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Estimating unofficial economy in DPRK: Hamkyong province from 1996 to 2003

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Estimating Unofficial Economy in DPRK ;Hamkyong Province from 1996 to 2003 by In sook LEE Around middle 1990’s, 40 year-old command economy of DPRK witnessed starvation of its people, and for survival attempts of North Korean economic activity out of central government control had to emerge. This paper is motivated by the query about that economic activity which is out of government detection in North Korea; how large it is and how does it change over time? As one and only available and reliable data source for now, DPRK refugees provide the data of economic activity when they were in North Korea. Through the survey to them, information of overall household income and that from shadow economy is gathered. Based on the components of income data from the survey, size of unofficial economy in Hamkyong province of North Korea was derived. Simple estimates from income data, share of unofficial economy in Hamkyong province is at least 54% and on average 60.5% during 1996 to 2003, which is higher than that of previous research. That is, in Hamkyong province over half of household income is not under the control of authorities. This is intriguing since at the scotoma of communist authority, the growth of market based transaction in the shadow economy can imply that economic control of command economy in DPRK is undermined from the bottom. On the other hand, about the dynamics of the portion of unofficial economy reveals another interesting or seemingly ironic aspect of unoff
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Title Estimating unofficial economy in DPRK: Hamkyong province from 1996 to 2003
Similar Titles
Material Type Reports
Author(English)

Lee, In Sook

Publisher

[Seoul]:KDI School of Public Policy and Management

Date 2006
Pages 53
Language English
File Type Documents
Original Format pdf
Subject Economy < General
Holding KDI School of Public Policy and Management

Abstract

Around middle 1990’s, 40 year-old command economy of DPRK witnessed starvation of its people, and for survival attempts of North Korean economic activity out of central government control had to emerge. This paper is motivated by the query about that economic activity which is out of government detection in North Korea; how large it is and how does it change over time? As one and only available and reliable data source for now, DPRK refugees provide the data of economic activity when they were in North Korea. Through the survey to them, information of overall household income and that from shadow economy is gathered.
Based on the components of income data from the survey, size of unofficial economy in Hamkyong province of North Korea was derived. Simple estimates from income data, share of unofficial economy in Hamkyong province is at least 54% and on average 60.5% during 1996 to 2003, which is higher than that of previous research. That is, in Hamkyong province over half of household income is not under the control of authorities. This is intriguing since at the scotoma of communist authority, the growth of market based transaction in the shadow economy can imply that economic control of command economy in DPRK is undermined from the bottom. On the other hand, about the dynamics of the portion of unofficial economy reveals another interesting or seemingly ironic aspect of unofficial economy in Hamkyong province of North Korean, since even with economic crisis of collapse of the ration system and great dearth of bare necessity the share of unofficial economy had remained around 55%, while after government showed strong will to economic reform at 2001 the share of unofficial economy abruptly increased, and it gradually dwindled since then. This sequel trend indirectly indicates that even though economic control of central government is undermined, the political control over the people plays determinant role over the latitude of unofficial economic activity.