KOREA, NORTH

COUNTRY OVERVIEW

LOCATION AND SIZE.

North Korea is in eastern Asia and occupies the northern half of the Korean Peninsula. It borders China to the north, Russia to the far northeast, the Sea of Japan / East Sea to the east, South Korea to the south, and the Korean Bay and Yellow Sea to the west. The country covers an area of 120,549 square kilometers (46,543 square miles), making it slightly smaller than the state of Mississippi. It has 1,673 kilometers (1,039 miles) of land borders and 2,495 kilometers (1,550 miles) of coastline. The capital city, P'yongyang, is situated in the western part of the country, while the other major cities of Hungnam, Ch'ongjin, and Namp'o are in the east, northeast, and west, respectively.

POPULATION.

Data on North Korea's population is scarce and unreliable. Because of serious famine in the late 1990s, it is thought that between a half million and 3 million North Koreans may have died of hunger and about 100,000 might have fled to China in search of food. In July 2000 the population was estimated at 21,687,550, with a growth rate of about 1.35 percent. The birth rate in 2000 was 20.43 births per 1,000 population and the death rate 6.88 deaths per 1,000 population.

The population is ethnically homogenous, consisting primarily of ethnic Koreans plus small communities of Chinese and Japanese. About 68 percent of the people are aged between 15 and 64 years and 6 percent over 65 years. The literacy rate, estimated at 99 percent in 1990, is high. The majority of North Koreans (about 70 percent in 1993) live in urban areas. Based on 1987 statistics, P'yongyang is the largest city with a population of 2,355,000, followed by Hungnam (701,000), Ch'ongjin (520,000), and Namp'o (370,000).

Most of the population follows the Buddhist faith. There are a handful of Christians, but freedom of religion is illusory, religious practice—like all else in North Korea—being manipulated and controlled by the state.

INDUSTRY

Accounting for 42 percent of GDP in 1999, industry is the largest sector of the North Korean economy. Along with services, it employs 64 percent of the North Korean workforce.

MINING.

North Korea has significant mineral resources, including the world's largest deposits of magnesite. However, the rest of its resources (brown and lignite coal, iron ore, cement, copper, lead, zinc, gold, tungsten, graphite, salt, and silver) are not sizeable enough to make the country a major world producer, though it may be able to engage in some production should these sectors receive some investment. Precious and non-ferrous metals are the country's most important exports. Aging equipment and flood damage in the mid-1990s led to a fall in North Korea's mineral output. Mining recorded negative growth between 1991 (-6.8 percent) and 1995 (-2.3 percent), when its share of GDP was 8 percent. As with other in- dustries, only significant investment will allow the mining industry to become a vital source of economic growth.

MANUFACTURING.

Manufacturing is the largest contributor to North Korea's GDP, accounting for the bulk of industry's share of GDP. Manufacturing produces metallurgical products, armaments, and textiles for export to China, Japan, South Korea, Germany, and Russia. North Korea's heavy industrial base was developed originally by the Japanese and later expanded by the Soviets. However, while the country expanded heavy industry and the production of military hardware, little was invested in light industry or the manufacture of consumer goods. The heavy dependency on the Soviet Union for financing, technology, equipment, spare parts, and energy caused a major decline in manufacturing once the Soviet Union ceased to be a source of assistance. Many industrial units work at a fraction of their original output following the cut in Soviet aid in 1991.

The country's manufacturing facilities need modernization and the expansion of its light and consumer industries. An improved relationship between North and South Korea has brought the North limited investment by 2 South Korean companies, Samsung and LG, who manufacture electronics in North Korea. These companies take advantage of the country's low labor costs. The South Korea-based car company Hyundai has also been negotiating with the North Koreans about the possible creation of an export-oriented industrial complex.

CONSTRUCTION.

The construction industry has also suffered from the country's economic decline. Since the 1990s, a decline in industrial construction, housing, and building of infrastructure has reduced activity in the sector. The construction industry's share of GDP fell from 9.1 percent in 1992 to 6.1 percent in 1999.

SERVICES

Services are the least developed sector in the North Korean economy, contributing just 28 percent of GDP in 1999. There is no precise record of employment figures for the services sector, but the little available evidence indicates that only a small percentage of the labor force is involved.

TOURISM.

Since the 1990s, some tourists have begun to visit North Korea from Taiwan, Singapore, and the West. The country's scenic landscape and mountains offer much potential for the growth of tourism. The government built new hotels in the 1990s, and there is a casino for the use of foreigners, which accepts hard currencies only. Improved relations between the 2 Koreas have made short trips to the North possible for tourists from South Korea. The South Korean Hyundai company took a total of 80,000 South Koreans to Mount Kumgang between November 1998 and June 1999, but the South Korean government suspended such trips after a South Korean tourist was arrested on spy charges. North Korea claims that the number of tourists doubled in 2000 compared to 1999, but no actual figures are available for either year.

RETAIL.

The retail sector is also state-dominated, although there is now a little room for limited private initiatives. The sector consists of state-run stores and direct factory outlets for average citizens, farmers' markets, and special shops for the elite where luxury products are sold. There is a chain of hard-currency stores in large cities that were established as a joint venture between the state and the Chongryun. As a general rule, the range of consumer goods is limited and their quality is low.

FINANCIAL SERVICES.

North Korea's financial sector is state-dominated. Two state banks control the entire industry: the Central Bank of North Korea, which has 227 local branches, and Changgwang Credit Bank, with 172 branches. The Foreign Trade Bank handles most international trade affairs. Two state companies, the State Insurance Bureau and the Korea Foreign Insurance Company, monopolize the insurance industry.

DEPENDENCIES

North Korea has no territories or colonies.

BIBLIOGRAPHY

Eberstadt, Nicholas. The End of North Korea. Washington, D.C.:AEI Press, 1999.

Economist Intelligence Unit. Country Profile: North Korea. London: Economist Intelligence Unit, 2001.

Eui-Gak, Hwang. The Korean Economies: A Comparison of North and South . London, UK: Oxford University Press, 1993.

Hunter, Helen-Louise. Kim Il-song's North Korea. Westport, CT:Praeger, 1999.

Reese, David. The Prospects for North Korea's Survival. Oxford and New York: Oxford University Press, 1998.

U.S. Central Intelligence Agency. World Factbook 2001. <http:// www.odci.gov/cia/publications/factbook/index.html> . Accessed September 2001.

U.S. Department of State. Background Notes: North Korea, October 2000. <http://www.state.gov/www/background_ notes/n-korea_0010_bgn.html> . Accessed October 2001.

—Hooman Peimani

CAPITAL:

P'yongyang.

MONETARY UNIT:

North Korean won (KPW). One won equals 100 ch'on (or jeon). There are coins of 1, 5, 10, and 50 ch'on. There are notes of 1, 5, 10, 50, and 100 won.

CHIEF EXPORTS:

Minerals, metallurgical products, manufactures (including armaments), agricultural, fishery products.

CHIEF IMPORTS:

Petroleum, coal, machinery and equipment, consumer goods, grain.

GROSS DOMESTIC PRODUCT:

US$22 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$520 million (f.o.b., 2000). Imports: US$960 million (c.i.f., 2000).