
32. North Korea releases first PDA
33. North Koreans love their Achim Android tablet
34. North Korea launches tablet with browser but no Wi-Fi
35. Naenara
36. In the mixed technology company "Noeul" (indefinite) . //naenara.com.kp. Retrieved 16 January 2014.
37. North Korea develops its own Arirang smartphone
38. Pyongyang's solar street lamps
39. Glushko A. A., Ryabinina L. I. Territorial organization of the economy of the Asia-Pacific countries. - Vladivostok: Far Eastern State University, 2003. - S. 101. - 173 p.

The North Korean government claims that their country is a real paradise: everyone is happy, secure and confident in the future. But refugees from describe a different reality, a country where they have to live beyond the limits of human capabilities, without a goal and the right to choose. been in crisis for a long time. The publication will present the features of the country.

Characteristic

In economics, there are three distinctive features. First, it represents an order in which resources are distributed centrally. This one is called planned. Secondly, resources are used to counter possible threats that can destroy the integrity of the country. This use is called the mobilization economy. And thirdly, they are guided by the principles of socialism, that is, justice and equality.

From this it turns out that the economy of North Korea is a planned mobilization economy of a socialist country. This state is considered the most closed on the planet, and since the DPRK has not shared economic statistics with other countries since the 60s, one can only guess about what is happening beyond its borders.

The country is distinguished by not the most favorable weather conditions, so there is a shortage of food products. According to experts, the inhabitants are below the poverty line, only in 2000 did hunger cease to be a problem of national scale. As of 2011, North Korea ranks 197th in the world in terms of purchasing power.

Due to militarization and the policies of the national communist state ideology of Kim Il Sung, the economy has been in decline for a long time. Only with the advent of Kim Jong-un, new market reforms began to be introduced and the standard of living increased, but first things first.

Economy of the post-war period

In the second half of the 1920s, Korea began to develop mineral deposits in the north of the country, which caused an increase in the population. This stopped after the end of World War II. Korea was then conditionally divided into two parts: the south went to the United States, and the north was under the rule of the USSR. This division provoked an imbalance of natural and human resources. Thus, a powerful industrial potential was concentrated in the north, and the main part of the labor force was concentrated in the south.

After the formation of the DPRK and the end (1950-1953), the economy of North Korea began to change. It was forbidden to practice entrepreneurial activity, and the card system came into use. It was impossible to trade grain crops in the markets, and the markets themselves were used extremely rarely.

In the 1970s, the authorities began to pursue a policy of economic modernization. New technologies were introduced into heavy industry. The country began to supply minerals and oil to the world market. In 1979, the DPRK was already able to cover its external debts. But in 1980 the country went into default.

Two decades of crisis

The North Korean economy has, in short, been a complete fiasco. Demand for products dropped significantly, and because of the oil crisis, the country was declared bankrupt. In 1986, the external debt to the allied countries amounted to over 3 billion dollars, and by 2000 the debt exceeded 11 billion. The bias of economic development towards heavy industry and military equipment, the isolation of the country and the lack of investment were the factors that hindered economic development.

To remedy the situation, in 1982 it was decided to create a new economy, the basis of which was to be the development Agriculture and infrastructure (especially power plants). After 2 years, a law on collective enterprises was adopted, which helped to attract foreign investment. 1991 was marked by the creation of a special economic zone. Albeit with difficulty, but investments flowed there.

Juche ideology

The Juche ideology had a special influence on the economic development of the state. This is a kind of combination of the concepts of Marxism-Leninism and Maoism. Its main provisions that influenced the economy were as follows:

• revolution is a way to achieve independence;
• to do nothing is to abandon the revolution;
• to protect the state, it is necessary to arm the whole people so that the country turns into a fortress;
• the correct view of the revolution comes from a feeling of boundless devotion to the leader.

In fact, this is what keeps the economy of North Korea. The main part of the resources is directed to the development of the army, and the remaining funds are barely enough to save the citizens from hunger. And in this state, no one will rebel.

Crisis of the 90s

After cold war The USSR stopped supporting North Korea. The country's economy stopped developing and fell into decline. China stopped providing support to Korea, and, combined with natural disasters, this led to the fact that famine began in the country. According to experts, the famine caused the death of 600 thousand people. Another plan to establish a balance failed. Food shortages increased, an energy crisis erupted, resulting in the shutdown of many industrial enterprises.

Economy of the 21st century

When Kim Jong Il came to power, the country's economy "cheered up" a little. The government carried out new market reforms, and increased the amount of Chinese investment ($200 million in 2004). Due to the crisis of the 90s, semi-legal trade became widespread in the DPRK, but no matter how hard the authorities try, even today there are “black markets” and smuggling of goods in the country.

In 2009, an attempt was made to implement financial reform to strengthen the planned economy, but as a result, the country's inflation rate skyrocketed and some basic commodities became scarce.

At the time of 2011, the DPRK balance of payments finally began to show a figure with a plus sign, positive influence foreign trade contributes to the state treasury. So what is the economy like in North Korea today?

Planned Economy

The fact that all resources are at the disposal of the government is called a command economy. North Korea is one of the socialist countries where everything belongs to the state. It solves the issues of production, import and export.

The command-administrative economy of North Korea is designed to regulate the amount of manufactured products and pricing policy. At the same time, the government makes decisions not based on the real needs of the population, but guided by planned indicators, which are presented in statistical reports. There is never an oversupply of goods in the country, since this is inexpedient and economically unprofitable, which the government cannot allow. But very often you can find a shortage of essential goods, in connection with this, illegal markets flourish, and with them corruption.

How is the treasury filled?

North Korea has only recently begun to emerge from the crisis, ¼ of the population is below the poverty line, and there is an acute shortage of food products. And if we compare the economy of North and South Korea, which competes with Japan in the production of humanoid robots, then the former is definitely lagging behind in development. Nevertheless, the state found ways to fill the treasury:

• export of minerals, weapons, textiles, agricultural products, coking coal, equipment, crops;
• oil refining industry;
• established trade relations with China (90% of trade turnover);
• taxation of private business: for each completed transaction, the entrepreneur pays the state 50% of the profit;
• creation of trade zones.

Kaesong - commercial and industrial park

Together with the Republic of Korea, a so-called industrial park was created, where 15 companies are located. More than 50,000 North Koreans work in this zone, their wage almost 2 times higher than in the territory of the native state. The industrial park is beneficial for both parties: exports to South Korea finished products, and the North has a good opportunity to replenish the state treasury.

Dandong City

Relations with China are established in a similar way, only in this case the stronghold of trade is not the industrial zone, but the Chinese city of Dandong, where trade transactions are carried out. Now there are many North Korean trade missions open there. Not only organizations, but also individual representatives can sell goods.

Seafood is in high demand. There is a so-called fish mafia in Dandong: in order to sell seafood, you need to pay a fairly high tax, but even so you get a good profit. There are, of course, daredevils who import seafood illegally, but due to strict sanctions, there are fewer of them every year.

Today, North Korea is dependent on foreign trade, but there are several other interesting points in the country's economy, some of which are inseparable from politics.

Thus, there are 16 labor camps in the country, created on the principle of the Gulag. They perform two roles: punishing criminals and providing free labor. Since the principle of “punishment of three generations” exists in the country, some families spend their whole lives in these camps.

During the period of economic decline, insurance fraud flourished in the country, and at the international level, for which the government was sued more than once demanding the return of insurance payments.

In the late 1970s, it was canceled for foreign trade. In this regard, on international market anyone who wished to leave could leave, having previously registered with a special foreign trade firm.

During the crisis, the main currency was food, it could be exchanged for anything.

The economy of North Korea may take the first place in the world in terms of the degree of closeness from the outside world.

There are still many gaps in the country's economy, citizens are trying to migrate at any opportunity, and cards that replace money have not yet gone out of use. It is almost impossible to get into the territory of the state, and all areas visible to tourists can be called exemplary and exemplary territories. The world is at a loss as to what is really going on in North Korea, but the country's economy is on the rise and perhaps in a decade, the DPRK will be on the same level of economic development as its closest neighbors.