Economy

Overview

North Korea has a command economy that is one of the most isolated and least developed in the world. It is one of the last centrally planned economies on the planet. The state owns virtually all means of production, and economic output is directed by government plans (though in recent decades, an unofficial market segment has emerged).

Reliable economic data is scarce, as North Korea does not publish detailed statistics. However, outside estimates put its GDP (PPP) in the few tens of billions of USD – around $40 billion as of the mid-2010s (roughly $1,700 per capita). This would rank North Korea among the poorest countries in Asia. By comparison, South Korea's economy is over 50 times larger. The DPRK's economy has faced chronic stagnation and periodic crises, with severe food shortages since the 1990s.

Structure and Industries

Key sectors of North Korea's economy include industry (especially heavy industry and military production), mining, agriculture, and some services. Under Kim Il-sung, the DPRK built up significant industrial capacity in steel, machinery, chemicals, and textiles (often with Soviet or Chinese help).

Mining

North Korea mines substantial natural resources – including coal, iron ore, magnesite, zinc, copper, and other minerals – but lacks the capital to fully exploit them. The industrial sector is now largely antiquated; factories operate well below capacity due to power shortages and lack of raw materials.

Military Industries

Military industries (arms manufacturing) continue to be prioritized; North Korea is known to produce small arms, artillery, tanks, submarines, and missiles for its own military and for limited export. Civilian manufacturing includes some textiles, footwear, and food processing, often for domestic consumption or export to China.

Agriculture

Agriculture remains crucial as North Korea aims for food self-sufficiency, but only about 20% of the land is arable. Farmlands are concentrated in flat areas in the west and some eastern plains. The country's staple crops are rice, corn (maize), potatoes, wheat, and soybeans, along with vegetables and fruits.

Farming is largely collectivized; however, since the 1990s, some farmers' markets and private plot cultivation have been tacitly allowed to boost food production. North Korea's terrain and climate (harsh winters, summer floods) make agriculture challenging, and the nation chronically falls short of food requirements. In recent years, even with improved harvests, the country has a substantial "food gap" – for example, in 2022 it was estimated that North Korea was short by about 860,000 tons of grain (2–3 months' supply) without foreign aid. As a result, malnutrition is persistent, and the average diet lacks diversity.

Economic Policy and Reforms

The DPRK's economy is state-planned, with "directives" guiding production targets. However, after the 1990s famine, informal markets (jangmadang) spread, and the government tolerated limited private trading. In 2002, North Korea introduced tentative economic reforms – allowing some market pricing, semi-legal farmers' markets, and special enterprise zones – but these were small steps.

In the 2010s, under Kim Jong-un, there were new economic development plans, and some sectors like construction saw activity (e.g. building showcase high-rises in Pyongyang). Special Economic Zones were set up to attract foreign investment (e.g. the Rason free trade zone in the northeast, or Kaesong Industrial Complex with South Korea, which operated from 2004 until its 2016 closure). Overall, these efforts failed to meet their targets for growth and industrial output.

By the late 2010s, growth had stalled and even reversed under tightened sanctions and COVID border closures. Kim Jong-un has emphasized central control and "self-reliant" development rather than true market liberalization.

Trade and Sanctions

North Korea's foreign trade is very limited. Its main trading partner by far is China, which accounts for over 90% of North Korea's reported trade volume. China imports minerals, seafood, textiles, and low-end manufactured goods from North Korea, and exports food, fuel, machinery, and consumer goods to North Korea.

Other trading partners have included Russia and a few countries in Southeast Asia or Africa, but UN sanctions in recent years have severely restricted what North Korea can export or import legally. For example, coal, iron, seafood, textiles – once major export earners – have been banned under UN resolutions. As of 2019, Chinese customs data showed North Korean exports plunging to a few hundred million dollars, while imports (mostly from China) were on the order of $2–3 billion. This lop-sided trade and sanctions pressure create constant hard currency shortages in the North.

Illicit Economic Activities

To earn foreign currency, North Korea engages in various illicit or semi-legal enterprises. These reportedly include:

• Export of labor: Tens of thousands of North Korean workers have been sent abroad to China, Russia, and elsewhere, to earn money for the state, though UN resolutions called for repatriating many of them.
• Illicit trading: Weapons, cybercrime (state-sponsored hacking and theft of cryptocurrency or bank funds), and the production of counterfeit goods or drugs in past decades.

Internally, a black market currency exchange exists since the North Korean won is not freely convertible – many North Koreans use Chinese yuan or US dollars for private trading. The official exchange rate is a state fiction; a significant gap exists between the black market rate and official rate.

Infrastructure and Energy

North Korea's economic infrastructure suffers from years of neglect and shortages. Electric power is in short supply; an estimated 52.6% of the population has access to electricity (meaning nearly half live mostly off-grid). Even those connected face frequent power outages. The electric grid's generation capacity is around 8.4 GW. Hydroelectric dams are a major source (over 80% of capacity), with the rest from coal-fired plants.

In practice, many plants operate below capacity due to fuel issues and disrepair. Rural areas often have electricity only a few hours a day or rely on wood/charcoal for fuel. Petroleum is almost entirely imported (mostly from China, often in limited, agreed quantities due to sanctions).

Transportation

Transportation infrastructure is also underdeveloped: roads are mostly poor and unpaved (only ~724 km paved out of 25,000+ km of road), and few North Koreans own vehicles (fuel is too scarce and private car ownership is tightly restricted). The rail network spans about 7,400 km, connecting major cities and linking to China and Russia, but trains are slow and prone to breakdowns due to aging equipment. Infrastructure constraints significantly hamper industrial and agricultural productivity.

Current Challenges

North Korea's economy faces multifaceted challenges:

• International sanctions limit its export earnings and access to technology
• A rigid planned system stifles private initiative and efficiency
• Natural disasters often affect harvests
• The COVID-19 pandemic – Pyongyang's response was to seal borders and halt nearly all trade and travel in 2020–2022, which reportedly caused severe shortages of inputs and goods in the local markets

Kim Jong-un has admitted that "many of the goals for improving the economy have not been met" and warned citizens to prepare for hardship reminiscent of the 1990s famine (even referencing an "Arduous March" again).

Unofficial Market Economy

One area of slight growth has been the unofficial market economy: small-scale trading of food and consumer items in markets provides livelihoods for many families. These markets have injected some resilience and entrepreneurship into local communities. However, they also threaten the regime's total control, so crackdowns occur intermittently. Corruption and bribery have become common as people navigate between the state system and private trading.

Summary

North Korea's economy is centrally directed and chronically underperforming. Basic needs like food and energy are not reliably met for the populace, and the country depends on limited foreign aid (mainly from China, and previously international food aid) to fill the gaps. The state's pursuit of nuclear weapons and military power has come at the direct expense of economic development and international trade. Without significant reform or external relief, the DPRK's economy is likely to remain stagnant, with the population living under austerity and the regime selectively allowing just enough market activity to prevent collapse while avoiding loosening its political grip.