A REPORT ON

Economy of North Korea

Submitted to
INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)
CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
(CHARUSAT)
CHANGA

Prepared by
Aesha B. Patel (14BBA019)
Ami V. Patel (14BBA020)
Archita A. Patel (14BBA021)
Janki H. Patel (14BBA028)

Dual Degree B.B.A +M.B.A Programme, Semester-IV

Under the Guidance of

Mr Rajendra Solanki
Assistant Professor
I2IM, CHARUSAT

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
(CHARUSAT)
AT. & PO. CHANGA 388 421 TA: PETLAD DIST. ANAND, GUJARAT

FEBRUARY 2017

1
 Table of Contents
Background:..........................................................................................................................................3
Geography.............................................................................................................................................4
Demographics........................................................................................................................................7
Government.........................................................................................................................................11
Economy for North Korea...................................................................................................................14
Transport in North Korea.....................................................................................................................17
Health Status in North Korea...............................................................................................................19

2
Background:
An independent kingdom for much of its long history, Korea was occupied by Japan
beginning in 1905 following the Russo-Japanese War. Five years later, Japan formally
annexed the entire peninsula. Following World War II, Korea was split with the northern half
coming under Soviet-sponsored communist control. After failing in the Korean War (1950-
53) to conquer the US-backed Republic of Korea (ROK) in the southern portion by force,
North Korea (DPRK), under its founder President KIM Il Sung, adopted a policy of
ostensible diplomatic and economic "self-reliance" as a check against outside influence. The
DPRK demonized the US as the ultimate threat to its social system through state-funded
propaganda, and molded political, economic, and military policies around the core
ideological objective of eventual unification of Korea under Pyongyang's control. KIM Il
Sung's son, KIM Jong Il, was officially designated as his father's successor in 1980, assuming
a growing political and managerial role until the elder KIM's death in 1994. KIM Jong Un
was publicly unveiled as his father's successor in 2010. Following KIM Jong Il's death in
2011, KIM Jong Un quickly assumed power and has now taken on most of his father's former
titles and duties. After decades of economic mismanagement and resource misallocation, the
DPRK since the mid-1990s has relied heavily on international aid to feed its population. The
DPRK began to ease restrictions to allow semi-private markets, starting in 2002, but then
sought to roll back the scale of economic reforms in 2005 and 2009. North Korea's history of
regional military provocations; proliferation of military-related items; long-range missile
development; WMD programs including tests of nuclear devices in 2006, 2009, 2013, and
2016; and massive conventional armed forces are of major concern to the international
community. The regime in 2013 announced a new policy calling for the simultaneous
development of its nuclear weapons program and its economy.

3
Geography

Location Eastern Asia, northern half of the Korean Peninsula bordering

the Korea Bay and the Sea of Japan, between China and South
Korea

Geographic 40 00 N, 127 00 E
coordinates

Map references Asia

Area total: 120,538 sq km

land: 120,408 sq km
water: 130 sq km

Area slightly larger than Virginia; slightly smaller than Mississippi

comparative

Land boundaries total: 1,607 km

border countries (3): China 1,352 km, South Korea 237 km,
Russia 18 km

Coastline 2,495 km

Maritime claims territorial sea: 12 nm

exclusive economic zone: 200 nm
note: military boundary line 50 nm in the Sea of Japan and the
exclusive economic zone limit in the Yellow Sea where all
foreign vessels and aircraft without permission are banned

Climate temperate, with rainfall concentrated in summer; long, bitter

winters

Terrain mostly hills and mountains separated by deep, narrow valleys;

4
 wide coastal plains in west, discontinuous in east

Elevation mean elevation: 600 m

extremes elevation extremes: lowest point: Sea of Japan 0 m
highest point: Paektu-san 2,744 m

Natural resources coal, lead, tungsten, zinc, graphite, magnesite, iron ore, copper,
gold, pyrites, salt, fluorspar, hydropower

Land use agricultural land: 21.8%

arable land 19.5%; permanent crops 1.9%; permanent pasture
0.4%
forest: 46%
other: 32.2% (2011 est.)

Irrigated land 14,600 sq km (2012)

Natural hazards late spring droughts often followed by severe flooding;

occasional typhoons during the early fall
volcanism: Changbaishan (elev. 2,744 m) (also known as
Baitoushan, Baegdu or P'aektu-san), on the Chinese border, is
considered historically active

Environment - water pollution; inadequate supplies of potable water;

current issues waterborne disease; deforestation; soil erosion and degradation

Environment - party to: Antarctic Treaty, Biodiversity, Climate Change,

international Climate Change-Kyoto Protocol, Desertification, Environmental
agreements Modification, Hazardous Wastes, Ozone Layer Protection, Ship
Pollution
signed, but not ratified: Law of the Sea

Geography - note strategic location bordering China, South Korea, and Russia;

5
mountainous interior is isolated and sparsely populated

6
Demographics

Population 25,115,311 (July 2016 est.)

Age structure 0-14 years: 20.97% (male 2,678,638/female 2,588,744)

15-24 years: 15.88% (male 2,009,360/female 1,977,942)
25-54 years: 44.22% (male 5,567,682/female 5,537,077)
55-64 years: 9.19% (male 1,090,739/female 1,218,406)
65 years and over: 9.74% (male 840,003/female 1,606,720)
(2016 est.)

Median age total: 33.8 years

male: 32.3 years
female: 35.4 years (2016 est.)

Population growth rate 0.53% (2016 est.)

Birth rate 14.6 births/1,000 population (2016 est.)

Death rate 9.3 deaths/1,000 population (2016 est.)

Net migration rate 0 migrant(s)/1,000 population (2016 est.)

Sex ratio at birth: 1.05 male(s)/female

0-14 years: 1.03 male(s)/female
15-24 years: 1.02 male(s)/female
25-54 years: 1.01 male(s)/female
55-64 years: 0.9 male(s)/female
65 years and over: 0.53 male(s)/female
total population: 0.52 male(s)/female (2016 est.)

Infant mortality rate total: 22.9 deaths/1,000 live births

male: 25.4 deaths/1,000 live births
female: 20.2 deaths/1,000 live births (2016 est.)

7
Life expectancy at total population: 70.4 years
birth male: 66.6 years
female: 74.5 years (2016 est.)

Total fertility rate 1.96 children born/woman (2016 est.)

HIV/AIDS - adult NA
prevalence rate

Nationality Korean(s)
adjective: Korean

Ethnic groups racially homogeneous; there is a small Chinese community

and a few ethnic Japanese

Religions traditionally Buddhist and Confucianist, some Christian and

syncretic Chondogyo (Religion of the Heavenly Way)
note: autonomous religious activities now almost
nonexistent; government-sponsored religious groups exist
to provide illusion of religious freedom

HIV/AIDS - deaths NA

Languages Korean

Literacy definition: age 15 and over can read and write

total population: 100%
male: 100%
female: 100% (2015 est.)

Education expenditures NA

Urbanization urban population: 60.9% of total population (2015)

rate of urbanization: 0.75% annual rate of change (2010-15

8
 est.)

Drinking water source improved:

urban: 99.9% of population
rural: 99.4% of population
total: 99.7% of population
unimproved:
urban: 0.1% of population
rural: 0.6% of population
total: 0.3% of population (2015 est.)

Sanitation facility improved:

access urban: 87.9% of population
rural: 72.5% of population
total: 81.9% of population
unimproved:
urban: 12.1% of population
rural: 27.5% of population
total: 18.1% of population (2015 est.)

Major cities - PYONGYANG (capital) 2.863 million (2015)

population

Maternal mortality rate 82 deaths/100,000 live births (2015 est.)

Children under the age 15.2% (2012)

of 5 years underweight

Hospital bed density 13.2 beds/1,000 population (2012)

Obesity - adult 2.5% (2014)

prevalence rate

9
Contraceptive 70.6%
prevalence rate note: percent of women aged 20-49 (2010)

Dependency ratios total dependency ratio: 44.3%

youth dependency ratio: 30.5%
elderly dependency ratio: 13.8%
potential support ratio: 7.3% (2015 est.)

10
Government

Country name conventional long form: Democratic People's Republic

of Korea
conventional short form: North Korea
local long form: Choson-minjujuui-inmin-konghwaguk
local short form: Choson
abbreviation: DPRK
etymology: derived from the Chinese name for Goryeo,
which was the Korean dynasty that united the peninsula in
the 10th century A.D.; the North Korean name "Choson"
means "[land of the] morning calm"
Government type communist state

Capital Pyongyang
geographic coordinates: 39 01 N, 125 45 E
time difference: UTC+8.5 (13.5 hours ahead of
Washington, DC, during Standard Time)
note: on 15 August 2015, North Korea reverted to
UTC+8.5, a time zone that had been observed during pre-
colonial times
Administrative 9 provinces (do, singular and plural) and 2 municipalities
divisions (si, singular and plural)
provinces: Chagang-do ss(Chagang), Hamgyong-bukto
(North Hamgyong), Hamgyong-namdo (South Hamgyong),
Hwanghae-bukto (North Hwanghae), Hwanghae-namdo
(South Hwanghae), Kangwon-do (Kangwon), P'yongan-
bukto (North Pyongan), P'yongan-namdo (South Pyongan),
Yanggang-do (Yanggang)
cities: Nason-si, P'yongyang-si (Pyongyang)
note: Nason-si is sometimes designated as a special city
and P'yongyang-si as a capital city

11
Independence 15 August 1945 (from Japan)

National holiday Founding of the Democratic People's Republic of Korea (DPRK), 9

September (1948)

Legal system civil law system based on the Prussian model; system
influenced by Japanese traditions and Communist legal
theory

12
Political Parties and elections

According to the Constitution of North Korea, the country is a democratic republic and
the Supreme People's Assembly (SPA) and Provincial People's Assemblies (PPA) are elected
by direct universal suffrage and secret ballot. Suffrage is guaranteed to all citizens aged 17
and over.[9] In reality, elections in North Korea are non-competitive and feature single-
candidate races only. Those who want to vote against the sole candidate on the ballot must go
to a special booth - without secrecy - to cross out the candidate's name before dropping it into
the ballot boxan act which, according to many North Korean defectors, is far too risky to
even contemplate.

All elected candidates are members of the Democratic Front for the Reunification of the
Fatherland (DFRF), a popular front dominated by the ruling Workers' Party of Korea (WPK).
The two minor parties in the coalition are the Chondoist Chongu Party and the Korean Social
Democratic Party; they also have a few elected officials. The WPK exercises direct control
over the candidates selected for election by members of the other two parties.

The Economist Intelligence Unit, while admitting that "there is no consensus on how to
measure democracy" and that "definitions of democracy are contested," lists North Korea as
the most authoritarian regime in its index of democracy assessing 167 countries.

Political ideology
Originally a close ally of Stalin's USSR, North Korea has increasingly emphasized Juche, an
ideology of socialist self-reliance, rather than MarxismLeninism. Juche was enshrined as the

13
official ideology when the country adopted a new constitution in 1972. In 2009, the
constitution was amended again, quietly removing the brief references
to communism (Chosn'gl: ). However, North Korea continues to see itself as part
of a worldwide leftist movement. The Workers' Party maintains a relationship with other
leftist parties, sending a delegation to the International Meeting of Communist and Workers'
Parties. North Korea has a strong relationship with Cuba; in 2016, the North Korean
government declared three days of mourning period for Fidel Castro's death.

Economy for North Korea

Overview

North Korea, one of the world's most centrally directed and least open economies, faces
chronic economic problems. Industrial capital stock is nearly beyond repair as a result of
years of underinvestment, shortages of spare parts, and poor maintenance. Large-scale
military spending draws off resources needed for investment and civilian consumption.
Industrial and power outputs have stagnated for years at a fraction of pre-1990 levels.
Frequent weather-related crop failures aggravated chronic food shortages caused by on-going
systemic problems, including a lack of arable land, collective farming practices, poor soil
quality, insufficient fertilization, and persistent shortages of tractors and fuel.

The mid 1990s were marked by severe famine and widespread starvation. Significant food
aid was provided by the international community through 2009. Since that time, food
assistance has declined significantly. In the last few years, domestic corn and rice production
has been somewhat better, although domestic production does not fully satisfy demand. A
large portion of the population continues to suffer from prolonged malnutrition and poor
living conditions. Since 2002, the government has allowed informal markets to begin selling
a wider range of goods. It also implemented changes in the management process of
communal farms in an effort to boost agricultural output.

In December 2009, North Korea carried out a redenomination of its currency, capping the
amount of North Korean won that could be exchanged for the new notes, and limiting the
exchange to a one-week window. A concurrent crackdown on markets and foreign currency
use yielded severe shortages and inflation, forcing Pyongyang to ease the restrictions by
February 2010. In response to the sinking of the South Korean warship Cheonan and the

14
shelling of Yeonpyeong Island in 2010, South Koreas government cut off most aid, trade,
and bilateral cooperation activities, with the exception of operations at the Kaesong Industrial
Complex. North Korea continued efforts to develop special economic zones and expressed
willingness to permit construction of a trilateral gas pipeline that would carry Russian natural
gas to South Korea. North Korea is also working with Russia to refurbish North Koreas
dilapidated rail network and jointly rebuilt a link between a North Korean port in the Rason
Special Economic Zone and the Russian rail network.

The North Korean government continues to stress its goal of improving the overall standard
of living, but has taken few steps to make that goal a reality for its populace. In 2013-14, the
regime rolled out 20 new economic development zones - now totaling 25 - set up for foreign
investors, although the initiative remains in its infancy. Firm political control remains the
governments overriding concern, which likely will inhibit changes to North Koreas current
economic system.

Economy of North Korea

15
 Currency North Korean won

Fiscal year Calendar year

Statistics

GDP ~ 40 billion

GDP rank 125th (nominal) / 96th (PPP)

GDP growth 1.0% (2014 est.)

GDP per capita $1,800 (2011 est.)

GDP by sector mining and industry 34.4%, services 31.3%, agriculture and
fisheries 21.8%, construction 8.2%, utilities 4.3%. (2014 est.)[2]

Main Military products, mining (coal, iron ore, limestone, magnesite,

industries graphite, copper, zinc, lead, and precious metals), metallurgy,
textiles, food processing.

External

Exports $3.954 billion (2012)

Export goods Minerals, metallurgical products, manufactures (including

armaments), textiles, agricultural and fishery products, coal, iron
ore, limestone, graphite, copper, zinc, and lead.

Main export China 63%

partners
South Korea 27%

Imports $4.83 billion (2012 est.)

Import goods Petroleum, coking coal, machinery and equipment, textiles, and
grain

Main import China 68.0%

partners
South Korea 22.0%

Gross external $20 billion (2011 est)

debt

Public finances

Revenues $2.88 billion

Expenses $2.98 billion

Size of North Korean economy

16
Estimating gross national product in North Korea is a difficult task because of a dearth of
economic data and the problem of choosing an appropriate rate of exchange for the North
Korean won, the nonconvertible North Korean currency. The South Korean government's
estimate placed North Korea's GNP in 1991 at US$22.9 billion, or US$1,038 per capita. In
contrast, South Korea posted US$237.9 billion of GNP and a per capita income of US$5,569
in 1991. North Korea's GNP in 1991 showed a 5.2% decline from 1989, and preliminary
indications were that the decline would continue. South Korea's GNP, by contrast, expanded
by 9.3% and 8.4%, respectively, in 1990 and 1991.

It is estimated that North Korea's GNP nearly halved between 1990 and 1999. North Korean
annual budget reports suggest state income roughly tripled between 2000 and 2014. By about
2010 external trade had returned to 1990 levels.

In 2014, the Seoul-based Bank of Korea estimated that the real GDP of North Korea in 2014
was 31,161 billion South Korean won. The same year, it published the following estimates of
North Korea's GDP growth:

Transport in North Korea

Transport in North Korea is constrained by economic problems and government restrictions.

Public transport predominates, and most of it is electrified.

Restrictions on freedom of moment.

Travel to North Korea is tightly controlled. The standard route to and from North Korea is by
plane or train via Beijing, China. Transport directly to and from South Korea was possible on
a limited scale from 2003 until 2008, when a road was opened (bus tours, no private
cars). Freedom of movement in North Korea is also limited,[1] as citizens are not allowed to
move around freely inside their country.

Public transportation

There is a mix of locally built and imported trolleybuses and trams in the major urban centres
of North Korea. Earlier fleets were obtained from Europe and China.

17
Railways

The Korean State Railway is the only rail operator in North Korea. It has a network of over
6000 km of standard gauge and 400 km of narrow gauge (762 mm) lines; as of 2007, over
5400 km of the standard gauge (well over 80%), along with 295.5 km of the narrow gauge
lines are electrified. The narrow gauge segment runs in the Haeju peninsula.

Because of lack of maintenance on the rail infrastructure and vehicles, the travel time by rail
is increasing. It has been reported that the 190 km (120 mi) trip from Pyongyang
to Kaesong can take up to 6 hours.

Water Transportation

Water transport on the major rivers and along the coasts plays a growing role in freight and
passenger traffic. Except for the Yalu and Taedong rivers, most of the inland waterways,
totalling 2,250 kilometers, are navigable only by small boats. Coastal traffic is heaviest on the
eastern seaboard, whose deeper waters can accommodate larger vessels. The
major ports are Nampho on the west coast and Rajin, Chongjin, Wonsan, and Hamhung on
the east coast. The country's harbour loading capacity in the 1990s was estimated at almost 35
million tons a year. There is a continuing investment in upgrading and expanding port
facilities, developing transportationparticularly on the Taedong Riverand increasing the
share of international cargo by domestic vessels.

Air Transport

North Korea's international air connections are limited in frequency and numbers. As of 2011,
scheduled flights operate only from Pyongyang's Pyongyang Sunan International
Airport to Beijing, Dalian, Shenyang, Shanghai, Bangkok, Kuala, Lumpur, Singapore,
Moscow, Khabarovsk, Vladivostok and Kuwait International Airport. Charters to other
destinations operate as per demand. Prior to 1995 many routes to Eastern Europe were
operated including services to Sofia, Belgrade, Prague, and Budapest along with others.

18
Health Status in North Korea

Life expectancy

North Korea has a life expectancy of 69.7 years (in 2014). The 2009 gender breakdown was
72.8 years life expectancy for females and 64.9 for males.

Non-communicable diseases
Further information: Smoking in North Korea

Cardiovascular disease as a single disease group is the largest cause of death in North Korea
(2013). The three major causes of death in DPR Korea are ischaemic heart
disease (13%), lower respiratory infections (11%) and cerebrovascular disease (7%).

Non-communicable diseases risk factors in North Korea include high rates of urbanisation, an
aging society, high rates of smoking and alcohol consumption amongst men.

19
HIV/AIDS
Main article: HIV/AIDS in North Korea

WHO estimates that North Korea has less than 100 people with HIV/AIDS.[According
to UNAIDS, less than 0.2% of North Korea's adult population has HIV.Officially, the country
maintains that it is completely free of AIDS.

20