HOW TO THINK ABOUT IT Still standing ... Gathering accurate data on North Korea’s centrally planned economy is challenging: Observers are forced to rely on a combination of information from defectors, human rights activists and South Korean estimates. In 2015, the latter pegged North Korea’s official gross domestic product at around $40 billion, more than one-fifth of which the regime reportedly spends on its military. Two years later, the economy is believed to have contracted some 3.5 percent — its largest decline since the 1990s — thanks to tougher sanctions. Global isolation has left the regime with few options, and analysts estimate Pyongyang’s ties with Beijing account for 90 percent of its trading activity. In the absence of a robust economy, the black market has thrived, while the state relies on complex and illicit trading schemes for cash and commodities like petroleum. … and maybe even stepping up? Curiously, though, the economy may not be doing as poorly as one might expect, according to a recent report. The North Korean currency, the won, has stood its ground against the U.S. dollar, while construction projects are chugging along in Pyongyang, where more local goods have cropped up, indicating a boost in manufacturing. Prices for rice and gasoline have remained stable or fallen. “There is no clear sign that the state is in trouble,” William Brown, a North Korea expert at Georgetown University, told The Wall Street Journal. That’s probably due to the government’s promotion of small-scale market activity in recent years, which analysts estimate provides households with more than 60 percent of their income. Today, some 400 markets are allowed to operate in exchange for paying various state fees. Still, recent visitors say, that’s the exception rather than the rule: Poverty remains widespread in North Korea, and it's facing a food shortage this year. Ask the hosts. North Korean officials are said to be increasingly considering Vietnam’s economic transformation as a blueprint for their own potential opening-up. Rolled out a decade after the war ended, a series of liberalization policies known as “doi moi” turned that country from an impoverished, war-torn backwater into one of Asia’s strongest economies — all without significantly reforming its one-party system. Developing an export-focused manufacturing industry was a driving factor. In North Korea, observers have pointed to the country’s abundant mineral resources, believed to be worth trillions of dollars. But it’s unclear whether a doi moi–style path would work for North Korea, which doesn’t appear as enthusiastic as Vietnam was to join the global community. What’s more, any such steps would require a degree of political reform that Pyongyang, whose ruler is still shrouded in a personality cult, probably wouldn’t accept. For now, as one report claims, North Korea remains “a responsible investor’s worst nightmare.” Leaving the door open. Despite the summit’s failure to produce a concrete deal, some say Kim isn’t walking away completely defeated. Most prominently, the two leaders effectively agreed to keep talking. And whether or not Trump intends to, observers believe he’s further legitimized his North Korean counterpart with each meeting as a global leader. At home — where state-controlled media reportedly has been careful not to criticize Trump directly — Kim will likely benefit from that image. But whether it actually compels him to change his country’s wayward habits remains to be seen. |
