A Tale Of Two Economies

The Rise and Fall of North Korea's Economy

A Tale of Two Economies

From the aftermath of the Korean War until the mid-1970s, North Korea and its neighbor South Korea enjoyed similar GDPs per capita. However, North Korea's economy has since plummeted, with a GDP per capita of less than 2000 in the late 20th century. In contrast, South Korea has thrived, becoming one of the world's leading economies.

Economic Mismanagement and Resource Misallocation

The decline of North Korea's economy can be traced back to decades of economic mismanagement and resource misallocation. After the end of Soviet aid in 1991, North Korea faced serious economic setbacks that were exacerbated by these factors. The country's closed and centralized economic system has stifled innovation and growth. Moreover, the government's heavy investment in the military has diverted resources away from productive sectors of the economy.