A statue of North Korean founder Kim Il Sung in Pyongyang. North Korea's economy is growing through a partnership between private North Korean enterprise and the regime, a South Korean analyst said on Friday. Photo by Yonhap
SEOUL, Feb. 27 (UPI) -- Informal markets are the prime source of goods and services for most North Koreans, and distribution through its officially planned economy is the "exception rather than the rule," a South Korean economist said Friday.
Speaking at a forum addressing issues of North and South Korean relations, Lee Seok-gi, an analyst for the Korea Institute for Industrial Economics and Trade, said the North Korean regime is finding ways to accommodate the rise of private enterprise to rebuild its economy, Yonhap reported.
Lee cited a recent case study in which North Korean citizens launched a private, inter-city bus route. The route is privately operated, Lee said, but is legally licensed as a state enterprise.
North Korea is pursuing a similar policy in other sectors, Lee said, taking full advantage of its entrepreneurial population in the areas of manufacturing, logistics and the payment of wages.
North Korea's new approach to economic development is coming despite a "low point" in North-South relations, said Kang Young-sik, the general secretary of a South Korean umbrella group of non-governmental organizations.
Kang said South Korean aid to North Korea dropped to a low of $4.9 million in 2014, half the amount sent to the North in 2012, South Korea's OhMyNews reported.
He and others at the forum said the Park Geun-hye administration should lift the May 24 economic sanctions against North Korea so civic exchange can resume its pre-2010 levels and South Korean investment in North Korea can begin again.
During the discussions, Lee presented the most recent Bank of Korea's estimates on North Korean economic growth.
Lee said the North Korean economy has not regained its pre-famine levels of growth, and has "recovered a degree of stability" after Kim Jong Un assumed power in late 2011.
On Thursday, North Korea notified South Korea of its decision to increase the minimum wage in the Kaesong factories, a joint venture of North and South Korea, to $164 a month, up from $155.
Patrick Cronin, senior director of the Asia-Pacific Security Program at the Center for a New American Security said the move adversely affects South Korean businesses.
"The geopolitical rationale for investing in a losing industrial project does not replace the basic needs of [South Korea's] private sector," Cronin told UPI.
South Korea is refusing to cooperate with North Korean demands for the wage hike.
