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North Korea Economic Assistance
Economic assistance from communist countries plays an
important role in securing resources for economic development.
Estimates vary, but it is likely that the equivalent of US$4.75
billion of aid was accepted between 1946 and 1984. Almost 46
percent of the assistance came from the Soviet Union, followed by
China with about 18 percent, and the rest from East European
communist countries (see
table 5, Appendix). Most of the
assistance--about two-thirds--was in the form of loans; the rest
were outright grants. Understandably, grants dominated in the
years immediately after the Korean War, but subsequently loans
became the predominant form of aid. Whereas in 1954 aid receipts
made up one-third of national revenues, by 1960 foreign
assistance had dropped to less than 3 percent of total revenues.
Officially, declining foreign aid in the 1960s was blamed for
being partly responsible for poor economic performance during the
First Seven-Year Plan. In the 1970s, loans (for importing Western
machinery and plants) from Japan and Western Europe were larger
than those from communist countries. Grants, terminated since the
1960s, were restored when China gave approximately US$300 million
between 1978 and 1984. In November 1990, China reportedly
promised North Korea economic aid amounting to US$150 million
over five years, largely made up of deliveries of grain and oil.
North Korea receives no multilateral economic assistance other
than from the UNDP.
Between 1949 and 1990, the Soviet Union helped North Korea
build or rehabilitate 170 large plants in sectors such as power,
mining, ferrous and non-ferrous metals, chemicals, construction
materials, oil-refining, machinery, textiles, food,
transportation, and communications. During the same period, these
plants reportedly produced about 60 percent of all electric
power, 40 percent of steel and rolled steel, 50 percent of oil
products, 10 percent of coke, 13 percent of fertilizers, 19
percent of fabrics, and 40 percent of iron ore. Soviet assistance
also was important in the construction of expanded port
facilities at Najin. In addition, a total of 6,000 Soviet
engineers and experts were sent to North Korea to train 20,000
Korean workers and 2,000 North Koreans received technical
training in the Soviet Union.
Beginning in the late 1970s, Soviet assistance began to take
the form of output-sharing ventures. Enterprises under these
ventures include an enamel wire plant, a small electric motor
plant, a car battery plant, a cold rolled steel shop, and a hot
rolled steel shop at the Kimch'aek Integrated Iron and Steel
Works. Under a buy-back arrangement, Soviet assistance for
constructing industrial projects was paid for with commodities
produced at the plants.
There were reports in 1978 that approximately 10,000 Chinese
laborers were working on construction projects. Chinese workers
had assisted in the construction of the Sup'ung and Unbong
hydroelectric power stations, from which China also drew
electricity.
In spite of its domestic economic difficulties, North Korea
also is an aid donor on a fairly modest scale. Between 1980 and
1989, North Korea provided a total of approximately US$26.4
million in aid to Third World countries, of which almost 74
percent went to African countries in the form of technical
agricultural assistance.
Data as of June 1993
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