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North Korea THE POST-WAR ECONOMY AND PATTERNS OF INDUSTRIALIZATION
North Korea has a socialist command economy. Beginning with
the Three-Year Plan (1954-56) at the end of the Korean War and
the shortened Five-Year Plan (1957-60) that succeeded it,
reconstruction and the priority development of heavy industry has
been stressed, with consumer goods a low priority. This strategy
of industrialization, biased toward heavy industry, pushed the
economy forward at record growth rates in the 1950s and 1960s.
The First Seven-Year Plan (1961-70--extended for three years
because of Soviet aid stoppages in the early 1960s caused by
North Korea's support for China in the Sino-Soviet dispute)--also
projected a higher than average growth rate
(see Economic Development and Structural Change
, ch. 3).
By the early 1970s, North Korea had clearly exhausted
extensive development of its industries based on its own, prewar
Japanese, or new Soviet technologies, and therefore turned to the
West and Japan to purchase turnkey plants. These purchases
ultimately caused North Korea's problems with servicing its
external debt-- estimated at between US$2 billion and US$3
billion for the years 1972-79
(see Foreign Trade
, ch. 3). Later
seven- and ten-year plans failed to reach projected growth rates;
still, a study published by the United States Central
Intelligence Agency in 1978 estimated that North Korea's per
capita gross national product
(GNP--see Glossary) equaled South
Korea's as late as 1976. Since that time, however, it has fallen
behind South Korea, and transportation bottlenecks and fuel
resource problems have plagued the economy
(see Industry
, ch. 3).
Agriculture was collectivized after the Korean War, in stages
that went from mutual aid teams to second-stage cooperatives, but
stopped short of building the huge state farms found in the
Soviet Union or the communes of China
(see Organization and Management
, ch. 3). Relying mostly on cooperative farms
corresponding to the old natural villages and using material
incentives (there was apparently little ideological bias against
using such incentives), North Korea pushed agricultural
production ahead, and its general agricultural success was
acknowledged. The United States government estimated in 1978 that
grain production had grown more rapidly in North Korea than in
South Korea and that living standards in North Korea's rural
areas had probably improved more quickly than those in South
Korea. Nevertheless, production has fallen behind and North Korea
has failed to reach projected targets, for example, the
production of 10 million tons of grain by 1986.
Data as of June 1993
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