The Decline of North Korea's Economy

Introduction 

North Korea is one of the countries that hit the world’s headlines nearly every day due to her strong stand regarding the manufacture of nuclear weapons. North Korea’s ambitions to manufacture and test nuclear weapons have triggered harsh reactions from powerful countries, such as United States and China, to launch concerted sanctions to North Korea in order to deter her from testing her nuclear weapons. Consequently, North Korea has witnessed substantial economic decline in the recent decades (Taylor & Kim, 2018). For instance, the U.N Security Council and the United States government imposed serious sanctions to North Korea in 2017, an action that send North Korea into her worst economic decline (Taylor & Kim, 2018). The 2017 sanction saw the North Korea’s total external trade drop by 15%, while her exports declined by about 37% (Taylor & Kim, 2018). Therefore, economic indicators show that North Korea has been experiencing serious economic decline over the last two decades, although it is hard to accurately estimate her economic status due to her secretive nature. This project paper focuses on analyzing and evaluating the North Korea’s economic indicators with the aim of determining her economic status. The paper also explores the regional and global challenges and opportunities that exist in North Korea, as well as giving recommendations for strengthening North Korea’s economic institutions and infrastructure. 

Analysis and Evaluation of North Korea’s Economic Indicators 

North Korea has been experiencing major economic crisis for decades (Kim, Kim, & Lee, 2007). The North Korea economic crisis is characterized by food shortages leading to mass starvation; an indication North Korea has not been able to sustain the basic needs of her population, hence depends largely on large-scale external aid (Kim, Kim, & Lee, 2007). This has prompted neighboring and the superpower nations, such as the United States of America, South Korea, China, Japan, and Russia, to chip in and look for ways of helping North Korea curb her economic crisis (Kim, Kim, & Lee, 2007). This means that the North Korea’s state of economic crisis is an international disaster that needs to be addressed at the international level. Unfortunately, the North Korea’s economic crisis continues to hit the nation day after another due to her stubborn stand on the issue of manufacturing nuclear weapons that has led to serious sanctions of the country, and hence leading to deterioration of her economic crisis (Kim, Kim, & Lee, 2007). There is therefore, the need for North Korea’s leaders to reconsider their plans regarding the manufacture of nuclear weapons in the country if at all they need to save the nation from her worsening economic crisis. 

Statistics regarding North Korea’s long-term economic growth indicate that between 1953 and 1980, North Korea experienced an annual average Net Material Product (NMP) growth rate of 12%. According to Kim, Kim, and Lee (2007), this 12% NMP growth rate for North Korea may have been published with a lot of exaggeration, as statistics indicate that by 1980, South Korea had her citizens living at a higher living standards than those of North Korea despite South Korea recording a 6.9% NMP growth rate between 1953 and 1980 (Kim, Kim, & Lee, 2007). This indicates that North Korea’s state of economic crisis is worse than mentioned today. Her leaders have the tendency of exaggerating the vital information regarding her well-being, a situation that may lead to a wrong perception about the nation and hence may cause unnecessary suffering to her citizens. 

However, the North Korea’s economic growth rate may be measured more accurately using her GNP and GDP. Thus, the data availed by the Ministry of Unification’s estimates indicate that North Korean economic growth was estimated to be 3.6% between the year 1980 and 1985 (Kim, Kim, & Lee, 2007). In addition, the Ministry of Unification’s estimates indicate that the available information regarding the North Korean both industrial and agricultural output translated to 1.4% growth rate between the preceding years of 1985 to 1990 (Kim, Kim, & Lee, 2007). This translates to 2.2% North Korean economic decline between 1985 and 1990, as compared to the economic growth recorded in the previous years of between 1980 and 1985. Therefore, from the GNP and GDP data available, it can be concluded that North Korea has been experiencing serious economic decline for decades. 

Another way of estimating the North Korean economic growth is through comparing her economic status with that of the neighboring country South Korea. Thus, the research conducted by Kim, Kim, Lee (2007) shows that as at 1990, the North Korean GNP per capita was estimated to be a quarter of that of her counterpart South Korea (Kim, Kim, & Lee, 2007). Besides, further studies by Kim, Kim, and Lee (2007) prove that the North Korea’s economic growth has been progressing with a lot of deceleration rate. 

Figure 1 : Table of Comparison between the North Korea's annual growth rates and the South Korea's annual growth rates ( Kim, Kim, & Lee, 2007 ). 

The recent North Korea’s economic indicators show that the nation is heading to worse state of economic deterioration. For instance, Moody’s Analytics assert that North Korea is among the world’s most centrally directed and least open economies (“Moody’s Analytics”, 2019). It is feared that North Korea’s industrial capital stock is heading to beyond repair levels for a number of reasons. First, North Korea has been going through periods of under-investments, spare parts shortages, and undesirable maintenance measures (“Moody’s Analytics”, 2019). Secondly, North Korea has been investing greatly on large-scale military as well as ballistic missile and nuclear programs; hence spend a lot of capital in military investments at the expense of her infrastructural development arrangements and civilian consumptions (“Moody’s Analytics”, 2019). This has led to high levels of industrial and agricultural stagnations over the years and consequently poor national capital stock. Finally, the nation has been faced with chronic food shortages due to prolonged periods of weather-related crop failures (“Moody’s Analytics”, 2019). North Korea has therefore, been relying largely on large-scale food aid from developed nations like China and the United States. Given that North Korea has been adamant in matters concerning production of nuclear weapons, the nation has been facing serious chronic food shortages due to repeated economic sanctions from China and the United States. 

The Current Economic State of North Korea 

In order to understand well the current North Korea’s economic state, this paper takes a brief analysis and evaluation of the North Korea’s current economic indicators from various sources. The publication availed by Moody’s Analytics (2019) gives various indicators of North Korea’s economic indicators in varying years. The North Korea’s purchasing power parity (PPP) remains at a constant rate of $40 billion in the year 2013, 2014, and 2015; translating to an estimation of country’s comparison to the world of 118 (“Moody’s Analytics”, 2019). Therefore, if this North Korea’s purchasing power purity were to be drawn in a graph, it would extrapolate to an estimate of today’s purchase power purity of $40 billion, giving two implications. First, the North Korea’s purchasing power purity is stagnating; and secondly, the North Korea’s purchasing power purity is very low. Therefore, it can be concluded that the available data regarding the North Korea’s purchasing power purity suggests that the nation’s current economic growth is extremely low. 

The official exchange rate of North Korea was $28 billion as on 2013, while her real growth rate 1.1% the same year (“Moody’s Analytics”, 2019). The North Korea’s real growth rate was 1.0% and -1.1% in 2014 and 2015 respectively; giving the country’s comparison to the world of 206 (“Moody’s Analytics”, 2019). This shows that the North Korea’s real growth rate declined successively from 2013 to 2015. Besides, the North Korea’s per capita remained constant at $1800 in 2013 and 2014 and dropped to $1700 in 2015. Regarding the exchange rates, North Korea won (KPW) per US dollar on average market rates of 130 in 2015 and 2016 and 135 in 2017. This further proves that the North Korea’s economy is in great decline. 

The 2019 index of economic freedom indicates that North Korea has a current score of 5.9 which is a slight improvement of 0.1 point (Venezuela, 2019). Furth examinations rank North Korea the last among all the 43 countries within the Asia-Pacific region (Venezuela, 2019). This implies that North Korea has the lowest overall index score in the region; further showing how her economy is under great deterioration. In fact, the country has no basic policy to boost her infrastructure for a free-market economy. To make it worse, nearly all the property within the nation belong to the state (Venezuela, 2019). Since the nation’s rule of law is weak, North Korea is encompassed by rampant corruption and bribery within the entire governmental institutions (Venezuela, 2019). All the state institutions are therefore, opaque and all companies running foreign exchange are entirely run by the cabinet (Venezuela, 2019). This shows how rotten the whole ruling institutions of North Korea are and hence the nation’s governing systems have done little to empower the nation’s economic growth. Besides, the nation’s investments have been under great negative influence by the multilateral economic sanctions. 

Another factor that is behind the current poor state of North Korea’s economic growth is her straining relationships with superpower nations, particularly United States and China. North Korea has no enough resources to sustain her citizens. The nation therefore, relies on large-scale aid from the developed nations (Albert, 2019). However, the current development and testing of the nuclear weapons by North Korea has triggered China and United States to impose serious sanctions to the nation leading to severe economic decline in North Korea (Albert, 2019). Given that China is North Korea’s biggest trade partner, the current China’s support for sanctions imposed on North Korea by UN is a big threat to North Korea’s economic status. China has reportedly agreed to impose sanctions to North Korea as a punitive measure to help limit North Korea from developing nuclear weapons. It is therefore, feared that North Korea’s economic status may fall beyond critical point in the near future. 

Regional and Global Challenges Posed by the North Korea’s Economic Decline 

This paper has established that North Korea has been experiencing a prolonged period of economic decline for the last two decades. The North Korea’s economic decline is evidenced by her economic indicators, such as food shortage, underdeveloped industrial and agricultural sectors, and low exchange rates and per capital income, low economic freedom index, and poor GNP. Besides, the paper has also indicated that the main cause of the North Korea’s economic decline is repeated economic sanctions by the UN in conjunction with the superpower nations like China and United States. Therefore, in order to understand well the regional and global challenges posed by the North Korea’s economic decline, it is necessary to define the specific areas of possible impacts of the North Korea’s economic sanctions. Bradley Babson (2016) clearly outlines six areas of possible impacts of the ongoing North Korea economic sanctions. 

To start with, the North Korea’s economic sanctions have triggered the expansion of front companies, illicit activities, and financial institutions that are not directly linked to the international banking system (Babson, 2016). North Korea has been reluctant to stop her plan of developing and testing nuclear weapons. Thus, instead of complying with the UN requirements of abandoning the manufacture of nuclear weapons, North Korea has developed a mechanism of counteracting her economic sanctions through expanding illicit activities and enhancing her relationships with criminal organizations in countries such as China and Russia (Babson, 2016). Examples of the illicit activities that North Korea has championed are drug trafficking and counterfeiting Chinese and United States currencies (Babson, 2016). Therefore, the North Korea’s economic decline is a major cause of the unending criminal activities, such as drug trafficking, terrorism, and cargo abductions experienced in both the Asia-Pacific region and the world at large. 

The unending North Korea’s economic sanctions have also made the nation to create ways of evading import and exports inspections as well as pursuing non-sanctioned trade systems (Babson, 2016). Consequently, the North Korea’s sanctions have led to increased cross-border criminal activities, such as bribery, smuggling of sanctioned goods, and use of small ships that escape tracking (Babson, 2016). Thus, these cross-border malpractices have reduced the Pyongyang’s authority’s ability to exercise centralized control and increase incentives for lax enforcement on the boundaries with China and Russia (Babson, 2016). Besides, the North Korea’s act of aiding the smuggling of goods is likely to champion the smuggling of illegal goods, such as illicit drugs and weapons, and hence increase criminal activities in both the Asia-Pacific region and the global world. 

Another challenge accruing from the North Korea’s economic sanction is increased costs for overseas transactions (Babson, 2016). This results from the high transactional costs incurred by North Korea in an attempt to meet essential foreign exchange. For instance, the sanction imputed on North Korea by UN due to her attempt to develop and test nuclear weapons has raised the cost of production within the nation; thus foreign companies willing to invest in the country have to seek ways of counteracting the country’s sanction, such as through bribing custom officials and border security officials. Besides, UN member states have been incurring a lot of loss in the attempt to comply with the enforcement of UNSCR 2270 (Babson, 2016). This implies that the North Korea sanction not only increases the country’s production cost, but also increases the costs for overseas transactions. 

The North Korea’s economic decline resulting from sanction has resulted into massive loss of job opportunities for both her citizens and the foreigners who work in various firms within the nation, such as the coal and iron mining companies (Babson, 2016). This is because the new sanction has increased the cost of production leading to closure of many companies within the state, especially in recent years when China has started to support the sanction. For example, the exportation of iron and iron ore plummeted in 2015 following the lowered international commodity prices as well as the fall in demand for the construction materials due to China’s economic slow and the shrinking of the China’s infrastructural investments (Babson, 2016). Given that North Korea depends highly on iron and coal exportation, the sudden fall in their exportation not only led to depletion of her economy, but also resulted in massive loss of job opportunities to the employees who work in the iron mining industry. 

Another possible impact of the North Korea’s sanction is diversion of coal and other sanctioned ore exports to domestic economic activities such as the Donju market-based entrepreneurial initiatives (Babson, 2016). The sanctioning of iron and coal exports has led to the hiking of their exportation cost, thus leading to low demand in the international market. This has led to a great threat to the domestic coal and iron mining industry (Babson, 2016). Therefore, North Korea has to divert her attention from the exportation of coal, iron, and iron ore to exportation of unsanctioned exports such as textiles, value-added manufacturing, and knowledge services. 

Finally, the North Korea sanction has stimulated adoption of the PDS to meet transition needs of displaced laborers, including miners and former workers at KIC (Babson, 2016). The sanctioning of the iron and coal exports has led to serious effects to the laborers who work in both the mining industry and other related firms. The sanction has led to sharp fall in the international demand for the exported iron and coal, thus the government of North Korea has to look for means of meeting transition needs of the displaced laborers including the miners and the former 54,000 KIC workers who lost their jobs following the closure of the complex (Babson, 2016). Therefore, meeting the transition needs of these displaced laborers is a great challenge and most of the workers ended up being jobless. 

Possible Reforms to Counteract North Korea’s Sanction 

As UN sanctions North Korea, her economy remains weak and vulnerable making the normal North Korean citizens suffer greatly. For instance, most of the North Korean citizens are living under poverty level due to the nation’s cracked economy. The nation suffers from a continuous food shortage and therefore, the largest percentage of the North Korea’s nationalists is living under high dependency level. However, as the North Korea experiences the sharpest economic decline in recent years, her structure is slowly changing towards major internal and external pressures (Brown, 2018). It is quite ironic that as the UN continues to impose sanction on North Korea; her economy has in recent times become more and more decentralized and productive (Brown, 2018). This is championed by the fact that the sanctions have weakened the state’s economy making the state to allow for the spread of market activities, thus acting as an opportunity for individuals and families to aim at working for their own interests (Brown, 2018). This in turn has increased the citizens’ incentives to make more and more of private investments. 

The fact that North Korea is not a member of the world’s market trading system, the WTO, has made most of the member nations place high tariffs on North Korean exports, making them highly competitive internationally (Brown, 2018). Worse is that Pyongyang’s long-term foreign debts default has made the nation unable to access foreign credits and direct investments (Brown, 2018). The challenge of North Korea’s lack of the WTO membership coupled by Pyongyang’s long-term foreign debts default could be perceived as a great threat to the nation’s economic growth and development. Interestingly, the current North Korea’s economic and political troubles have contributed largely in availing a narrow pathway for the nation’s reforms that could greatly unshackle North Korea’s economy (Brown, 2018). This has contributed greatly in the rise of the North Korea’s economic growth, even at a higher rate than the neighboring nations such as China, South Korea, and Japan; if compared at the same period of economic growth measure. 

Since North Korea has shown little intention to stop her nuclear plans, the UN sanction on the nation has proven futile in solving the nuclear insecurity issue posed by North Korea (Clemens, 2016). Pyongyang may not be willing to comply with the UN call to stop the nuclear plans and instead may be interested in making systematic reforms to counteract the current the rising demand for hard currency emanating from the increasing dollarized economy (Brown, 2018). This paper explores in details the examples of reforms that North Korea may adopt because they have been found working in areas such as Deng’s China, Post-war Japan, and Park Chung-hee’s South Korea. 

One of the reforms that Pyongyang may adopt is initiating the transfer of property ownership from the state to the private sector (Brown, 2018). The fact that North Korea is largely owned by Pyongyang implies that the North Korea sanction is instilled through sanctioning Pyongyang (Clemens, 2016). Therefore, the state may decide to liquidate the real assets in order to be able to generate funds necessary for building infrastructure (Brown, 2018). This will enable the state to fulfill its social obligations through allowing the private sector to be the key contributor of the nation’s productivity through small quantity industrial and real assets (Brown, 2018). North Korea may therefore, evade the argon of economic sanction through transferring property ownership from the state to the private sector in order to curb her economic decline. 

Another reform that North Korea government may undertake is to unify its monetary system under a U.S. dollar or RMB currency board system (Brown, 2018). This reform worked in Hong Kong in the year 1982 following a successful step towards integrating with China (Brown, 2018). Unifying the monetary system will be a necessary step, as it reduces the vulnerability that may accrue from won and hard currencies should they begin to slip in value (Brown, 2018). Besides, unifying the monetary system, possibly under the U.S. dollar and RMB currency will help to avoid chances of financial panic due to the vulnerability created by won and hard currencies used side-by-side. 

The third possible reform may entail unifying the wage system through harmonizing the state salaries with the market wages, thereby deploying the idea of paying workers directly with real money (Brown, 2018). This is because not in ration coupons stifle productivity and prevent financial savings and are prone for abuse (Brown, 2018). Furthermore, it is impossible for ration-based economy to take the advantage of multiplying impact of money circulation (Brown, 2018). It should be noted that North Korea is a UN nation that does not subscribe to International Labor Organization rules and the wage payment is required by the International Labor Organization (Brown, 2018). Therefore, North Korea is required to pay the International Labor Organization wages, and unifying the wage system may help to reduce the UN sanction on North Korea. 

The final reform that Pyongyang may adopt is initiating policies that allow private farming and private ownership together with permitting transfer of farm assets (Brown, 2018). North Korea has about one third of her population practicing farming as their main source of economy (Brown, 2018). The state may therefore, support the farmers to double or even triple their productivity; thereby generating surplus income and workforce that may be useful in generating lucrative export-driven growth (Brown, 2018). This reform may therefore, prove useful to North Korea especially following the new sanctions, and given that there is no hope for North Korea to come out of sanction due to her unstoppable plan to develop and test her nuclear weapons. 

Why North Korea Has Been Unable To Keep Up With Neighbors In Terms Of Economic Growth 

Statistics indicate that back in 1980s, North Korea’s economic growth was more than twice as compared to that of her neighbor China (Champion, 2018). However it is difficult to explain how North Korea entered an era of tumultuous economic collapse in late 1980s while China entered her economic miracle, that offered the most successful formula in history; China experienced a drastic transition from agonizing state of poverty to prosperity (Champion, 2018). It is also surprising that while South Korea continues to enjoy moments of economic prosperity, their counterparts North Korea continues to experience the sharpest economic decline (Champion, 2018). Other North Korea neighbors such as Japan and Russia are also on the receiving end of economic prosperity (Champion, 2018). In fact, it is clear that North Korea ranks the least in terms of economic growth in the whole of the Asia Pacific region (French, 2015). This paper therefore, seeks to unveil the major reasons why North Korea has been unable to catch up with her neighbors despite standing a good chance to have even better economic prosperity than her neighbors. 

The first reason behind the North Korea’s economic stagnation could be blamed on her leadership (Champion, 2018). The successive North Korea’s leaders, ranging from Kim Jong Un, Kim Jong Il, and Kim Il Sung, have been extremely reluctant in embracing change ( Tarrington, 2009 ). For instance, the Beijing model enticed pulling off a rare trick, leading to the delivery of market-led growth, global economy integration, and at the same entrenched Communist Party (Champion, 2018). To make it worse, Kim’s recent speech in a party congress in 2016 was inclined towards championing the country’s heroic, guns-over-butter resistance to the “wave of bourgeois liberty and wind of ‘reform’ and ‘openness’ around us” (Champion, 2018). This explains how rotten the North Korean leadership has been and continues to drag all her instruments of economic growth ( Tarrington, 2009 ). Therefore, North Korean leadership should take the major blame for the country’s poor economic development. 

The second reason as to why North Korea has experiencing decades of economic stagnation as compared to the neighboring nations is her cult of personality that surrounds the dynasty and the North Korea’s rare condition ( Park & Snyder, 2012 ). The North Korea’s cult of personality has led to the division of the nation along ethnic lines and this has seriously made the country’s transition quite unappealing ( Park & Snyder, 2012 ). In fact it is surprising that the Politburo could declare Mao Zedong 70% wrong while embracing private property (Champion, 2018). More so, it would prove hard to Kim to question his both father’s and grandfather’s wisdom in what has been a monarchical kind of communist state (Champion, 2018). This explains how the North Korea’s cult of personality has been a key driver to her economic stagnation. 

The North Korea’s state ownership of property is another driver of her economic breakdown ( Park & Snyder, 2012 ). The North Korea’s private property and enterprise remains nominally illegal up to date (Champion, 2018). The North Korea’s state ownership of property makes her citizens lack incentives to working hard to raise their economic status. This explains why even today the North Korea’s GDP per capita is about a eighth that of China (Champion, 2018). The neighboring nations, such as China, South Korea, and Japan, have been embracing private ownership of property and that is why they have been on a good record of economic development while North Korea remains in her poor state of economic growth. 

The final and the major reason why North Korea has been on economic stagnation as compared to the nations within the Asia-Pacific region is her emphasis on her military empowerment at the expense of other areas of economic development ( Hanlon, 2003 ). As early as the late 1960s, North Korea devoted about 20% of her GDP to the military ( Hanlon, M. (2003 ). Besides, North Korea has been keen to develop complicated nuclear weapons instead of saving her capital to pursue developmental projects, such as investing in agricultural production, industrial development, construction of infrastructure, and other social amenities that help to earn the nation income ( Hanlon, M. (2003 ). The habit of North Korea to continue investing in military more than other areas of governmental operations, has made the nation’s economic state move from bad to worse. 

By 1970s, North Korea depended greatly on her relationships with the Soviet bloc, through importing fire arms and later exporting them to the Soviet bloc and Iran ( Hanlon, M. (2003 ). However, following the dissolving of the Soviet Union, North Korea suffered a major economic blow ( Hanlon, M. (2003 ). This is because North Korea lost her access to markets and also had to subsidize the Soviet oil ( Hanlon, M. (2003 ). Consequently, North Korea has been on a serious case of economic contraction, which is championed by her desire to invest more on military and other military related areas. 

Suggested Possible Solutions to North Korea’s Economic Decline 

This paper has already established that North Korea is now entering a second decade of economic decline that is championed by multifaceted factors. The factors behind the North Korea’s economic stagnation include prolonged periods of sanctions, emphasis of military investments at the expense of infrastructural development, poor leadership, just to mention a few. The North Korea’s economic decline not only affects her citizens, but also acts as a major blow to the global world ( Park & Snyder, 2012 ). For instance, the North Korean citizens have been going through hard periods of shortage of food leading to starvation ( Park & Snyder, 2012 ). Most of the nationalist have been living below poverty level and they largely depend on large-scale aid from other developed nations, such as the United States, China, Japan, and South Korea. In addition, the major North Korea economic collapse is a big blow to the other nations, as her sanction has led to the closure of North Korea’s mining industries (like iron and coal mining industries). This has led to massive loss of job opportunities to both the North Korean citizen and the other people who work in such industries. 

It is therefore, worth noting that the current poor economic state is actually a global issue that needs to be addressed at the international level ( Park & Snyder, 2012 ). Holly Ellyatt (2018) asserts that rebuilding North Korea will cost an estimated amount of $63 billion. This amount is extra-large for North Korea’s Budget and it may take centuries for North Korea to rebuild her developmental infrastructure alone (Ellyatt, 2018). Consequently, North Korea’s devastating state of economic overhaul is likely to affect the whole world for decades. This implies that it would be a good idea that the global world device tangible strategies in order to help in boosting the North Korea’s economy (Ellyatt, 2018). This paper suggests several possible solutions that either North Korea may put in place or the other nations may employ in order to assist in boosting the North Korea’s economy for a better world. 

First of all, North Korea should think of downsizing her military (Mochizuki, 2003). North Korea has been investing heavily on militia empowerment. In fact, this paper earlier on established that North Korea’s military cuts about 20% of her annual budget ( Hanlon, 2003 ). Heavy investment in militia groups in North Korea and any other nation is unnecessary, especially at this time when the world has been experiencing moments of peace ( Hanlon, 2003 ). Nevertheless, North Korea has been having huge military in peninsula that demands a lot of capital to maintain ( Hanlon, 2003 ). North Korea should downsize her military in order to reduce her enormous economic burden accruing from the high military investments (Mochizuki, 2003). The nation should spare her little resources to invest in developmental structures such as funding the mining industry, investing in agricultural production, construction of improved transport and communication systems, and construction of social amenities, such as hospitals and educational institutions ( Hanlon, 2003 ). Therefore, downsizing her military will help North Korea boost her economic growth and improve the living standards of the North Koran citizens. 

Another possible solution to the deteriorating economic state of North Korea is complying with the UN requirement to drop her nuclear plan ( Roehrig, 2017 ). This paper has shown that the major reason behind the North Korea’s economic decline is the unending sanctions from UN due to her notorious plan to manufacture and test nuclear weapons. North Korea has been relying largely on economic boost from China through her strong trade partnership with China ( Roehrig, 2017 ). However, the current action by China to back up UN in instilling North Korea sanction is a big blow to North Korea’s economic growth ( Roehrig, 2017 ). This is because the North Korea-China relationship is under threat and unless North Korea abandons her nuclear plan, her economy will in near future shift from worse to the worst. It is therefore, necessary for the North Korea’s leadership to reconsider its nuclear plan for the betterment of her citizens. There are two main ways in which North Korea may boost her economic growth through dropping her nuclear plans. First, the nation will spare the money used in the development and testing her nuclear weapons to invest in developmental areas, such as equipping the infrastructural sectors; as discussed earlier in this paper. Secondly, dropping her nuclear plan will enhance North Korea’s relationship with developed nations such as the United States and China ( Roehrig, 2017 ). This will help North Korea receive economic boost from the other nations, as well as getting rid of her prolonged sanctions. 

The change of the North Korea’s leadership style is another possible solution to her economic decline ( Kwon & Chung, 2012 ). North Korea has been having one of the poorest leadership in the world. For instance, the North Korea’s dynasty leadership ranging from Kim Jong Un, Kim Jong Il, and Kim Il Sung has been a great threat to her economic growth ( Kwon & Chung, 2012 ). The nation has no democracy and the leaders of the nation have been dictating the North Korea’s economic growth ( Kwon & Chung, 2012 ). For example, the nation has been having state ownership of property; hence citizens lack incentives in long term investments within the nation. The international community should therefore, chip in and help the nation to change her leadership from dictatorship leadership to democratic leadership in order to help all citizens feel represented and help to change state ownership of property to private ownership of property. 

Finally, there is the need for the international world to come together and help in rebuilding North Korea ( Choi, Kim, & Merrill, 2003 ). This paper has established that North Korea’s economic decline is a major issue affecting not only the nation, but also the global world. It is also clear that North Korea’s economy is approaching a critical state and if not corrected now, it may reach uncontrollable state and end up frustrating the whole world ( Choi, Kim, & Merrill, 2003 ). Nations should therefore, gang up and rebuild North Korea together. In fact, the neighboring nations, such as South Korea may benefit greatly while helping in rebuilding North Korea (Ellyatt, 2018). North Korea has an isolated economy ( Choi, Kim, & Merrill, 2003 ). Recent research indicates that President Donald Trump meeting with the North Korean leaders Kim Jong Un is likely to yield good results and the outcomes is that North Korea may soon abandon her nuclear plan leading to the wake of North Korea’s reconstruction (Ellyatt, 2018). This will lead to the normalization of the North Korea’s economy to the rest of the world (Ellyatt, 2018). There is therefore, the future for North Korea’s economic boost. 

Although rebuilding North Korea will be costly, the idea will be accompanied by various benefits, especially to the neighboring countries like South Korea. Plans are that South Korea will be closely involved in rebuilding North Korea (Ellyatt, 2018). Rebuilding North Korea will give the nation greater access to foreign capital to aid in infrastructural investments (Ellyatt, 2018). This will offer a greater opportunity for South Korea, emanating from the cross-border activities that will be taking place. Rebuilding North Korea will also mean that the South Korea’s companies will be constantly involved in provision of construction and building materials sectors (Ellyatt, 2018). Rebuilding North Korea will also offer an opportunity to the other nations to cheaply import North Korea’s materials from the mining and agricultural sectors. In addition, the other nations will be able to cheaply export their products to North Korea and hence boost their economy. 

Recommendations 

North Korea is one of the nations that have registered prolonged periods of economic stagnation. This paper has established that back in 1980s; North Korea enjoyed an era of economic prosperous that was eight times higher than that of China. However, it is quite ironical today that while China miraculously gained economic prosperous drastically, North Korea has been hit with even steepest economic decline ( Xiaodon, 2018 ). The same case applies to the neighboring nations, such as South Korea, Japan, and the United States. While it is not clear as to why North Korea should experience high levels of economic decline, while her neighbors are enjoying high levels of economic prosperity, this paper approaches the North Korea’s recommendation for economic prosperity by drawing illustrations from her neighbors’ points of success. 

First, North Korea should monitor and learn from what her neighboring countries and the rest of the world is doing in order to rise to her economic prosperous ( Kim, 2009 ). North Korea has a great opportunity to learn from what China did in order to quickly rise to economic prosperous. Therefore, the North Korean leaders should visit their counterpart leaders in China, South Korea, and Japan, and seek to learn from them the best steps they can follow in order improve her economy. For example, North Korean leaders should adopt both economic and innovative policies that are under practice in the other nations. Secondly, North Korea should reinforce support for her innovation leadership ( Kim, 2009 ). This may include reinforcing policies, programs, as well as institutions that offer base for knowledge-based growth and high value employment ( Kim, 2009 ). This could include strategies like empowering research institutes that explain the secrecy behind her economic growth. 

Thirdly, it is recommended that North Korea aim at capturing great values from her public investment in research (Champion, 2018). This could include making the plan to reinforce cooperative efforts between North Korea’s both private and public sectors. Thus, North Korea should embrace Private-public partnerships and aim at expanding her support for manufacturing, just like the other nations have done. Finally, North Korea should actively cooperate with other nations, such as United States, China, South Korea, Japan, and Russia that have high chances of helping in boosting her economic growth (Champion, 2018). Besides, cooperating with other nations will help North Korea learn innovative ways of handling shared challenges, such as energy, security, and environment. 

Conclusion 

North Korea has been experiencing tenacious and pragmatic economic decline that not only poses great challenge to the citizens of the nation, but also confronts existential real world challenges. For instance, North Korea’s economic decline has led to low living standards and starvation; hence the country highly depends on large-scale aid in order to meet her citizens’ basic needs. The North Korea’s economic sanction has also hiked tariffs, thus acting as a major blow to the trade partners, a situation that has resulted in massive closure of North Korea’s companies leading to subsequent loss of job opportunities to both the North Korean citizens and the other citizens who work in industries like iron and coal mining industries. This implies that the current steepest North Korean economic decline is a global problem that needs to be addressed at the global level. This project paper has analyzed and evaluated the North Korea’s economic indicators with the aim of determining her economic status. Besides, the paper has also explored the regional and global challenges and opportunities that exist in North Korea. It is recommended that all nations come together and rebuild North Korea as soon as possible before her economy drops beyond critical level. In addition, it is recommended that North Korea learn strategies for economic success from the other nations, especially the neighboring nations such as South Korea, China, Japan, United States, and Russia. 

References 

Albert, E (2019). The China-North Korea Relationship. (Online).Retrieved from https://www.cfr.org/backgrounder/china-north-korea-relationship 

Babson, B.O. (2016). The North Korean Economic System: Challenges and Issues: International Journal of Korean Studies. 20(1): 149-175. 

Beal, T. (2005).  North Korea: The Struggle against American Power . Ann Arbor, MI: Pluto Press. (Online).Retrieved from https://ebookcentral.proquest.com 

Champion, M. (2018). Why Can’t North Korea Keep Up With the Neighbors? (Online).Retrieved from https://www.bloomberg.com/news/articles/2018-05-23/why-can-t-north-korea-keep-up-with-the-neighbors 

Choi, E. K., Kim, E. H., & Merrill, Y. (2003).  North Korea in the world economy . 

Clemens, W. C. J. (2016).  North Korea and The World: Human Rights, Arms Control. 

Ellyatt, H. (2018). Rebuilding North Korea could cost $63 billion and South Korea is set to benefit. (Online).Retrieve from https://www.cnbc.com/2018/06/27/rebuilding-north-korea-could-cost-63-billion.html 

French, P. (2015).  North Korea: State of paranoia . (Online).Retrieved from https://ebookcentral.proquest.com 

Han, J., & Tae-hern, J. (Eds.). (2013).  Understanding North Korea: Indigenous perspectives . 

Hanlon, M. (2003). Economic Reform and Military Downsizing: A Key to Solving The North Korean Nuclear Crisis? (Online).Retrieved from https://www.brookings.edu/articles/economic-reform-and-military-downsizing-a-key-to-solving-the-north-korean-nuclear-crisis/ 

Hirsh-Pasek, K., & Becker, J. (2005).  Rogue regime: the continuing threat of North Korea . 

Justin V.  A (2016). Most Enterprising Country: North Korea in the Global Economy : Cornell University Press.  (Fairly recent published by a scholarly press). 

Kang, J. (2013). Assessment of the Nuclear Programs of Iran and North Korea . New York: 

Kim, B.Y., Kim, S.J., & Lee, K. (2007). Assessing the Economic Performance of North Korea, 1954–1989: Estimates and Growth Accounting Analysis: Journal of Comparative Economics    35(3):564-582. 

Kim, S. C. (2009).  Engagement with North Korea: A Viable Alternative . (Online).Retrieved from https://ebookcentral.proquest.com 

Kim, S. C., & Cohen, M. D. (2017).  North Korea and Nuclear Weapons: Entering The New Era of Deterrence . Washington, D.C: Georgetown University Press. 

Kongdan, O., & Hassig, R.C. (2000).  North Korea through the Looking Glass , Brookings Institution Press. ProQuest Ebook Central. (Online).Retrieved from https://ebookcentral.proquest.com/lib/norwich/detail.action?docID=3004290 . 

Kwon, H., & Chung, B.-H. (2012). North Korea: Beyond Charismatic Politics. Lanham, Maryland: Rowman & Littlefield Publishers. (Online).Retrieved from http://search.ebscohost.com.library.norwich.edu/login.aspx?direct=true&db=e000xna&AN=463731&scope=site 

Massingame , S. P. (2009).  North Korea: Issues and U.S. policy . New York: Nova Science 

Mochizuki, M. (2003). Economic Reform and Military Downsizing: A Key to Solving the North Korean Nuclear Crisis? (Online).Retrieved from https://www.brookings.edu/articles/economic-reform-and-military-downsizing-a-key-to-solving-the-north-korean-nuclear-crisis/ 

Moody’s Analytics. (2019). North Korea-Economic Indicators. (Online).Retrieved from https://www.economy.com/north-korea/indicators 

Park, K., & Snyder, S. (2012).  North Korea in transition: Politics, economy, and society . (Online).Retrieved from https://ebookcentral.proquest.com 

Roehrig, T. (2017).  Japan, South Korea, and the United States Nuclear Umbrella: Deterrence after the Cold War . New York: Columbia University Press. 

Tarrington, C. W. (2009).  Kim Jongil Regime in North Korea . (Online).Retrieved from https://ebookcentral.proquest.com 

Taylor, A., & Kim, M.J. (2018). North Korean Economy Suffers Its Steepest Decline in Two Decades. (Online).Retrieved from https://www.washingtonpost.com/world/north-korean-economy-suffers-steepest-decline-in-two-decades/2018/07/20/50a84dbc-8bd7-11e8-8b20-60521f27434e_story.html?noredirect=on&utm_term=.8dc50eacbf5c 

Venezuela. (2019). 2019 Index of Economic Freedom: North Korea. (Online).Retrieved from https://www.heritage.org/index/country/northkorea 

Xiaodon. (2018). The Six-Party Talks at a Glance.