The North Korean Economy: Overview and Policy Analysis

This report provides an overview of the economy of the Democratic Peoples Republic of Korea DPRK or North Korea, its external economic relations, attempts at reform, and U.S. policy options. Along with the United States, North Koreas major trading partners - China, Japan, South Korea, and Russia - form the so-called six parties, who are engaged in talks, currently restarted, to resolve issues raised by the DPRKs development of nuclear weapons. The economy of North Korea is of interest to Congress because it provides the financial and industrial resources for Pyongyang to develop its military, can be used as leverage in negotiations, constitutes an important push factor for potential refugees seeking to flee the country, creates pressures for the country to trade in arms and illegal drugs, is a rationale for humanitarian assistance, is tied to Pyongyangs nuclear program, and creates instability that affects South Korea and China. The North Korean threat to sell nuclear weapons material could be driven in part by Pyongyangs need to generate export earnings. The dismal economic conditions also foster forces of discontent that potentially could turn against the Kim regime especially if knowledge of the luxurious lifestyle of communist party leaders becomes better known or as the poor economic performance hurts even Pyongyangs elite.