The Economics of North Korea

Many of us believe the world is at the brink of WWIII. To be honest we can’t completely rule out the possibility of this. Recently the world is going in a rapid change where every country seems to play its part but rather looks confused. What has brought all these confusions at the first place? One of the possible answers on which many of us will agree is the possession of nukes. According to a new report from the Stockholm International Peace Research Institute (SIPRI), nine nations — the United States, Russia, United Kingdom, France, China, India,Pakistan, Israel and North Korea — possess approximately 16,300 nuclear weapons.

North Korea, officially the Democratic People’s Republic of Korea, is a country in East Asia, in the northern part of the Korean Peninsula. The recent test of nukes by North Korea has brought the world at the back foot. How come a country which suffered from one of the most disastrous famines of all time just a few years back which killed 3,500,000 of its people got the huge economic capabilities to develop so much of the Nuclear Warheads in such a short time?

North Korea has always cared about its image among the people. From Kim Il-sung to Kim Jong Un, the supreme authority has used a variety of methods to earn the respect and loyalty of its people. One such act was the introduction of Gift Politics by Kim Jong-il. Gift politics has proven to be a very efficient way of getting the loyalty of North Koreans. Kim Jong Un spends around $600 million a year on gift politics, nearly twice as much as his father Kim Jong-il did. The gifts range from Gold plated hunting rifles, Limousines, Expensive watches, all sorts of expensive cars like Mercedes Benz and much more. Officials working for the government are sent to Germany, Italy, France and other places like Macau to buy expensive items for the recipients.

The spine of North Korean Propaganda is the hidden currency it has brought from the world. This blog focuses on the balance of money and power in North Korea. North Korea has been said to have two economies:

  • People’s Economy – For the general public.
  • Royal Court Economy – Controlled by the supreme leader, Financial foundation of the Kim Dynasty.

Let’s shed some light on these two economies in more detail:

People’s Economy is a typical socialist economy system where citizens use plans compiled by the party and the cabinet to produce goods and services, they receive supplies in return. But Kim Jong-il started using public funds as his own property to strengthen his power. The obsession for power and beating the imperialists led to the birth of Royal Court Economy.

Royal Court Economy is a cancer on Socialism.

In Royal Court Economy, the supreme leader can use as much of the money he wants without seeking the party’s approval. He used the money for gift politics and also for the military projects such as developing missiles and nuclear weapons. This economy has expanded at the expense of People’s Economy and currently accounts more than 60% of the total economy. In the meantime, many citizens live in poverty and hunger.

How are the massive funds’ for The Royal Court Economy collected?

North Korea has an organisation dedicated to the task. This special organisation is called Room 39, all the money it gathers goes to the leader. Room 39 has been given the task of collecting as much of the foreign currency possible which will be used exclusively for The Royal Court economy.


The Room 39 directly comes under the leadership of supreme commander of North Korea.

All the foreign currency collected by the Room 39 is stored in the Worker’s Party Headquarters. Money is gathered by Room 39 is mainly from the weapon deals it carries around the globe. Vietnam, Myanmar, African and Middle East countries are the prime customers in this weapon deals carried out the Room 39. Most of these deals happen at Macau as it is relatively easier to wire the currency to North Korea because of the liberal laws. The contacts are signed using false product names such as printers. North Korea has benefitted greatly from the arms trade which is said to be near about $ 1 billion/year.

TransArms USA is an NGO based in Chicago, USA which monitors North Korean’s illegal weapon trafficking. In July 2013, authorities seized a large shipment of arms in the Panama Canal from a North Korean cargo ship. Hidden under large bags of sugar were fighter jets and disassembled missiles.

When arms dealings became tougher, the officials started trading Gold and other minerals. Gold transactions were always done in cash. No money passes through the back accounts leaving no traces of any transactions occurred.

A large amount of foreign currency also comes from The Mansudae Art Studio which provides the propaganda statues for the government in Pyongyang. Its artisans have produced every statue of the country’s leaders. Now they are using their skills in the other parts of the world. Their works can even be found in Dakar (Captial of Senegal), Namibia and others. They have built nearly 30 statues across Africa. These artisans bring plenty of foreign currency for the Royal Court Economy.

North Korea which has kept its population cutoff from the rest of the world has now started allowing its people to work as labourers in the other parts of the world to keep foreign cash flowing. Women are now working in the sewing factories of Mongolia, Men are working as construction workers. Around 100,000 North Koreans are working all around the globe as directed by their governments.

But the Supreme Leader is under pressure, gradually gratitude is taking place of the gifts. The gift politics has changed. Time is changing in North Korea as the funds for Royal Court Economy is getting tighter. The shortage of funds created a power struggle at the top. Kim Jong Un’s uncle Jang Sung-taek, the second in command was given the task of getting the economy back to its feet. He visited china and met with the Chinese president starting a totally new phase of international relations with China. The Rason International Trade Fair and Rason Economic Zone were the consequences of his visit. Money and power started to float towards Jang. He was the head of Party’s administration department. With the Chinese support in his pocket, Foreign currency started accumulating around him. This accumulation of money around the second in power possessed a serious threat to the Kim Jong Un’s authority and power. As a result of this threat, Kim purged Jang which caused relations with China to deteriorate.

North Korea is an economy destined to fall sooner or later. Slowly the hunger for power and greed for control is eating up the country. I hope one day I would be somewhere writing about the fallen totalitarian state of North Korea.





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