Economics Explained

The Pathetic Economy Of North Korea

Jun 15, 2023
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INSIGHT

Economy Is Shockingly Small

  • North Korea's economy is tiny, with a nominal GDP around $25 billion and PPP about $40 billion.
  • The country's political spectacle masks a deeply underperforming economic reality.
INSIGHT

Strong Postwar Start

  • After the Korean War, North Korea rapidly industrialized with Soviet and Chinese support and initially outpaced the South.
  • The state ran five-year plans and used central planning to prioritize industry and military growth.
INSIGHT

Military Burden Undermined Growth

  • Growth stalled from the mid-1960s as Soviet aid fell and defense spending rose, undermining ambitious plans.
  • Central planning magnified military spending's share of the total economy, worsening resource allocation.
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