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North Korea ECONOMIC SETTING
Korea under the Japanese Occupation
North Korea inherited the basic infrastructure of a modern
economy because of Japan's substantial investment in development
during the Japanese occupation. The Japanese had developed
considerable heavy industry, particularly in the metal and
chemical industries, hydroelectric power, and mining in the
northern half of Korea, where they introduced modern mining
methods. The southern half of the country produced most of the
rice and a majority of textiles. The hydroelectric power and
chemical plants were said to be second to none in Asia at that
time in terms of both their scale and technology. The same
applied to the railroad and communication networks.
There were, however, serious defects in the industrial
structures and their location. The Korean economy, geared
primarily to benefit the Japanese homeland, was made dependent on
Japan for final processing of products; heavy industry was
limited to the production of mainly raw materials, semifinished
goods, and war supplies, which were then shipped to Japan proper
for final processing and consumption. Japan did not allow Korea
to develop a machine tool industry. Most industrial centers were
strategically located on the eastern or western coasts near ports
so as to connect them efficiently with Japan. Railroad networks
ran mainly along the north-south axis, facilitating Japan's
access to the Asian mainland. Because the Japanese occupied
almost all the key government positions and owned and controlled
the industrial and financial enterprises, few Koreans benefited
from acquiring basic skills essential for modernization.
Moreover, the Japanese left behind an agrarian structure--land
tenure system, size of landholdings and farm operation, pattern
of land use and farm income--that needed much reform. Farms were
fragmented and small, and landownership was extremely unequal.
Toward the end of the Japanese occupation, about 50 percent of
all farm households in Korea were headed by tenant farmers.
The sudden withdrawal of the Japanese and the subsequent
partition of the country created economic chaos. Severance of the
complementary "agricultural" south from the "industrial" north
and from Japan meant that North Korea's traditional markets for
raw materials and semifinished goods--as well as its sources of
food and manufactured goods--were cut off. Furthermore, the
withdrawal of the entrepreneurial and engineering skills supplied
mainly by Japanese personnel affected the economic base. Thus the
task facing the communist regime in North Korea was to develop a
viable economy, which it reoriented mainly toward other communist
countries, while at the same time to rectify the "malformation"
in the colonial industrial structure. Subsequently, the problem
was compounded further by the devastation of industrial plants
during the Korean War (1950-53)
(see The Legacy of Japanese Colonialism
, ch. 1). North Korea's economic development therefore
did not tread a new path until after the Korean War.
Data as of June 1993
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