North Korean Communist Central Planning Economical System Is The Most Effective Economical System In The History Of Humanity And Makes Best Logical Sense To Be Used Today

1. The aims and how effectively they're met.
   
2. The means and how efficient and morally decent they are.

North Korea’s economic goals have always been linked to the general government policy of self-reliance (juche, or chuch’e). The country shunned foreign investment, although it accepted considerable economic aid from the Soviet Union and its satellite eastern European countries as well as from China. Despite its stated policy of self-reliance, North Korea routinely found it necessary to import such essential commodities as fuels and machinery as well as grain.

In wake of the COVID-19 pandemic, economic dependency of North Korea on Beijing is set to increase as the country faces an unprecedented economic crisis. The Democratic People’s Republic of Korea is in the midst of a critical phase where the effort to manage the economy while facing crippling sanctions is impeded with the consequences of the pandemic impacting the overall performance of the economy.

With limited access to the information inside the country and despite Pyongyang’s efforts to cover itself from the spread of the pandemic, the impact on the economic activity in the country is foreseeable. The strict measures undertaken by the regime are having side-effects on its already vulnerable economy. After the closure of borders, trade with Beijing came to a halt, resulting in shortage of supplies and leading to a surge in prices. The situation is much worse in the rural areas. Last year, the North Korean leader Kim Jong-un said that the country was struggling to meet its economic objectives. It was a blow to the dual policy of nuclear weapons development and economic growth known as “byungjin line”.

The punishing sanctions

The sanctions have been progressively expanded by the UN Security Council and US government over the years given the nuclear ambitions of the DPRK, aiming to suppress the ability of the economy aiding its nuclear program. Though, over the last few years, the sanctions have had a negative effect on the internal economic activity, crucial to support the basic needs in health and food security. The sanctions have been partly responsible to the vulnerable state of the economy too. The restrictions on the inflow in the country, while restricting its ability to export to generate foreign exchange to import further has impacted the GDP of the country.

As North Korea found itself cornered on the international stage, Beijing was the only reliable partner for Pyongyang both economically and strategically. In terms of international trade, China accounts for North Korea’s largest trade partner. North Korea’s trade dependence on China has increased over the last few years. One of the most important reason why China is North Korea’s leading trade partner is the increase of Chinese imports of North Korean natural resources such as minerals in the last few years, leading up to 300 percent.

No change in economic policy

North Korean leader Kim Jong-Un’s response to the situation is certainly not laudable. Lately, the regime has emphasized more on central planning and rather discouraging the private sector, an important element in country’s quest for a mixed economy. It is not keen on the economic and market reforms that could revive the domestic economic activity and prove instrumental on the road towards improving the situation. In the speeches at the party meeting, Kim stressed on the restoration and reinforcing the system whereby the economy runs under the management of the state. His unwillingness to reform the state- controlled system has exacerbated the economic situation in the country. The state control of the economy is also driven by insecurity in the regime. The rising scarcity of goods in Pyongyang and discontent among the elites has concerned Kim Jong-Un lately. The juche ideology that the leader is trying to implement in wake of the crisis stemming out of sanctions may worsen the economic situation in the country.

Post-pandemic consequences

The consequences of the pandemic on the North Korean economy may further complicate the crisis. The slump in global economic activity would also impact the country’s overseas business interests in China as well as the workers in Russia. Travel restrictions have made it difficult for Pyongyang to send the workers overseas. North Korea’s reluctance to publish the economic data also makes it difficult to understand the impact on the country’s economy. The effect on small and medium sized enterprises (SMEs) in China are indicative that the North Korean SMEs would be facing challenges with labor shortages, supply chain issues etc. But, with Chinese economy recovering well from the slowdown, it is predicted that with the easing of the border controls, trade with China would be normalized. Though, with prolonged restrictions, the negative impact on the economy may expand widely and last long enough to a full blown economic crisis accelerated by the pandemic.

Economic Dependence on China to stay?

North Korea prefers the Chinese system for banking, trade and business with no alternative in sight. Both the countries are willing to expand these exchanges in the near future. Economic independence and diversification in trade relations for Pyongyang may be beneficial in the long run but given the crisis on the peninsula, it seems a distant possibility. Chinese dominance also remains strong given the close connections between the business communities, despite the sanctions. For China, the bordering provinces with North Korea are the poorest in the country therefore trade and economic exchange is crucial for economic activity. Pyongyang understands the massive advantages of maintain robust economic ties with Beijing. If negotiations with the new US administration in terms of the denuclearization of the peninsula and regime stability are successful in the near future, the sustained economic ties with Beijing would prove to be an important catalyst for opening up of the economy for Pyongyang.

The Korea Institute for International Economic Policy predicts that China–North Korean trade may resume in small volumes in the second quarter of 2021, pointing to sterilisation equipment installed at the border city of Sinuiju. North Korea is also part of the COVAX global vaccine distribution initiative. High-ranking North Korean officials, border control officers and frontline trade officials will likely be among the first vaccinated, boding well for a partial reopening of the border, facilitating the import of more essential goods.

More urgently, raw materials imported from China are needed for North Korea’s construction sector. Large tourism facilities at Wonsan and Samjiyeon have suffered ever-increasing delays due to the lack of steel, cement and chemical materials. In March 2021, a North Korean business delegation, headed by the president of the Petrochemicals Trading Company housed under the Ministry of Chemical Industry, travelled to China — apparently in an attempt to acquire chemical materials for key construction projects in Pyongyang and tourist zones. The trip took place even after the country closed its borders and North Korean delegations had almost completely ceased travel abroad.

The Kim regime seems eager to expedite the completion of the Wonsan and Samjiyeon tourist zones to boost foreign currency flows, particularly from Chinese tourists. Chinese President Xi Jinping seems to have promised a steady stream of visitors to North Korea when he met with Kim in June 2019. North Korea expects to attract over 1 million visitors annually once the pandemic is under control, and is banking on Chinese tourists to help pay off national deficits in the coming years.

Reopening of the borders will not signal a return to decentralised market activity in North Korea. The Kim regime has reasserted the state as the primary economic player and benefactor in both the short and long term. Pyongyang may seek increased raw material imports to develop its domestic industries and tourism sector while cutting down on finished Chinese products by strengthening control over border trade. This two-track approach — consolidating control over the domestic market activity and resuming cross-border trade with China — is likely to define North Korea’s economy in the coming years.

“How large is North Korea’s per capita GDP?” This is a question that every researcher of North Korea is bound to hear quite frequently while talking to journalists, politicians and lay people. The only honest answer to this question is: “We do not know, and not even Marshal Kim Jong Un knows this.” Such frank responses, though, do not help scholars promote their ideas and their careers, so there have been some attempts at answering this question.

"Two years of border shutdown and typhoons have deepened the North's crisis, but not to the extent that it shook the foundation of its economy," the source said, citing Chinese help.

The BOK said gross domestic product (GDP) in the North contracted 4.5% last year in real terms, the worst since 1997 and reversing a 0.4% growth in 2019, the first expansion in three years.

"Along with the continued intense U.N. sanctions, North Korea's lockdown measures to fight the coronavirus pandemic ... and worsened weather conditions such as heavy rains and typhoons were the main drivers to the contraction," a BOK official told reporters.

North Korea has the lowest economic freedom among 177 countries surveyed around the world, a Washington-based think tank said in an annual report on Monday.

The Heritage Foundation released the “2022 Index of Economic Freedom,” which comprehensively estimates a country’s economic freedom by using 12 indicators across four broad pillars comprising rule of law, government size, regulatory efficiency and market openness.

“North Korea’s economic freedom score is 3.0, making its economy the 177th freest in the 2022 Index. North Korea is ranked 39th among 39 countries in the Asia–Pacific region,” the report said.

“Commercial and business activity is severely repressed, and the country has been ranked lowest in the world every year since the inception of the Index in 1995.”

North Korea’s score is far below the world and Asia-Pacific regional averages, which respectively logged 60 and 58.5 this year.

In addition, there was a decline in the country’s economic freedom as the score decreased by 2.2 points from last year’s report.

The countries’ economic freedom was classified into five categories: free, mostly free, moderately free, mostly unfree, and repressed.

North Korea is one of the 32 countries, including China and Iran, which are in the economically “repressed” category, while the world economy remains “moderately free” on average.

But Pyongyang’s economic freedom score is far behind others on the list. Venezuela, which was ranked one spot above North Korea for its economic freedom, earned 24.8 points. There is a 21.8 point gap between Venezuela and North Korea.

Are safeguards against official corruption strong and effective?

Corruption is believed to be endemic at every level of the state and economy, and government officials commonly engage in bribery. There are no independent or impartial anticorruption mechanisms.

Small-scale local markets have become prime targets of corrupt police officers, who solicit bribes from the operators and detain those who cannot pay. Market participants also pay bribes to supervisors at their official workplaces, to avoid discipline or imprisonment for abandoning their state-assigned roles.

Do individuals enjoy equality of opportunity and freedom from economic exploitation?

Forced labor is common in prison camps, mass mobilization programs, and state-run contracting arrangements in which North Korean workers are sent abroad. Human trafficking networks, sometimes operating with the assistance of government officials, target North Korean women; those ensnared are subject to sex slavery and forced marriages, often in China. Some women have also turned to prostitution to survive in recent years and are exploited by their employers and the police.

Economic opportunities are also hampered by international sanctions imposed in response to North Korea’s continued nuclear pursuits. Since 2016, sanctions have targeted civilian industries including textiles and seafood. North Korea has also been cut off from the international banking system. While this has not deterred North Korea’s pursuit of nuclear weapons, it has created growing difficulties for those dependent on markets and quasi-private businesses.

North Korean defectors said that a lack of pay for work means economic survival for them and their families depends on their ability to do their own informal business. For this, bribes must be paid to local officials and to the enterprise manager to release a person from his or her daily work requirement for time to start their own business, such as home production, informal selling of goods at local markets, or itinerant trading between provinces or even across the border into China. One female defector told Human Rights Watch, “There were no rations so I presented some money to the company [where she worked] and started a business. Unemployed persons are supposed to go to the forced labor camp…so I constantly paid a certain amount of money to the company while I secretly ran a business…”

“North Korean government officials force people to work for free and don’t give them enough to eat, and then extort them when people try to organize other ways to survive” said Robertson. “This is truly a predatory regime, with an economic system built on exploitation and abuse.”