Under the July 1 Economic Management Improvement Measure in 2002, North Korea launched a large program of economic reforms. These moves are done in order to draw foreign capital for its economy. The launch and the continuation of reforms are due to the sanctions applied to North Korea which restrict the growth of the North Korean economy. According to some South Korean Public and Private institutions, the North Korean economy fell down in 2010, marking the second consecutive year of negative growth. Some institutions argued that the North Korean economy increased by 4.7% in 2011 but it is difficult to difficult to assess the North Korean data because of the lack of reliable and verifiable data. One thing is sure: reforms are going on in the most secret country of the entire world.
What are the main goals of these reforms? Looking at economical sessions of the North Korean parliament, we may notice that the budget for construction projects have dramatically increased (the budget for 2010 was focused on consumer goods and grains). According to the South Korean Unification Ministry, the North Korean parliament endorsed about 6 billion of dollars for construction projects.
North Korean economists launched various state-run banks which should fund the North-Korean developments projects. These institutions are closely related to North Korean Free Trade Zones (Rajin Sobong, Kaseong and Hwanggumpyong Island). North Korea is copying a part of the Chinese model. In the late 70’s, Beijing settled a stated investment company called China International Trust and Investment Company.
Recently North Korea established an investment insurance firm for foreign companies. This new entity should ensure risks resulting from uncertainties in North Korea. Establishing a reinsurance company may also guarantee an access to international credits. It is the first time that North Korea introduces such an insurance system for foreign companies and investors. North Korea is trying to attract foreign investments since a long time however foreigners are afraid of investing in North Korea. This country is the most opaque of the world. Kim Jong Ils’ death may also threaten the North Korean stability. Therefore North Korea is trying to give some guarantees for foreign investors.
On a microeconomic scale, North Korea created a few years ago “general markets” (jonghap sijang) which are spreading all around the country. People are selling here various items like food and industrial products. The government however tried to monitor these markets dividing them into smaller structures. Market sellers wore for a time armbands in specific colors to indicate which goods they offered.
Formers North Korean open minded economists are also back on the top scene. Ro Tu Chol, a former North Korean economist, who disappeared from the political scene between 1998 and 2003. He’s now managing economic ties between his country and China. Another expert Pak Pong Ju reappeared. In the past he was the vice director of the party’s Economic Policy Supervisory Department in the 2000’s but was removed in 2006 and not seen in public for a few years. He was finally recently rehabilitated.