North Korea; what comes to your mind when you hear the country’s name? A dark, shady country, with probably a grey weather all the year around and no ounce of happiness. Right? At least that’s how major pop culture references have been to the country.
None of us really have an idea about how things go around in North Korea. And how would we? The country’s public affairs are not so ‘public’ after all. While the entire world enjoys the benefits of a global village, North Korea is rather secluded will little to none diplomatic relations with other countries around the globe. Furthermore, not many countries really like the country’s top leader ‘Kim Jong Un’.
Several countries have special sanctions and treaties between them, acknowledging North Korea as a threat and banning trade with the Asian country. Owing to all of these factors, the country’s economy is in a backlog and relies heavily on domestic resources only. It is easy to contemplate trade when you live in a country with an open economy with trades from all around the world. You may get oil from the gulf countries, technology from America or China, wheat and rice from India and so on. Countries engage in imports and exports and other businesses with each other and that’s how they earn.
Now, in such a world, how does a country like North Korea, with sealed borders and no diplomatic relations with any one, earn money? In this article, we’re going to explore how North Korea makes money and how stable its economy is.
What is the state of North Korea’s GDP?
When the unified kingdom of Korea split into North Korea and South Korea, North Korea adopted the Soviet policy of heavy industrialization and socialism. The country had diversified investment in iron, steel, cement and machinery. The Kim dynasty took over the control of the country in 1948, a time when several new republics were forming and the world economy was taking a new shape. Since then, the policies of the North Korean government have been very repressive and contained (within the country’s shell). Due to lack of data available, North Korea’s GDP was estimated somewhere around $19 Billion in 2021 by experts.
Despite the several sanctions imposed by governments worldwide, North Korea’s economy has grown exponentially at a subtle rate. The only competitor is the old brother South Korea, with an economy of more than 1 trillion GDP. The country’s major industries include textiles, seafood, entertainment, armory and coal. An interesting fact about North Korea is the presence of professional hackers. Even though most of the citizens of the country are shadowed from using internet, claims have been made that there are approximately somewhere around six thousand hackers in the capital city of Pyongyang working in liaison with the North Korean government. Hacking is apparently a huge business in North Korea that works under the knowledge of the government who fully supports and funds it.
Now, moving on to the most important question,
How does North Korea earn money?
Given how shady and secluded the country is, one might think that the country’s earning resources would be few. However, that is not really the case with North Korea. North Korea has several indigenous industries that not just cater to the country’s needs, but are also able to export the residual outside. Here is a list of the ways how North Korea earns its money:
1. International Trades:
Even though North Korea trades with a number of nations despite its closed economy, the country seems to favor China a lot when it comes to export and import. According to a data shared by Statista, China accounts for about 75% of the overall trades; 94% in imports and 91% in exports (Info Credits: Startup Talky)
As per some reports, North Korea’s exports in the year 2015-16 accounted for somewhere around a whooping $2.82 billion. But, the question is, what does North Korea export? What does it have in so much abundance that a closeted nation shares it with the rest of the world? Well, North Korea mostly exports coal. Coal exports account for about $380-450 million in a year, and most of it is illegal. The 35th greatest coal deposit in the world is found in North Korea, which contains 661 million tons of known reserves. According to a 2017 Observatory of Economic Complexity (commonly known as OEC) research, North Korea exports coal worth around 368 million dollars from these deposits, with China being one of its largest customers.
When BBC interviewed the North Korean defector Kim Kuk Song in 2021, he revealed that he was the sole responsible man for selling coal in the Black Market for millions of dollars and bring the money back into Korea for his supreme leader.
India is one of North Korea’s major customer. India imports about $36 million worth of automobile and silver parts. However, the trade is not one sided. North Korea too imports petroleum products from India which are expected to be somewhere around $70-80 million.
2. Textiles and Seafood Export:
Textile makes up for a huge amount of exports in China. Textile exports from North Korea total around 584 million dollars and comprise non-knit jackets, suits, and sportswear, according to the 2017 report by the Observatory of Economic Complexity that revealed North Korea’s coal exports. However, there are widespread claims that when these products are brought into the open market for sales, they are rebranded as Made in China.
North Korea’s sea food is very famous all across the globe. Some of North Korea’s famous sea foods include pine mushrooms, molluscs and processed fish. It all started when in 2018 the North Korean government gifted the South Korean government about two tons worth of pine mushrooms. Even though North Korea had been exporting sea food for a long time before this happened, word got out and the popularity of North Korean seafood just grew further. In 2017, mollusks generated a solid $137 million, with North Korea accounting for 1.3% of global mollusk exports. North Korea also sold a substantial amount of processed fish, with annual sales to China amounting to $2.69 million.
4. Weapons Trade:
North Korea has great relations with countries in the African continent. The major ground of friendship among them is the shared love for socialism. Now, because of this so called friendship, North Korea acts as a major weapon supplier for these African countries. It is estimated that North Korea supplies approximately 250 million dollars worth of arms and other weapons to these nations on a yearly basis. The major reason for this is that Pyongyang has established weapons factories in Uganda, Ethiopia, Madagascar, and the Democratic Republic of the Congo. Additionally, it has a contract to build military facilities in Namibia. Additionally, North Korea has provided Egypt and Libya with ballistic missile systems.
Imagine when someone tells you that a nation’s economy is run by hackers. It sounds too filmy and funny at some point but in North Korea’s case, it is true. When on one hand most of the general public is denied the basic amenity of Internet, the North Korean government is harboring more than 6000 hackers in the capital city of Pyongyang. These hackers steal the money from all across the globe through various means and supply a major part of it to the government. In exchange, the North Korean government protects them and treats them as a country would treat government employees. These hackers bring in millions of dollars worth of crypto currency for the government every year. Experts also claim that the North Korean hackers played an important role in two of the biggest cyber attacks: the WannaCry ransomware attack of May 2017 as well as stealing Bangladesh’s funds deposited with the New York Federal Reserve in the year 2016.
6. Slave Labor:
Even though several agencies work worldwide solving problems of mistreatment of labor workers, North Korea does not seem to pay heed to the basic human rights. Every year, North Korea sends several thousand workers to all parts of the world to work menial jobs such as mining, construction and other daily wage jobs. The workers are severely mistreated here and whatever remuneration they earn is straight away transferred to the North Korean government and the labors are left with little to no remuneration to feed themselves or their families. In a sense, the North Korean government is supplying unpaid slaves everywhere and in turn is getting its pockets filled. Reports claim an estimation of about fifty thousand to one lakh labors being sent to several parts of China and Russia as well as Europe, Asia and Africa.
North Korea is also engaged in several illegal activities like selling drugs and counterfeiting foreign currency notes. It has long been assumed that North Korea manufactures and traffics drugs for profit, and sanctions that restrict the trade of legal items may encourage it to do so even more. Given that lax border restrictions and a large market for drugs make them a simple and lucrative method of generating money, it seems doubtful that the state will clean up its act anytime soon. However, the exact estimate of counterfeit currency and drug racketeering is not known, but is believed that North Korea is mining millions and millions of dollars every year owing to these shady under the table practices.
This is almost all you need to know about the North Korean economy and how North Korea earns money despite being a closeted country. The major earning potentials for North Korea lie in coal, textiles, drugs, weapons and seafood. If you still have any doubts in your head, you can always hit us up in the comment section and we’ll try to come up with an answer to all your queries and doubts.