WP 03 5 Famine and Reform in North Korea Marcus Noland July 2003 Copyright 2003 by the Institute for International Economics All rights reserved No part of this working paper may be reproduced or utilized in any form or by any means electronic or mechanical including photocopying recording or by information storage or retrieval system without permission from the Institute FAMINE AND REFORM IN NORTH KOREA Marcus Noland Senior Fellow Institute for International Economics I would like to thank for helpful comments on an earlier draft Nick Eberstadt Gordon Flake Aidan Foster Carter Ruediger Frank Mark Manyin Bill Newcombe Scott Snyder and participants at the conference Famine Interdisciplinary Perspectives from the Past and the Present Fondation des Treilles without implicating them in the final result Scott Holladay provided research assistance The Democratic People s Republic of Korea DPRK or North Korea has been experiencing an ongoing food crisis for more than a decade A famine in the late 1990s resulted in the deaths of perhaps 600 000 to 1 million people out of a pre famine population of roughly 22 million 1 Since then a combination of humanitarian food aid and development assistance has ameliorated the situation somewhat but according to the World Food Programme WFP and other observers as of this writing the country is once again on the precipice of another famine By standard statistical measures North Korea is the world s most militarized society and domestic propaganda incessantly proclaims the virtues of military first politics 2 If comparable statistical measures were available for politicization North Korea might rank first on this criterion too Internally all aspects of society are suffused with politics and externally politics thoroughly permeates not only the country s diplomatic relationships but also its economic relations Given the regime s extreme preference for guns over butter the North Korean economy does not produce enough output to sustain the population biologically and population maintenance is increasingly aid dependent Yet the October 2002 revelation of a nuclear weapons program based on highly enriched uranium in addition to a plutonium based program acknowledged a decade earlier undertaken in contravention of several international agreements and North Korea s subsequent withdrawal from the Nuclear Nonproliferation Treaty have put continued international assistance in doubt The situation is further complicated by internal economic policy changes initiated in mid2002 These reforms included marketization of the economy a large increase in the overall price level the promotion of special economic zones and a diplomatic opening to Japan intended to secure the provision of billions of dollars in postcolonial claims These initiatives could be expected to impact the availability of food on both the supply and demand sides On the supply side it is hoped that the increase in the relative price of grains will spur additional supply Yet North Korean agriculture is highly input intensive i e it makes extensive use of chemical fertilizers and insecticides electrically powered irrigation etc and the ultimate 1 The issue of excess deaths is analyzed in more detail below Noland 2000 summarizes contemporaneous estimates of excess deaths that ranged from 220 000 to 3 5 million On the difficulty of assessing North Korea s population statistics see Eberstadt and Banister 1992 and Eberstadt 2001 2 During its war with Ethiopia the percentage of Eritrea s population under arms and military expenditures as a share of GDP actually exceeded the comparable figures for North Korea but with the cessation of hostilities in the Horn of Africa North Korea has reasserted its historic primacy on these measures See www kcna co jp for a whiff of North Korean domestic discourse 1 impact of the reforms on agricultural yields could be strongly influenced by what happens in the industrial sector On the demand side the government appears to be trying to ensure survival rations through the public distribution system PDS the rationing system through which most people historically obtained food with food purchased in the market supplementing the PDS rations for those who can afford it The increase in agricultural procurement prices was presumably undertaken to increase the amount of food entering the PDS However while PDS prices have remained largely unchanged since 1 July 2002 market prices have increased significantly and it is unclear if the policy is having its intended effect This is to say that whatever its motivation it is unclear if the North Korean policy has been successful in practice Given the growing inequality in the distribution of income and wealth within North Korea which could be expected to accentuate differences in access to food and the already highly stressed nature of the North Korean society it would not be surprising to observe future increases in mortality rates BACKGROUND ON NORTH KOREA Prior to the partition of the Korean peninsula at the end of the Second World War most Korean industries were located in the North the South was the breadbasket In 1950 North Korea invaded South Korea The see saw character of the war which saw armies of both sides traversing twice nearly the entire length of the peninsula destroyed most of the physical capital stock There was considerable population movement as well mostly from the North to the South It is impossible to ascertain with any degree of certainty the capacities of the two countries at the end of the hostilities in 1952 Under Soviet tutelage the North set about establishing a thoroughly orthodox centrally planned economy remarkable only in the degree to which markets were suppressed Households obtained food and other items through a rationing system that provided for some differentiation on the basis of age and occupation In 1955 founding leader Kim Il sung proclaimed juche or self reliance the national ideology and under his leadership North Korea developed as the world s most autarkic economy never joining the Council of Mutual Economic Assistance COMECON and going so far as to time its central plans to frustrate linkage with those of fraternally allied socialist states In the period immediately following the end of the Second World War and the expulsion of Japanese colonialists the Korean peninsula was partitioned into zones of Soviet and American military occupation in the north and south respectively In the Soviet
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