North Korea - Economic Plans
The DPRK allowed only a sharply limited role for market allocation, mainly in the rural sector, where peasants sold produce from small private plots. There was almost no small business. The North also sought a self-reliant, independent national economy; therefore, it would seem to be a typical socialist system on the Stalinist model, and certainly it was in the emphasis on heavy industry.
After the Korean War, the Korean people were confronted with difficult tasks to rehabilitate the ruined national economy and stabilize the people's living in a short period while pushing ahead with the socialist revolution. Damages caused by the war were enormous. The US troops dropped average 18 bombs per sq.km. reducing cities and rural areas to ashes. All sectors of the national economy, irrespective of factories, rural economy and rail transport and facilities of education, culture and public health were damaged. People were completely deprived of houses and living tools, and food and clothes were in short supply. Indeed, the country's situation was in a harsh condition beyond description and a number of complex issues were raised.
The Party viewed heavy industry as a centerpiece to solution of all issues arising in postwar reconstruction and advanced a basic line of economic construction on developing light industry and agriculture simultaneously while giving priority to the heavy industry. In terms of developing industries, especially heavy industry, the Party made sure those sectors urgently needed for the national economy and the people's livelihood and able to produce quick economic results should be rehabilitated on a priority basis. In the rural economy an emphasis was put on the agricultural production in order to solve the food problem at an early date while introducing socialist cooperation of private farming.
The Three-Year Postwar Reconstruction Plan (1954-56), which began after the Korean War, and the Five-Year Plan (1957-61), which succeeded it, both stressed the reconstruction and development of major industries, with consumer goods at the bottom of priorities. This bias toward major industries, however, pushed the economy forward at world-beating growth rates in the 1950s and 1960s. Official sources put the average annual growth rate in industry at 41.7 percent for the Three-Year Plan and 36.6 percent during the Five-Year Plan. The First Seven-Year Plan (1961-67) projected an average rate of 18 percent, but stoppages of aid from the Soviet Union in the early 1960s, owing to North Korean support for China in the Sino-Soviet dispute, caused the plan to be extended for three years.
Under this line and policy a 3-year plan (1954-1956) of post-war reconstruction of the national economy was mapped out and the whole Party and the entire people turned out to implement it. Under the guidance of the Party, the Korean people tightened their belt and displayed the revolutionary spirit of self-reliance so as to tide over difficulties and fulfill the 3-year plan ahead of schedule.
In the wake of the fulfilled 3-year plan, the Korean people embarked on the 5-year plan from Juche 46 (1957). The 5-year plan was intended to finish the building of the foundation of socialism. The Party put forward a task to wind up the agricultural co-operativization and socialist transformation of private trade and manufacture. The key task of the 5-year plan was to lay the foundation for socialist industrialization and to basically solve the problems of food, clothing and housing.
In the period towards implementing the 5-year plan, the situation at home and abroad was very complicated, which caused new difficulties and ordeals in the way ahead of the Korean people. At that time President Kim Il Sung roused the entire people to a heroic struggle to overcome hardship and trials at the plenary meeting of the Party's Central Committee held in December, Juche 45 (1956). It is how upswing in socialist construction and Chollima Movement came into being.
The Korean people continued to pursue upsurge in socialist construction and Chollima Movement further and implemented the enormous 5-year plan ahead of schedule. Agricultural cooperativization and socialist transformation of private trade and manufacture came to a successful end in August Juche 47 (1958). The plan was fulfilled in two and a half years in terms of total industrial output value and fulfilled or over fulfilled in four years in terms of production indices.
As a result, DPR Korea turned into a socialist industrial and agricultural state with firm foundations of independent national economy. In urban and rural areas socialist production relations established an undivided sway, bases of heavy industry centered on machine-building industry and light industry were built up, and the rural economy acquired solid production foundations. Accordingly, the task of the building of the foundations of socialism in the northern half of the Republic was undertaken.
Considerable importance attached itself to the rapid development of machine building. KWP CC and DPRK government leaders think that at the present time this is one of the most important conditions in the development of socialism in the DPRK. Consequently the September (1958) KWP CC Plenum pointed to the need to develop not only small and medium, but also heavy machine building. In particular, it was noted that it is necessary to have 30-35,000 tractors and 20-25,000 trucks to basically finish the mechanization of agriculture in the next four to five years. The availability of small reserves of foreign currency and the limitations on the opportunity to export permit annual purchases of only 2-3,000 tractors and vehicles to be made in the Soviet Union and other countries of the socialist camp, which delays the mechanization of agriculture for a considerable period. Therefore a decision was made to also begin the production of Korean-made tractors and trucks. President Kim Il Sung put forward a gigantic program of the first 7-year plan in the Fourth Congress of the Workers' Party of Korea held from September 11 to 18, Juche 50 (1961). The main task of the 7-year plan was to carry out a comprehensive technological reconstruction and the cultural revolution and to make radical improvements in the people's living conditions by relying on the socialist system. He convened various important meetings at the Party and State levels to successfully implement the 7-year plan to set forth wise policies and led the efforts to a victory to implement them. In particular, he personally organized and guided efforts to hit 6 major targets of grain, textile, fishery, housing, steel and coal, thus making a crucial turning point in fulfilling the 7-year plan.
When difficulties were created in the fulfillment of the 7-year national economic plan, President Kim Il Sung put forward a revolutionary line to carry on economic construction and national defense up building in parallel. And he, at the same time, took a series of revolutionary steps to strengthen the national defense while reorganizing the overall economic construction work. Based on that, he took active steps of postponing for another 3 years in the fulfillment of the 7-year plan.
Under the leadership of President Kim Il Sung the tasks of 7-year plan were fulfilled with good credit. Thanks to the successful conclusion of the socialist industrialization in the 7-year plan, the country has become a socialist industrial state. This has made it possible for the DPR Korea to be in a set of modern independent industrial system, comprehensively developed with strong material bases and equipped with new technologies.
The First Seven-Year Plan (1961-67) built on the groundwork of the previous plans but changed the focus of industrialization. Heavy industry, with the machine-tool industry as its linchpin, gained continuing priority. During the plan, however, and because of the withdrawal of Soviet aid during the Sino-Soviet dispute, the economy experienced widespread slowdowns and reverses for the first time, in sharp contrast to the rapid and uninterrupted growth during the previous plans. Poor performance forced the regime to extend the plan for three additional years, to 1970. During the last part of the de facto 10-year plan, emphasis shifted to pursuing parallel development of the economy and of defense capabilities.
The Korean people faced a task of further consolidating and developing the socialist system and hastening the complete victory of socialism on the basis of successes gained in the 1960s. President Kim Il Sung charted out tasks to speed up three revolutions of ideology, technology and culture and hasten a complete victory of socialism in the Fifth Congress of the Workers' Party of Korea in November Juche 59 (1970).
In the proposed grandiose program of the 6-year plan, he put forward three major tasks of the technical revolution designed to considerably narrow down the gaps between heavy and light labour and agricultural and industrial work and to free women from the heavy burden of housekeeping by unfolding an extensive technical innovation movement in all fields of the national economy and wisely guided the efforts to carry out them.
The Six-Year Plan (1971-76) followed immediately after the previous plan, but in the aftermath of the poor performance of the previous plan, growth targets of the Six-Year Plan were scaled down substantially. Because some of the proposed targets in the First Seven-Year Plan had not been attained even by 1970, the Six-Year Plan did not deviate much from its predecessor in basic goals. The Six-Year Plan placed more emphasis on technological advance, self-sufficiency in industrial raw materials, improving product quality, correcting imbalances among different sectors, and developing the power and extractive industries; the last of these had been deemed largely responsible for slowdowns during the First Seven-Year Plan. The plan called for attaining a self-sufficiency rate of 60 to 70 percent in all industrial sectors by substituting domestic raw materials wherever possible and by organizing and renovating technical processes to make such substitution feasible. Improving transport capacity became one of the urgent tasks in accelerating economic development—understandably because it was one of the major bottlenecks threatening the Six-Year Plan.
By the end of August 1975, North Korea claimed to have fulfilled the Six-Year Plan 16 months ahead of schedule. Under the circumstances, it was expected that the next plan would start without delay in 1976, a year early. However, it was not until nearly 30 months later that the plan was unveiled; 1976 and 1977 became "buffer" years.
The Socialist Constitution of the DPRK was adopted in the first session of the Fifth Supreme People's Assembly held in December Juche 61 (1972) and Comrade Kim Il Sung was elected to the highest office as the President of the DPRK. President Kim Il Sung advanced a policy on dynamically launching the Three-Revolution Team Movement in order to push ahead with the three revolutions of ideology, technology and culture and took measures to dispatch three revolution teams to major factories, enterprises and cooperative farms. As the Three Revolution Team Movement progressed in full swing, the three revolutions gained further development. In such a historic period, the 8th Plenary Meeting of the Fifth Central Committee of the Workers' Party of Korea was held in February, Juche 63 (1974). In the meeting Comrade Kim Jong Il was elected as a member of the Political Bureau of the Central Committee of the WPK and the sole successor to President Kim Il Sung. Under the wise leadership of President Kim Il Sung and General Kim Jong Il, the Korean people fulfilled the 6-year national economic plan in one year and four months ahead of schedule.
The Sixth Congress of the Workers' Party of Korea was held from October 10 to 14, Juche 69 (1980). President Kim Il Sung defined modeling the whole society on the Juche idea as a general task of the Korean revolution and set forth 10 long-term goals of the socialist economic construction to be hit in the 1980s alongside the main task of the socialist construction.
In order to fulfill the task of the socialist economic construction, Comrade Kim Jong Il put forward a revolutionary policy on creating a new speed of the 1980s and guided the struggle to implement it. The basic thrust of the Second Seven-Year Plan (1978-84) was to achieve the three-pronged goals of self-reliance, modernization, and "scientification." Although the emphasis on self-reliance was not new, it had not previously been the explicit focus of an economic plan. During the 1970s, North Korea was not nearly as closed off to the international community as it became during and after the 1980s. Although trade accounted for a relatively small proportion of the country's total economy during the Cold War, North Korea still traded with other countries. And, while most of the trade was conducted with China and the Soviet Union, a surprisingly large proportion of trade occurred outside the communist bloc. For example, during the 1970s, about 10 percent of North Korea's trade was with Japan, and more than 15 percent was with nations belonging to the Organisation for Economic Cooperation and Development (OECD).
All indications are that the Second Seven-Year Plan was not successful. North Korea generally downplayed the accomplishments of the plan, and no other plan received less official fanfare. The fulfillment of the second 7-year plan for the national economic development in Juche 73 (1984) is attributable to the guidance of President Kim Il Sung and General Kim Jong Il and devotion of the Korean people.
Based on the second 7-year plan, the Party and the Republic government set up Juche 74 (1985) and Juche 75 (1986) as a period of adjustment and made sure to produce large-size equipment with own efforts which were of great significance in developing priorities of the national economy of coal, electricity, rail transport and metallurgical industry and carrying out the technical revolution.
It is worthy of mention that the Korean people built the West Sea Barrage across the 8 km-long open sea in Juche 75 (1986). In addition, great successes were made in the areas of biology and thermal engineering to suit the global mainstream of the development of modern science and technology and practical requirements of the socialist construction. Subsequent to the successful fulfillment of the second 7-year plan and tasks of the two-year-long adjustment period, a conference calling for general mobilization was convened to fulfill the third 7-year plan ahead of schedule, which called on the entire people to launch a 200-day battle.
The main targets of the Third Seven-Year Plan (1987-93) were to achieve the "Ten Long-Range Major Goals of the 1980s for the Construction of the Socialist Economy." These goals included the three previous policy goals of self-reliance, modernization, and scientification. Furthermore, the plan gave more attention to developing foreign trade and joint ventures. Because of the collapse of the socialist bloc in the late 1980s, the plan never had a serious chance of succeeding, and in 1993 North Korea admitted it was not successful. On December 8, 1993, Premier Kang Song-san said that, "Due to the collapse of socialist countries and the socialist market, our country's economic cooperation and trade have faced setbacks. This has brought serious damage to our economic construction, and therefore our Third Seven-Year Plan has had a hard time achieving its goals."
In the progress of the all-people construction, monumental creations sprang up in Pyongyang and the rest of the country and construction of power, metallic and chemical centers of crucial significance in implementing the third 7-year plan were accelerated. 240 km-long railway tracks in the northern part of the country were laid and great successes were achieved in large-scale building of major objects. In positive response to the Party's call on launching another 200-day battle, the Korean people successfully built 500 objects contributable to raising the level of Juche-orientation, modernization and scientification of the national economy.
The third 7-year plan saw a jump of 1.5 times in an industrial output and irrigation, mechanization and chemicalization underwent a radical change in the rural economy. In a historic environment of entering a new turning point to fulfill the third 7-year plan and to inherit and accomplish the socialist cause, the Korean people significantly celebrated the 80th birthday of President Kim Il Sung as a greatest national holiday. Later seven- and 10-year plans failed to reach projected growth rates; still, a U.S. Central Intelligence Agency (CIA) study published in 1978 estimated that North Korea's per capita gross national product (GNP) was the same as South Korea's as late as 1976. In 1979 Kim II Sung claimed a per capita income in the North of US$1,900, and later North Korea put the figure at more than US$2,500, but it is not known if the figure was accurate, or how it was derived. Since the early 1980s, North Korea has fallen badly behind South Korea as transportation bottlenecks and fuel resource problems have plagued the economy. Published CIA figures for the 1980s and 1990s placed North Korea at around US$1,000 in per capita GNP.
After 1993, North Korea did not promulgate plans. Kim Jong-il himself formulated it bluntly in January 2001: "Things are not what they used to be in the 1960s. So no one should follow the way people used to do things in the past... We should make constant efforts to renew the landscape to replace the one which was formed in the past, to meet the requirements of a new era."
In May 2016 North Korean leader Kim Jong Un announced the nation’s first five-year economic plan in decades, saying the country must modernize but giving no indication that he was planning market-style reforms to jumpstart the moribund state-dominated economy. It is the first such meeting in 36 years, and it is seen as a major milestone for Kim in consolidating his rule and establishing a vision for going forward.
In August 2020 Kim Jong-un acknowledged that his five-year economic development plan had failed to achieve intended goals and pledged to unveil a new scheme at a Workers' Party congress to be held in January 2021. "The economy was not improved in the face of the sustaining severe internal and external situations and unexpected manifold challenges," Kim said while reading a decision reached at a plenary meeting of the party's Central Committee held 20 August 2020. "The 8th Congress would review this year's work and the work of the Central Committee of the Party in the period under review and set forth a new 5-year plan for national economic development including next year's orientation of work," the KCNA quoted Kim as saying.
Slamming the regime's economic agencies, Kim Jong-un was determined to make his new five-year economic development plan a successful one. Delivering a report on the first year's tasks, Kim on 08 February 2021 rapped the agencies for what he called their (quote) "passive and self-protecting tendencies.” He also demanded the increased production of iron, steel and chemical fertilizer, calling them the "main link in the chain of national economy." The session was already the second plenary meeting since the eighth party congress in January.
Analysts said such detailed, continual meetings reflect Kim's perception that the success of the new economic plan depends on achievements made in 2021. In addition, Kim may be seeking to restore confidence within the regime through new projectespecially in the face of the pandemic and the international sanctions imposed on the regime. With his frank admission that the North's economy had "immensely under-achieved," Kim last month unveiled a new five-year economic development plan, with a focus on self-reliance.
Kim lamented 12 February 2021 that the cabinet was failing in its role as the key institution in managing the economy, saying it was producing unworkable plans while displaying no “innovative viewpoint and clear tactics”. He said the cabinet’s targets for agricultural production this year were set unrealistically high, considering limited supplies of farming materials and other unfavourable conditions. Targets for electricity production were set too low, he said, showing a lack of urgency when shortages could stall work at coal mines and other industries. “The cabinet failed to play a leading role in mapping out plans of key economic fields and almost mechanically brought together the numbers drafted by the ministries,” state news agency KCNA paraphrased Kim as saying. The KCNA also said that O Su Yong was named as the new director of the Central Committee’s Department of Economic Affairs during this week’s meeting, replacing Kim Tu Il who was appointed in January. During the January party congress, Kim Jong Un called for reasserting greater state control over the economy, boosting harvests and prioritising the development of chemicals and metal industries.
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