Evaluation of Kim Jong-un's Economic Policy in 2020
[Curret Issues & Policies] No. 2020-30 (December 2020)
Dr. YANG Un-Chul
Director of the Dept. of Unification Strategy Studies,
The Sejong Institute
The North Korean economy recorded negative growth of –3.9 percent in 2017 and –4.1 percent in 2018 due to economic sanctions imposed by the international community. Although it turned into a positive growth of 0.4 percent in 2019, it can be said that the North Korean economy in 2019 barely sustained its previous status with a fine improvement since the sharp decline of economy in 2017 and 2018. Due to the triple distress in 2020, North Korea’s export to China this year fell by about 73 percent compared to the previous year. The decline in trade has also resulted in heavy blow to state companies and the market.
In 2021, Kim Jong-un meets his 10th anniversary of inauguration. Although overall assessment of Kim Jong-un’s economic policy seems a little early, this article underlines some key points of economic policies during the past 10 years. In 2016, North Korea presented a five-year strategy for national economic development at the 6th Plenary Session of the 7th Central Committee of the Workers’ Party of Korea. At the time, Kim Jong-un emphasized the necessity to lay the foundation for the continuous development of national economy by revitalizing people’s economy as a whole and ensuring balance among economic sectors.
Kim Jong-un has continued to highlight self-reliance, self-strengthening first policy and localization in terms of North Korea’s economic management. Among actual policy practices, North Korea’s localization policy has been successful in some sectors such as defense industry, light industry and agriculture. Even the quality of North Korean goods has gradually improved through competition as the supply of local goods extended to the sectors of food and daily necessities. However, self-reliance strategy with the emphasis on localization is an economic development method based on the “market-centered management,” which greatly expands the autonomy of companies and collective farms. The reality is that many companies in North Korea are far from their normal operations; in fact, most companies in operation run with the Chinese investment on facility, materials and technology.
Kim Jong-un has not officially referred to the market but has been using market principles in his economic policies. His flagship economic policy, June 28 Policy, is similar to China’s reform and opening policies that aimed at improving agricultural productivity by introducing family farming. Furthermore, May 30 Measure provides North Korea’s state companies with a higher level of autonomy in determining product, price, wage and profit distribution. North Korea exercised strategies to maximize the use of available domestic resources and succeeded in attracting private capitals to several companies from “don-ju (emerging rich in North Korea).” It also promoted development of service sectors by self-devising and adopting new technologies. In fact, Kim Jong-un’s market-friendly policies and economic benefits from trade with China allowed North Korea to ease economic difficulties to certain extent.
So far, Kim Jong-un’s biggest economic achievement can be seen as the revitalization of market in his own way. However, a true marketization is completed when an individual’s property rights, scope of ownership and economic liberty are extended. In reality, North Korea has not practiced forward-looking economic policies to resolve its current economic difficulties. It has rather put forward a campaign to mobilize its people, such as “80 Days Battle,” which does not really help in improving the livelihood of people. As it is now, it is difficult for the North Korean economy to recover simply by presenting policies that lack reform and incentives.
▶ For a full article in Korean, please follow the link: http://www.sejong.org/boad/1/egoread.php?bd=2&itm=&txt=&pg=1&seq=5690
※ Translator’s note: This is a summarized unofficial translation of the original paper which was written in Korean. All references should be made to the original paper.
※ This article is written based on the author’s personal opinions and does not reflect the views of the Sejong Institute.