Introduction

No particular changes were observed in North Korea’s markets in 2016. This has three implications: first, in terms of market policy, the North Korean regime faces a growing need to strike a balance between actively “utilizing” the markets and “controlling” the potential growth of and illegal activities within them; second, with market development, marketization in North Korea has progressed to the point where new changes are rarely detected; and third, with respect to the impact of the international community’s sanctions, there have been no significant changes.

Since the “Arduous March” in the mid-1990s, North Korea’s markets have undergone a rapid transformation due to the people’s increased reliance on them (jangmadang) to make ends meet as their regime fails to provide support. In addition, the regime turned a blind eye to “non-legal” market activities and adopted economic management measures that include elements of a market economy, which might have expedited the qualitative and quantitative growth. With limited productive and financial capabilities, the North Korean regime urgently needed to use the market’s production capabilities and competitive mechanism. Indeed, this current market-oriented direction has been maintained throughout Kim Jong-un’s leadership since 2012. As a result, the North is now witnessing a dual economy in which planned and market economies coexist and have taken root.

One of the most outstanding trends in the North Korean market in 2016 was price stability. This is particularly noteworthy because the international community, led by the UN, enforced strong additional sanctions on North Korea during that year. In general, the market is regarded as the most sensitive area to economic sanctions from the outside world.

* This article is part of 2016 The DPRK Economic Outlook

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