DPRK Economic Structure

Agriculture

The DPRK's rugged terrain limits agricultural cultivation to less than 20% of the land area. The main crops are rice, maize, wheat and potatoes. The agricultural sector is run as a collectivised system, incorporating both state and cooperative farm systems. According to some estimates, 36 percent of the country's total labour force is engaged in agricultural work (including forestry and marine products), which accounts for about 25 percent of GNP. These proportions are much lower than the mining and manufacturing industries and reflect the traditionally low priority and minimal investment input accorded to agriculture in the DPRK. The regime has not prevented the spread of small farmers' markets, but this can be interpreted as an ad hoc unofficial response to serious food shortages, and not a genuine policy change.

Due to structural problems, North Korea has been suffering from a grain shortage of about 2 million tons a year. - The North's annual grain demand is estimated to be about 6 million tons a year, while its annual output level remains around 4 million tons. In 2003, North Korea's grain demand was forecast to be about 6.32 million tons and its output at about 4.13 million tons. This left a shortage of 2.19 million tons. Taking into account the 760,000 tons, including the grain shipments provided by the South in loans and the aid from the international community, the North would still be in need of about 1.5 million tons of grain additionally.

Energy

The DPRK's indigenous energy resources are predominantly coal and hydroelectricity. It has no known deposits of oil or gas, but used to gain significant quantities of both from the former Soviet Union and China at `friendship prices'. However, in the 1990s, Pyongyang's concessionary arrangements with its two neighbours came to an end, severely exacerbating its economic problems. The DPRK's energy shortages are both a symptom and cause of its economic malaise. From having one of the most developed electricity networks in Asia in 1980, with a capacity of 5.4 million kw generating 25 billion kwh annually, the DPRK now has an obsolete, poorly maintained and inefficient system operating at less than 50% capacity and falling far short of demand.

The DPRK's dire energy situation received some relief under the terms of the October 1994 Agreed Framework Agreement between the US and the DPRK - see section on the Korean Peninsula Energy Development Organisation (KEDO). However, even with the realisation of the two reactors and their 2 million kw capacity, the DPRK's electricity supply will still be constrained by an antiquated grid.

Infrastructure

Apart from a few modern and rarely used motorways (there are no private cars and intercity buses and trucks are increasingly rare), DPRK infrastructure is characteristic of those of an underdeveloped country. The lack of adequate road infrastructure (only eight per cent of roads are paved) acts as a significant brake on other commercial activity, and consequently 90% of freight and 70% of passenger traffic is by rail. The rail network itself is generally outdated and run-down and largely electricity dependent (90%), making the mobility of people and goods vulnerable to the electricity shortages frequently experienced throughout the country.

Telecommunications infrastructure is also primitive. Few citizens own a phone and phone numbers are treated with a degree of secrecy. There is no published phone directory and many firms are reluctant to give out their phone, fax or telex numbers, and the phone numbers and addresses of government departments are kept secret. The telecommunications equipment itself, with the exception of the system installed in the Rajin-Sonbong free trade zone by Loxley Telecommunications, is generally 1950s Soviet technology and is poorly maintained.

Heavy Industry

Heavy industry accounts for 50% of total production in North Korea. The most important sectors are iron and steel for machine building, chemicals and military production. Focusing on heavy industry enabled North Korea to achieve substantial economic growth up until the mid-1970s, largely because of the availability of abundant natural resources (such as coal, iron ore, lead, zinc, gold, silver and other mineral deposits) and the massive amount of aid it received from socialist bloc allies. The emphasis on heavy industry was intended to provide a sound basis for light industry and agriculture. In reality, however, the emphasis on heavy industry has been at the expense of the latter two sectors and has greatly curtailed the country's economic growth.