Monday, 27 July 2015

How Does North Korea Make Money?



For us in the West, North Korea is a rather mysterious country in many aspects. A combination of government secrecy (very few updates on the nation are publicly released), strict control over entrance into the nation by foreigners and Western dislike of the DPRK's authorities mean that we know very little for certain about the country.
One of the enigmas surrounding the nation lie in its economy. While its economy is pretty much in dire straits (its annual growth of 0.8% is deemed as stagnating, per capita income is estimated to be $1-2k per year), the country continues to maintain a huge military expenditure (as evidenced by the recent reported hydrogen bomb tests). The DPRK spends around $10bn, according to International observers, on its military- a quarter of the total national GDP, among the highest rates in the world. North Korea must be getting some reliable income to be able to maintain this spending, but where from? How does the DPRK's economy function with its doors of trade largely closed to today's globalised world?

1. (Narrow) International Trade
Textiles constitutes a significant part in the North Korean
economy, but is secondary to commodities.

North Korea exports roughly $2.7bn worth of materials every year, a notably large proportion of these exports being derived from primary industry. Mining in particular plays a massive role in keeping North Korean trade afloat, with coal and iron constituting over 46% of the nation's exports. Other products exported from the DPRK include clothing, molluscs (according to the OEC North Korea's 6th most valuable export, no kidding) and fur.

Nevertheless, it is evident that North Korea is heavily dependent upon its primary sector, on the commodities (coal, iron, etc) whose prices are constantly fluctuating. The impact of these fluctuations on North Korea is amplified by this dependence, meaning their economy would be far more damaged by a fall in coal prices, for example, than other nations whose economies are far more diverse. NK's exports have given them a tightrope to walk upon- as opposed to the kind of solid, wide platform most countries would ideally like to have.

But not only does North Korea's product lack diversity, but its list of trade partners does as well. The country's lack of extensive diplomatic ties with other nations has resulted in China receiving 84% of NK's exports, followed far behind by Indonesia, which receives just 2%. This is the same when you look at North Korea's imports. 84.5% of NK's imports come from China- India follows with just 5%.

So not only are North Korea extremely sensitive to global commodity prices, but also to the performance of China. Currently the Chinese economy is relatively stable, but could a catastrophe hit, North Korea would see a severe lack of supplies, one even more deadly than it is experiencing right now.

But it would be foolish to put this off as a long-term economic problem. Kevin Stahler from the Peterson Institute of Economics claims the country's lack of economic diversity is already hitting growth. "Just as it [North Korea] rode the resource boom to its apex in 2011, it is now the victim of a steady and steep decline in world prices."

2. Tourism
North Korea's state tourism is becoming more popular to
travellers from outside the region.

It's reputation in the West has written off to many the idea of ever travelling to North Korea, but it is indeed possible, and it's not even that complicated. You just need to have two guides prepared to accompany you on a pre-planned tour, which can be organised via a number of online tour operators. It may not be totally convenient ("It's not possible to travel independently in North Korea", according to tour operator Gill Leaning), but it is an opportunity available to those who wish to take it.

It's easy to travel to North Korea because the authorities there see tourism as a potential source for a great amount of income and economic activity. Their increased efforts particularly in the past few years have seen the number of visits to DPRK growing. For example, Leaning claims to have received a 400% increase in booking enquiries in 2012, largely thanks to the nation's 100 year anniversary and the government's heavy publicity of the occasion.

It is difficult to attain the precise figures for how much income tourism brings, but what is more certain is that, currently, the majority of the DPRK's 100,000 guests a year are Chinese. "About 80% of the tourists who come are from neighbouring countries," says Kim Sang Hak, a senior North Korean economist. "It's normal to develop tourism within your region... but we are also expanding to European countries as well.". In explaining his countries target to increase tourism to two million people a year by 2020, Hak affirms that "Tourism can produce a lot of profit relative to the investment required, so that's why our country is putting priority on it."

3. The Black Market

The North Korean-built 'African Renaissance
Monument' in Senegal.
While the North Korean economy does produce something, looking at figures such as the GDP per capita earlier mentioned, it is evidently not performing particularly well. It is widely believed that the DPRK has been and still is involved in some more questionable dealings to try to further boost its revenues. The government's sale of labour workers to Russia and China has been relatively well documented. While exporting labour itself is not something unusual, the taking of up to 70% of the workers' earnings as 'loyalty payments' by the North Korean government makes this dealing particularly shady. This exporting of workers not only brings North Korea revenue, but it brings revenue in the form of US Dollars, providing the government with a far safer, stable currency than its own Won.
North Korea also exports monuments and statues of national leaders to other countries. These can be seen throughout Africa, in countries such as Senegal (pictured), and the Mansudae Art Studio, the Pyongyang-based company responsible for most of these works, had even created one for Germany in 2005.

However 'shady' one might consider these deals to be, they are technically legal- and according to NPR, they brought in around $2bn in 2009. But there is a darker side to the North Korean economy, that involves drugs, counterfeit money, and weaponry.

According to the Wall Street Journal, in 2001 North Korea made somewhere between $500m and $1bn from illegal drug sales. The late 20th century saw growing opium exports from the DPRK, but more recently crystal meth has been growing in popularity, not just outside the country but internally, where "People with chronic disease take it until they're addicted," according to an NGO worker in an interview with journalist Isaac Fish. "They take it for things like cancer. This drug is their sole form of medication."

Counterfeiting money has also been a tactic used by the North Korean government, usually of the dollar in attempts to destabilise the American economy. Making the government up to $25m a year, the USA has actively moved to stop this, by introducing a new $100 bill in 2013 specifically designed to prevent further North Korean counterfeits.
Mohammad M Lone Editor

29 comments:

  1. I needed to compose you that little observation so as to thank you as before regarding the pretty basics you’ve discussed here. This is really tremendously open-handed with people like you to provide extensively exactly what many people could possibly have advertised as an electronic book to help make some profit on their own, even more so seeing that you could have tried it in the event you decided. The pointers additionally worked like the fantastic way to understand that many people have a similar passion just like my personal own to learn much more on the topic of this condition. I am certain there are thousands of more fun opportunities in the future for folks who scan through your blog. https://www.extracasheachmonth.com

    ReplyDelete
  2. Extremely helpful post. This is my first time i visit here. I discovered such a large number of intriguing stuff in your blog particularly its exchange. Truly its extraordinary article. Keep it up. Make Money Online

    ReplyDelete
  3. I know your aptitude on this. I should say we ought to have an online discourse on this. Composing just remarks will close the talk straight away! What's more, will confine the advantages from this data.  how to make money online

    ReplyDelete
  4. I have read all the comments and suggestions posted by the visitors for this article are very fine,We will wait for your next article so only.Thanks! Make Money Online

    ReplyDelete
  5. I am grateful for this blog to distribute knowledge about this significant topic. Here I found different segments and now I am going to use these new instructions with new enthusiasm.
    Freight forwarding

    ReplyDelete
  6. I was very pleased to find this site.I wanted to thank you for this great read!! I definitely enjoying every little bit of it and I have you bookmarked to check out new stuff you post  make money online

    ReplyDelete
  7. This comment has been removed by the author.

    ReplyDelete
  8. Online problem gamblers spend much more money on the online gambling websites than the amount teenagers spend on drugs. The worse bit of online gambling is its anonymity.

    judi online

    ReplyDelete
  9. The Best casino company. The licensing requirements needed for you state may also require the casino company to be licensed. There have been occasions in New Jersey where a non profit organization called a casino party company and neither of the parties knew the laws resulting in the event being stopped and fines.

    https://parisbola.co.id/

    ReplyDelete
  10. Gold is over the top expensive to create; in this manner, it limits its fast supply. The gold trade standard implied a global framework, in which every nation needed to name and fix the estimation of its cash concerning gold. This made an entire framework associating the monetary forms of the considerable number of nations over the globe. money converter

    ReplyDelete
  11. If you are looking for more information about flat rate locksmith Las Vegas check that right away. convert money

    ReplyDelete
  12. The straightforward answer is completely everything. Geopolitical, natural, business exchange, merchants, theorists, occasion creators, sovereign governments, national banks; and so on and it likely affects the conversion scale. money converter

    ReplyDelete
  13. These rates are alluded to as interbank rates and can be found in the stock trade segment of numerous national papers. This is the base rate most currency converters use.convert money online

    ReplyDelete
  14. Thanks for sharing,The quality of our notes is AAA+. Some features of our counterfeit banknotes include metallic ink and thread, micro-lettering, holographic strips and holograms, IR detection, watermarks, see through features, ultra-violet features and different serial numbers. These features contribute toward the making of 100% undetected notes.Counterfeit Money Online
    We make them in such a way that you can use them in areas such as ATM, casinos, banks, stores as well as money changers.
    contact us via
    Email: info@noveltydocumentationexpress.com

    Skype: Newdeal1920
    Whatsapp:+1 (469) 431-3023

    ReplyDelete
  15. With all these venture openings which one would it be a good idea for you to pick? South African brokerage firms

    ReplyDelete
  16. It would be interesting to join such an aggressive and real discussion with readers of this blog as well as readers of other blogs or websites who really thing that they can express more related to this topic.https://forexgo.co

    ReplyDelete
  17. If you meet Joeeun Ticket, the best reassurance company in Korea, you will feel comfortable and fast so that you can not trade with other companies. 소액결제현금화

    ReplyDelete
  18. Such large numbers of clients to handle lead to more audits to be done, lots of tasks, research, reports and even more calls from the clients to be attended to. backlinks

    ReplyDelete
  19. wow this saintly however ,I love your enter plus nice pics might be part personss negative love being defrent mind total poeple , 파워볼추천

    ReplyDelete
  20. I just thought it may be an idea to post incase anyone else was having problems researching but I am a little unsure if I am allowed to put names and addresses on here. 파워볼추천

    ReplyDelete
  21. I propose merely very good along with reputable data, consequently visualize it: 파워볼추천

    ReplyDelete
  22. Profit primarily prime quality items -- you can understand them all within: 파워볼추천

    ReplyDelete
  23. In this way, if your blog or site become well known, and you are getting a great many guests a week or a day, you can make an incredible pay doing basically nothing! make money online

    ReplyDelete
  24. Situs Pokerseleb Situs Poker Online Terpercaya dan IDN Poker Uang Asli siap melayani para pecinta judi online di Indonesia dalam pembuatan akun bermain IDN Poker, Capsa susun, Domino QQ, Ceme, Ceme keliling, Super 10 dan Omaha. Dengan Deposit 10 ribu dan 1 ID untuk semua permainan.

    ReplyDelete
  25. This is the concept of either working for money, or having your money work for you. But, you can do both until you've reached the point where you don't have to work for money, a.k.a. reaching financial independence.소액결제현금화

    ReplyDelete
  26. Pokerseleb agen Poker online dengan berbagai macam permainan sepeti ceme, ceme keliling, capsa susun, super10 dan lain- lain. jika anda ingin bermain di pokerseleb cukup bermodal 10 ribu rupiah saja untuk bermain di pokerseleb, dan anda juga bisa mendapatkan bonus dari bermain dan deposit.
    http://pokerganteng.com/situs-poker-online-terpercaya-di-indonesia-memberikan-bonus-berlimpah

    ReplyDelete
  27. As Spiritual Teachers offer their blessings, we occasionally notice some people's excuse for not letting it in is there's a cost. Some people's judgment is that it "should" be free. mihai1497

    ReplyDelete
  28. bermain game ceme online terbaik itu hanya di http://ariscool.com/bajupoker yang dimana memberikan banyak game online terbaik serta jackpot besar yang akan bisa kalian dapatkan.

    ReplyDelete