A Market Economy Rises in North Korea
lation of 25 million, about 1.1 million people are now employed as retailers or managers in these markets, according to one study.
Unofficial market activity has flourished, too: people making and selling shoes, clothing, sweets and bread from their homes; traditional agricultural markets that appear in rural towns every 10 days; smugglers who peddle black-market goods like Hollywood movies, South Korean television dramas and smartphones that can be used near the Chinese border.
At least 40 percent of the population in North Korea is now engaged in some form of private enterprise, a level comparable to that of Hungary and Poland shortly after the fall of the Soviet bloc, according to the director of South Korea’s intelligence service, Lee Byung-ho.
North Koreans once worked only for state enterprises, farms and factories, receiving salaries and ration coupons to buy food and other necessities in state stores. But that system crumbled in the 1990s, and now many state workers earn barely a dollar a month. Economists estimate the cost of living in North Korea to be $60 per month.
“If you are an ordinary North Korean today, and if you don’t make money through markets, you are likely to die of hunger,” said Kim Nam- chol, 46, a defector. “It’s that simple.”
Eighty percent of consumer goods sold in North Korean markets originate in China, according to an estimate by Kim Young-hee of the Korea Development Bank in the South.
But Kim Jong- un has exhorted the country to produce more goods locally in an effort to lessen its dependence on China. His call has emboldened manufacturers to respond to market demand.
Shoes, liquor, cigarettes, socks, sweets, cooking oil, cosmetics and noodles produced in North Korea have already squeezed out or taken market share from Chinese- made versions, defectors said.
Regular visitors to Pyongyang, the showcase capital, say a real consumer economy is emerging. “Competition is everywhere, including between travel agencies, taxi companies and restaurants,” Rüdiger Frank, an economist at the University of Vienna, wrote recently.
A cellphone service started in 2008 has more than three million subscribers. Imported solar panels have become a status symbol. And on sale in Pyongyang is a beverage that state propaganda used to condemn as “cesspool water of capitalism” — Coca- Cola.
Mr. Kim has granted state factories more autonomy over what they produce, and families in collective farms are now assigned to individual plots. Once they meet a state quota, they can keep and sell any surplus on their own.
As the markets develop, growing numbers of North Koreans will see the vastly superior products made overseas and perhaps question their nation’s backward status.
“Thanks to the market, few North Koreans these days flee for food, as refugees in the 1990s did,” said the Reverend Kim Seung- eun, a pastor who has helped defectors reach South Korea. “Instead, they now flee to South Korea to have a better life they learned through the markets.”