What Kind of Economy Does North Korea Have?

North Korea or its official name the Democratic People's Republic of Korea(DPRK) is one of the countries in the world that practices a Close Economy totally. Over there, the ruler will decide what should be produced, how much should be produced, and the price of it.

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Not just that but imported goods also cannot be sold inside the country and the people can only enjoy what's made on the inside. Some of you might be wondering how this sanctioned economic country operates?

North Korea utilized the rule and economies of the Soviet Union by applying the Juche ideology. This particular model emphasizes the expansion and investments in the heavy industry.

The ideology that is still being currently practiced by North Korea seems to backfire on the country's economy ever since the fall of the Soviet Union. This is followed by the food crisis after a series of natural disasters that hit the country hard and ultimately led to an economic crisis.

Between the years 1990 and 1998, North Korea has exponential growth in the country's Gross Domestic Product(GDP) growing at an average rate of 4.1% per year. However, things turn south pretty quickly for North Korea and the country is still receiving international aid in order to help stimulate the country's economy.

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In 2000, North Korea has reformed its economy by launching an economic plan called Economic Management Improvement Measures. Through this plan, North Korea's economy has been on the rise for a few years ahead. From 2000 to 2005, there has been an increase of 2.2% in the country's GDP.

It has been estimated that in 2015 North Korea's GDP was valued at $40 billion. As for North Korea's GDP per capita, it was at $1700 in which agriculture contributes 25.4%, heavy industry 41%, and lastly services 33.5% in 2017.

Not just that but North Korea has also made big investments in the military and so far this did not help the country in any way. The country has used roughly $4 billion or around 23% of the country's GDP just for military expenses alone.

As of today, China has become a trading partner for North Korea, and the country has put heavy reliance on China in the aspects of economy and politics. This is shown by almost all of North Korea's exports going toward China which includes goods like minerals, textiles, agriculture, and fishery.

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The question is how long North Korea will be able to sustain its current state as of now. China which happens to be the biggest communist country in the world is also practicing a free market.

If in the future China decided to not help North Korea one day, what will be the fate of the country? Perhaps it will ultimately fall or they shall implement a closed economy entirely.

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