“The reason for the mass starvation that occurred in late 90s is that North Korea faced natural disasters without expanding the market’s capability to substitute for the broken planned economy capability, and so the damage to North Korean citizens was inevitably large.”
Dong Yong Seung, the Samsung Economic Research Institute’s Economic Security Team Chief, speaking at the 19th Expert Forum sponsored by the Peace Foundation on the 19th, explained that, “The market in North Korea has expanded in the last 10 years. The supply and demand structure of daily necessities, including food items, has been formed.”
Continued Mr. Dong, “Because the market capacity has expanded, the possibility of a mass-scale starvation occurring is no longer high. In actuality, the change in food prices is being monitored at the market.”
He explained, “If South Korea sends food aid to the North, food provision increases, because the intermediary wholesalers will bring out a lot of the food items that have been held. As a result, there is a decline in the food price. In the areas of trade, a similar phenomenon has been taking place. North Korean trade organizations can achieve their quota due to the plan of the authorities.”
Further, he revealed, “Within North Korean factories, there are family enterprises that were allowed, as affiliated laborers, to produce necessities using the by-products of the factory. Therefore, the market-connected family enterprises were recently supporting factories.”
He explained the result: “That’s why these kinds of family enterprises, which manufacture products through purchasing materials from markets and the factory were raising their profits, even when the factory has not been operating due to the paralysis of the capacity of the planned economy.”
Simultaneously, Mr. Dong advised, regarding the North Korean policy of the Lee Myung Bak administration, “There is a need to maintain consistency by reestablishing the basic principles of economic policy towards the North.”
He said, “The reason for pursuing economic cooperation with the North is to promote change in the North and to improve its economic situation through its entry into the international economy. There is a need to reestablish basic principles such as helping to activate the South Korean economy while improving the quality of the North Korean citizens’ lives.”
