Accession Number:



Assessment of Pathways to Collapse in the DPRK

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Technical Report

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NSI, Inc. Boston United States

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The collapse of the North Korean economy and disastrous famine of the mid-1990s forced the regime to adapt its centrally-planned economymost notably by allowing limited and small-scale private entrepreneurship among a starving population that the governments Public Distribution System could no longer support. In this context, the North Koreans had turned to informal markets for sustenance in order to survive Gause, 2018 Park, 2018 Platte, 2018 Rinna, 2018. This bottom up marketization resulted in policy reforms that followed rather than led the transition Haggard and Noland, 2005 Park, 2018 Platte, 2018 Rinna, 2018. While the regime acknowledged the need for these informal markets to meet needs that it could not fulfill, and even instructed state institutions to find profit-making opportunities, the regime nonetheless remained ideologically opposed to marketization and capitalism. The leadership even enacted policy reversals in late 2005 intended to roll back some of this change including banning private trade in grain, resuscitating the quantity rationing system, andreverting back to confiscatory seizures from rural cultivators Haggard and Noland, 2005. The regimes 2007 and 2009 efforts to inhibit private entrepreneurship and decelerate marketization e.g., through currency reform were ultimately unsuccessful Park, 2018. The informal economy is still in place, represents a substantial sector of the total economy, and has fostered a new stratum of wealthy North Koreans, unattached to the military or traditional elite Hastings, 2017. The result today is the emergence and continued growth of private entrepreneurs. One estimate is that 20 of the North Korean population is directly or indirectly reliant on general markets for survival DailyNK, 2018. Simultaneously, there are party and military organizations with their own trading companies.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science

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