Introduction

No outstanding changes were observed in the North Korean economy in 2017. This came as a surprise, considering that international sanctions against North Korea have continued to strengthen in response to the regime’s continual provocation. Several interpretations have been proposed in this regard. The first view is that the crisis-management capability of the North Korean authorities has been exercised effectively. The idea here is that North Korea had secured reserves of major commodities in advance, in anticipation of growing sanctions by the international community, and that it effectively exerted strong administrative authority in order to control price increases in its economy. The second explanation is that the North Korean economy has improved rapidly, resulting in a level of tolerance that could withstand modest external shocks. As the North Korean economy continue to expand, the size and scope of its marketplaces, which are operated independently under the government-led planning system, also have grown, and have done so in a more systematic and efficient manner mostly depended on the so-called “red capitalist” idea. Lastly, a third explanation is that the international sanctions on North Korea do not apply to sectors connected to the livelihood of the people, and that, as such, most of the products traded into the market are not directly affected by the sanctions. Rather, some argue that as North Korean exports have halted, certain commodities, such as coal, and marine products, are flowing into North Korean domestic marketplaces and driving down prices. Taken together, all these perspectives suggest that it will take more time for effects of the sanctions on the North Korean economy to become observable.

* This article is part of 2017 The DPRK Economic Outlook

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