Two Koreas, two economies

In this article, we’ll take a look at the two Koreas and their economies, compare them and see how they’ve evolved over time.

Korea’s economy

North Korea is facing a new economic decline. After the Korean War, supported by its Communist allies, the USSR and the People’s Republic of China, it was richer than South Korea. Today, conversely, it remains in the shadow of the South Korean boom, with South Korea’s economy ever more buoyant.

GDP – Gross Domestic Product

After the war, thanks to its dynamic industrial development, North Korea’s GDP grew three to four times faster than that of South Korea. South Korea’s GDP per capita was 2% that of North Korea.

Currently, “GDP per capita in North Korea is estimated at $1,119, 26 times less than in South Korea” (Berger, 2019). The North Korean economy “contracted again last year, with GDP falling by 4.1%, the first time this has happened since the famine of the 1990s”(ibidem).

“Big leaps

In the second half of the twentieth century, communist countries adopted a policy of so-called “great leaps” or “plans of a few years”. The best-known case is the Great Leap Forward, implemented in Mao Zedong’s China (毛 泽东) during the years 1958-1962. The aim of this policy was to achieve rapid economic growth for the country over a very short period of time. To achieve this ambitious plan, it implemented the collectivization of agriculture, dynamically developed all industrial sectors (especially the arms industry) and organized major public works. In effect, GDP rose rapidly; however, the consequences of excessive policy can be dramatic after the fact. Economic collapse occurs suddenly and affects the whole of society.

In the 1950s, North Korea launched the Five-Year Plan, an important part of which was the Cheollima movement (천리마운동 Cheollima undong). Inspired by the Soviet propaganda campaign of Stakhanovism (Стаха́ новское движе́ ние), which glorified the model of the highly productive worker, the movement motivated the people and the economy increased very rapidly. Unfortunately, this success was short-lived.

The first problems arose as early as 1961, due to the disproportion between the industrial sectors and the exploitation of resources. In addition, the Soviets and Chinese reduced their support. A few years later, a major famine broke out.

The South Korean boom

In the 1960s, South Korea was still on the list of the world’s poorest countries. The situation changed at the turn of the 1960s and 1970s, when the government initiated a strategic reorientation. The economy was based on technological development, with export as a priority strategy.

From 1972 to 1979, growth was self-sustaining. After “a tremendous acceleration in the growth of its gross national product, from 1962 to 1971, the average annual growth rate of GNP amounted to +8.8%” (Barjot, 2011). Despite the difficulties of the following two decades, including the unexpected crisis of 1997, South Korea became the thirteenth world power in 2007.

Sources

• Barjot Dominique (2011). South Korea’s economic development since 1950. In : (2011) Les Cahiers de Framespa – Nouveaux champs de l’histoire sociale [online], no. 8/2011 Japon et Corée à l’époque contemporaine (1868-1997), p.
• Berger Annick (2019). In freefall, North Korea’s economy is now 50 times less powerful than South Korea’s. Capital.fr, 27.07.2019

Illustrations

• Opening image: The flags of two Koreas in a single composition
• ill. 1. A symbolic representation of two Koreas whose economies are moving in two different directions
• Fig. 2. GDP per capita in US dollars, South Korea and North Korea, 1950-2010
• ill. 3. The statue of Cheollima, Pyongyang. Cheollima (천리마) is a mythical winged horse that is very fast so no one can ride it. The North Korean government adopted this legendary figure to symbolize the country’s speed and economic growth.