Besieged by international sanctions, the recently-nuclear North Korea is enjoying an unexpected economic boom. In 2016, the regime touted a GDP growth rate of 3.9%, the tallest spike since 1999. Now a 3.9% may not be much to brag about and with its tiny economy, such growth would hardly be unattainable. However, as many may have overlooked, it is precisely because of its tiny economy that any growth would trickle down with greater speed and larger beads to the general public.
The question now is: How did North Korea do it?
From published numbers, its greatest source of revenue comes from the coal and manufacturing industries (with clothing being its most successful export). China has always been its largest trading partner: by 2016, it accounted for 92.5% of North Korea’s trade. Although it suffered a huge blow with China’s ban on North Korea coal import, bilateral trade between the two still shows significant growth.
The problem with numbers is that North Korea’s fabled opacity meant that few from the outside world would have any clear indicators of its economic performance (even the 3.9% growth was an estimation made by the Bank of Korea). And even these numbers do not account for its bustling black market economy (before his assassination, Kim Jong-nam was rumored to be the underground minister of finance and was in charge of the regime’s less legitimate economic activities overseas).
Arms-trading, for instance, may be one of the most well-developed industry in North Korea, with its missiles testings being one giant marketing campaign. Another potential (or already is) source of revenue would be its hackers. According to intelligence agencies and information security companies, North Korean hackers were specialized in attacking foreign banks, financial institutes, and even government servers. With little to no cost, corporate blackmail and espionage can be a very lucrative trade.
Though closed off from the rest of the world, North Korea reaped a huge sum of foreign capital by exporting its cheap labor. These men and women were shipped to manufactories and warehouses overseas and toiled with low pay (even more so as a sizable chunk were turned over to the state) and long working hours. The magnitude and severity of their exploitation are not unlike Russian serfs. Ironically, international sanctions meant that it is illegal to hire North Korean nationals, and as illicit workers, their wage and welfare were unprotected by neither labor laws or unions, making them a prime target of sweatshops.
With little diplomacy to tend to, North Korean embassies were bases of economic operation abroad. According to news outlets and defectors, ambassadors often doubled as heads of smuggling rings, from items as mundane as beef, alcohol and expensive cars, to drugs and counterfeit bills. With their diplomatic immunity, these ambassadors were literally above the law and can even fall behind on rent when necessary. Their embassies catered to weddings, parties, banquets and even business conferences. In other words, they go to any lengths to keep themselves afloat.
Autocracy aside, Kim Jong-un was keen on economic reforms to share the ‘fruits of prosperity’ with his people. Long sealed off from the rest of the world, any minute progress or gesture of goodwill may be enough to purchase the people’s complacency.
Despite his jingoist stance, Kim was more open to market liberalism. Ever since his inauguration, small businesses and self-employment were on the rise, even convenience stores, a symbol of modern capitalism, sprouted in urban areas. Ten years ago, tourists entering the country would have find phone being confiscated to prevent anyone in engaging ‘highly technological communications’. Now, 10% of the nation enjoys the luxury of a cell phone. The ‘Arirang‘, a smartphone developed in North Korea, was seen by some as superior in quality than those made in China and was a staple engagement gift among the youth. With a certain degree of ‘intranet’ proliferation, online shopping also became a new fad among well-off North Koreans, driving up domestic sales of gourmet groceries and electrical appliances.
Between the fear of losing whatever scrap of welfare they had just been granted and the desire for greater change, the latter is often ruminated but seldom acted upon.
On top of that, there were some noticeable improvements in the nation’s infrastructure as well. At the eve of 2016, the first batch of local-developed metro-carriages was put into service, replacing the hand me downs from East Germany. Stepping into its shiny cabin from the marbled platform felt like leaping into a few decades. Under the shadow of nuclear destruction, skyscrapers mushroomed thanks to growing small businesses and contractors. Tallest of them all, the Ryugyong Hotel, has also reportedly resumed construction in recent months to signify Kim Jong-un’s eclipse of his forefathers. Speaking of family values, the supreme leader also took a fondness for amusement parks and clips of him trying out the rides were looped on televisions. Now, bumper cars, condo towers, and even 3D cinemas became popular pastimes for North Korean urbanites.
Meanwhile, adventurous vacationers trickled into the closed nation for the exotic taste of police state despite the arrest and death of Otto Warmbier. Recent success with the Pyongyang marathon, for instance, bolstered the government’s confidence with its hospitality and the country expected to receive 2 million tourists by 2020.
Naturally, both its growth rate and economic reforms were mostly inflated. After all, the average annual income of a North Korea hung at $1342USD, less than 5% of their southern counterpart. Not only the ‘growth’ we have bragged about was relative to its basis, most infrastructural improvements were limited in Pyongyang. In other words, much like most dystopian novels, those in the capital lives in a world beyond other parts of the nation.
Such disparity, however, may come in handy to solidify the regime’s legitimacy rather than boiling into a hunger game-esque revolution. Limited improvements in living standards coupled with tightly controlled information allow more to feel a sense of vested interest. Such is the human condition: between the fear of losing whatever scrap of welfare they had just been granted and the desire for greater change, the latter is often ruminated but seldom acted upon.