Trade (Economic System)

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ECONOMIC SYSTEM

Socialistic System of Ownership

In North Korea, the socialistic system of ownership is defined as "collective or common ownership of production means and products that are basic to socialistic production." The production means under the socialistic economic system are owned by the state and communal groups.

Those playing a leading role in the nation's economic development such as the nation's all natural resources, railroads, aviation, transportation, postal and communicational institutions, major factories, businesses, ports and banks are owned by the state.

Communal groups can own land, farming machinery, ships, small and medium-sized factories and businesses. The communal groups are comprised of social groups and community groups. Major social groups are the Workers'Party, the Vocational Federation, the Women's Federation and Kim Il-sung Socialist Youth Federation. Representative forms of communal groups are communal farms.

The country permits very limited forms of personal ownership, i.e. of personal saving, home appliances and everyday articles of consumption. However, no personal ownership is allowed of production means. Individuals are free to dispose of their personal belongings and their right of inheritance is also allowed. 

Centrally Planned Economy

Economy in North Korea is a system in which all economic activities are carried out in accordance with the state-sponsored plans. Drawing and supervision of economic plans are carried out under a unitary system centered around the State Plan Committee from Provincial level down to small businesses.

Each committee of all ministries also has its own planning department, whose planned figures are all uniformly submitted to the State Plan Committee for its control and coordination.

INDUSTRIAL STRUCTURE

Characteristics of Industrial Structure

• In North Korea, agriculture and fishery account for 30% of the entire industry, with another 30% accounted by the service industry. This shows that its structure still follows those of typical developing nations. The higher share of the service industry is due to the government sector's higher share in its economic system of centralized planning. 

• The nation's light industry has been regarded as less important than the heavy industry including the munitions industry, which fact has caused the ever deepening unbalance among industries.

• North Korea has abundant natural resources. Its mining industry has been well developed, centered around strategic ores including coals. In 199, for example, the mining industry accounted for 7.3% of the GNP (compared to 0.4% in the case of South Korea).  

Industrial Structure

(Unit: %)

Source: The Bank of Korea (South Korea)
Nominal GDP =100  

Trend for Changes in North Korea's Industrial Structure

(Unit: %)

Source: The Korea Development Bank and the Bank of Korea (South Korea)