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North Korea's emphasis on state industries could hurt economy, analyst says

North Korea's emphasis on state industries could hurt economy, analyst says
North Korea’s economy is largely driven by private economic activity, according to South Korea’s Korea Development Institute. but the state continues to promote its industries in its official plans. File Photo by KCNA/EPA-EFE

July 1 (UPI) -- North Korea's state-owned enterprises only had a small role in economic development after the Great Famine of the '90s while informal markets were crucial to recovery, according to new South Korean analysis.

Economist Kim Kyoo-chul said in a new report from Seoul's Korea Development Institute that North Korea's state-run electric power, metals and chemical industries -- the focal point of Kim Jong Un's five-year plan -- have had a marginal impact in rehabilitating the North's economy, Yonhap reported.

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Pyongyang's current emphasis on heavy industries, its policy of "self-reliance" and seclusion are "highly likely to cause the North Korean economy to slip back into recession," Kim said in his review.

Kim Jong Un's five-year plan unveiled at the Eighth Party Congress in January included guidelines for expansion in nearly every industrial sector, including nuclear power, coal mining, railways and tourism.

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Kim Kyoo-chul said in the KDI report that North Korea's per capita gross domestic product has been rising continuously since the end of the famine in the late '90s while malnutrition declined.

The rise in GDP per capita in the North can be attributed mostly to informal markets and trade with the outside world, Kim said.

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The economist also said that while market activity increased exponentially in the 2000s, the recovery of state-owned industries "remains largely unconfirmed."

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North Korea is one of most impoverished countries in the world. According to Seoul's National Statistical Office in 2020, the country's gross national income per capita was $1,285.

Gavi, the international alliance working to provide COVID-19 vaccines to the developing world, has said it is expected to deliver vaccines to North Korea, Voice of America's Korean service reported Wednesday.

The vaccines continue to be delayed as North Korea refuses to allow in foreign aid workers. North Korea, along with Tanzania, Haiti, Eritrea and Burundi, has yet to launch a vaccination program, according to the report.

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