North Korea's (not so) secret economy

Despite decades of shutting down commerce, media and, free speech, the Kim family dynasty has opened their doors to one of the most western concepts of all: capitalism. 

The "donju," or the black market capitalists who have bartered and smuggled their way to a small middle class, have been imprisoned in the past. But more recently, they have not only been tolerated, but trained. 

Western professors, marketers and accounting professionals have been allowed into the Hermit Kingdom to improve business.

Listen to the full NPR Podcast here

North Korea's Dollarization

Among the many changes and outside views infiltrating North Korean's historically hermit-like society, a new study gives insight into a strong economic shift: the dollarization of the economy. 

Measured by what households in NK will save away, the dollar and yuan are the two dominant currencies represented in savings and the black market, even surpassing the North Korean won. 

While the indices used to benchmark the changes in Asset and Currency Substitution are far from perfect, the changes in North Koreans and recent refugees seem to indicate that transformation is taking hold. 

For the full report, click here

“Everyday Life” for North Koreans highlighted on NPR

NPR’s Weekend Edition featured an interview with Liberty in North Korea’s Director of Research and Strategy Sokeel Park, who touched on what the “everyday” looks like for a North Korean.

Sokeel Park

“…with so much focus on Kim Jong Un and nuclear weapons and missile launches and these kind of things, North Korea is often just seen as a security problem, as a potentially kind of crazy or irrational dictator with missiles. And often, we miss out on the story of 24 million ordinary people, just like you and I, who are living their lives in that country. And the country is changing on the inside.”

Kim goes on to cite changes in information, a basic market economy that has been established in the country, and less-effective indoctrination of the younger generations who are increasingly fleeing the country.

For the full interview and transcript, click here:

North Korean Refugees Now - Part 1: Changing Economy

In our new blog series, we will explore the newest developments in the world, which affect the flow of North Korean refugees in China. If there is any silver lining to the Great North Korean Famine, it is that North Korea was forced to fundamentally change the way that it distributes goods and resources throughout the country.

The famine killed up to 3 million people and put the country in a tailspin from which it has still not recovered.

Resources during the famine were so scarce that the country had to start a PR campaign to ask its people to eat two meals a day. At the famine’s height, many were left to eat grass, tree bark, pets, and other people.

Much of the starvation in the country can be attributed to a failed distribution system. The irony of the famine is that there was food sitting in warehouses for people to eat. But distributors were afraid to go to the outer regions for fear of starting riots. They also had no incentive to distribute food because, under the old system, they would get paid regardless. So the people starved.

Amidst the chaos, North Korea allowed the economy to be privatized under heavy restrictions.

As a result, private markets popped up all over the country and distributors were paid based on the deliveries they made. Experts say that there is actually less food in North Korea today but people are not dying of starvation because of better distribution.

North Korea has said that this is a temporary solution to the country’s food problems. But the current system has remained intact for almost 20 years.

This has sparked what many have called the Jangmadang, or Black Market generation. This generation carries cell phones, styles their hair to mimic the South Korean pop stars they have seen via illegally imported DVDs, and, most importantly, have not lived through famine.

Change is also coming to the country's vast number of farmers. North Korea is making strides to incentivize farmers for greater yields. After giving their share to the government and paying their operating expenses, farmers can now share profits with their workers.

Manufacturers have also been given more leeway to operate based on market principles. They can negotiate contracts with foreign entities and also pay their employees what they wish.

All these factors have, along with beefed-up security at the border, slowed the pace of North Korean refugees spilling over into China.

But many experts say that these changes enacted by the North Korean government are not drastic enough to revive the moribund economy and to cause change.

“In the economics sphere, the regime seems to lack any real strategic vision,” Marcus Noland, of the Washington-based Peterson Institute for International Economics told the Associated Press earlier this year.

Food remains the biggest issue. There might not be a famine but much of the country is still malnourished and very hungry. All this while food aid is on the decline and experts predict a smaller harvest this year, due to an unusually dry winter.

How this will affect the flow of North Korean refugees into China is yet to be seen. Regardless, Crossing Borders will continue to work in China to give vital protection and aid to these people.

North Korean Refugees: Suggestions for Kim Jong Un

As an organization at work in aiding North Korean refugees who escape out of the Hermit Kingdom, Crossing Borders is careful to keep up-to-date on the news coming out of the country. Some of the information coming out of North Korea this year has been heartening. A shorter hemline signals a country that is beginning to change with the times. A first lady is making the regime seem more people-friendly. All of these things are great. Recently North Korean media released text of a speech Kim Jong Un made to the Workers’ Party on July 26, which called for reforms to the country’s economic system. In the speech, Kim stated that the party would focus on “developing the economy and improving livelihoods, so that the Korean people lead happy and civilized lives.” Even better.

But if nation would really like to show its strength, it must welcome North Korean refugees back into the country without the risk of punishment.

In spending time with North Korean refugees along the border and in South Korea, it is obvious to many of our field workers and staff that they miss their families back home. Because North Korea maintains a stranglehold on all forms of communication, it is very difficult for families to communicate and virtually impossible for them to see each other.

This is the agonizing decision that all North Korean refugees who fled their country have made. One family in this position comes to mind.

Our staff met the "Lee" family in a restaurant in Northeast China a few years ago. They were upstanding members of the Workers’ Party and, according to them, they had never starved because of their class standing and they had never committed a crime. This was until they couldn’t find food around 2007. The patriarch of this family of four had to make the tough choice to go into the illegal money transfer business.

Within months he was caught and had a few hours to decide what to do. He fled with his wife and his teenage daughter to China. His son, who was in elementary school, was left with relatives. They feared he would slow the family’s escape. When the family met with our staff for dinner, they could hardly focus on the meal as they told their story. All they could talk about was their son who was trapped in North Korea.

As a response, Crossing Borders helped send money into North Korea to get their son out of the country.

What do Kim Jong Un and the Democratic People's Republic leaders fear most about allowing North Korean refugees back into their country? Information. With an inflow of people who have seen the prosperity of the outside world, North Korea is afraid that their people might grumble for change and the ruling elite might lose power.

But change is already afoot. DVDs from the outside world are secret, but commonplace. People get news regularly from foreign news outlets beaming short wave radio signals into the country. Illegal cell phones connected to the Chinese networks are available to some through the black market.

What is North Korea trying to shield its people from? The cat is out of the bag.

For people to live in happiness they must be given the opportunity to see their families. New economic reforms will undoubtedly open the country up even more. There is no risk in slowly allowing North Korean refugees back to help rebuild the country that they love. This will help North Koreans live, as Kim Jong Un states, "happy and civilized lives."