Page last updated at 17:18 GMT, Tuesday, 26 August 2008 18:18 UK

Viewpoints on North Korea's economy

Big changes are afoot in the North Korean economy, as people turn to small-scale trading and kitchen gardens as systems of state provision break down.

The BBC's Becky Branford spoke to three specialists for their views on the new trends.

Curtis Melvin, editor of North Korean Economy Watch website

Leonid Petrov, a North Korea historian at the Australian National University

Park In-ho, journalist at Daily NK, a news website which sources stories from North Korean refugees

Curtis Melvin, editor of North Korean Economy Watch website

There are quite a few people in the Korean Workers' Party interested in more economic reform, but it's a trick of managing that transition without losing power, essentially.

Badges of the North Korean flag and late Great Leader Kim Il Sung worn on a North Korean's lapel (pic courtesy North Korea Economy Watch)
Ideology no longer has the power it once had in North Korea

In North Korea, people can now get away with transactions that are not ideologically permissible just by paying the right people. The leadership still controls the reins of power, so if you need to get anything done, you need to grease those wheels on your own.

I would say that the ideology is not nearly as important to people in their private lives as it has to be in their public ones. When you're paraded in front of a camera or a journalist, or in a group and you have to recite something, then you just have to do it. But at home no-one really talks about it.

Ostrich farming

It's the level of specificity in the ideology that's the problem for reform. If your guiding principles were vague and adaptable, it would be easier - but in North Korea, they have official guidelines on how to do proper ostrich farming! How can you say, in fact that's not the right way to do ostrich farming? But it costs the state money to enforce its system, and they just can't afford to do it any more.

In terms of the cultural implications of marketisation, I guess the main one is a complete breakdown in the social contract. North Koreans know they are poorer now than they used to be. They were taught their whole lives that the state would provide for them. There's been a lot of want and a lot of suffering. Today everyone knows they have to take care of themselves.

Everyone who knows North Korea has been wrong in terms of predicting what will happen. China has influence, but it's muted because they don't want the North Korean government to collapse. Ultimately they're always going to capitulate to Pyongyang.

But the process of marketisation in North Korea is not reversible.

Leonid Petrov, a North Korea historian at the Australian National University

Elements of market economy exist, but it's not like the gradual change or transition of an economy turning from centrally planned to market - rather, certain segments or layers are allowed to adopt some market-driven mechanisms - but the majority of the economy is being artificially preserved.

I saw several farmers' markets. We also saw illegal hawkers - people lurking in dark places on the streets. In the city they form spontaneous markets in the evening to catch people coming back from work so people don't have to go and queue in the state shops. As soon as they see foreigners or government officials, they disappear.

Vulnerable groups

The government still has a monopoly on strategic goods and provides coupons to the most vulnerable groups of the population - students, pensioners and low-income families. They can buy these essential goods in state shops at a very low price. They cost much more at the farmers' markets. This coupon system is what remains of the public distribution system (PDS). It was almost abandoned officially in 2001, but it later appeared to the government that this was threatening very vulnerable groups.

More and more consumer goods are arriving in North Korea, mostly from China. These include DVDs, USBs. Radios are less common, as they are basically outlawed unless their frequency is fixed by the government. People probably do have radios but it is very restricted - if you are found, the consequences will be quite grim.

One diplomat I spoke to told me of one slow, subtle change - how the system treats people and their attitudes toward the system. For example, people often now don't attend indoctrination sessions on a Saturday. They can send an apology instead in the form of material support - money, food, services. So rather than going and spending all Saturday perusing the works of Kim Il Sung or Kim Jong-il they can go to the markets and trade.

Park In-ho, journalist at Daily NK, a news website which sources stories from North Korean refugees

With the exception of the regime's high officials, the military, intelligence organisations and factories, most North Korean residents are now involved in businesses. Labourers and farmers don't go to work in the factories and collective farms, but just go to the jangmadang [farmers' markets]. Under these social conditions, where there is no more stable food distribution like in the past, this is a necessary activity for residents to survive.

Workers in the Kaesong special economic zone receive training (pic courtesy Dieter Schmitt)
Some pay bribes to get factory jobs in the "special economic zones"

Trading is not so dangerous that it is life-threatening. But if you are found dealing in forbidden items, your goods will be confiscated and in the worst case, you could be sent to 're-education' camps or labour-training corps. The forbidden items are electrical goods, tyres, diesel, gas, beef, medicine, DVDs, electric cables, liquor, CDs and others - in total over 100 items.

The new information coming into North Korea is changing people's minds. North Koreans are watching illegally-produced DVDs. The North Korean authorities have educated the people to believe that South Korea is a colony of the US and poorer than the North, but there is no-one who believes this propaganda lately.

Life still hard

However, doing something against the regime is a different story. A mistake of just one word can lead a North Korean to be publicly executed in this society. It is impossible to publicly resist the regime. The control and suppression are beyond our imagination. Slaughter... is still being carried out in North Korea.

The massive famine that happened in 1995-1997 would not happen anymore. This is because of the existence of markets. However, the truth is that their lives are still so hard. In 2008, the food situation is getting worse because of the damage of the flood last summer, the decrease of international food aid, rising international grain prices and other reasons.

Those working in the 'special economic zones' are seen as the 'blessed people'. The Kaesong complex is seen as a dream workplace, and some pay huge bribes to cadres to work there. Besides their salaries, they can make money by embezzling products to sell in the markets. Currently, you can see products made in Kaesong, such as underwear and other kinds of clothes, in the jangmadang [markets]. This fact was confirmed by several believable sources.

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