A Concise History of Modern Korea: From the Late Nineteenth Century to the Present, Volume 2, Second Edition by Michael J. Seth

Author:Michael J. Seth [Seth, Michael J.]
Language: eng
Format: epub
Publisher: Rowman and Littlefield
Published: 2016-03-07T16:00:00+00:00

Economic Problems

After an impressive decade of recovery and growth, the North Korean economy began to slow down. Under a Seven-Year Plan from 1961 to 1967, rapid industrialization continued but the shift to military building after 1962 and the cut in Soviet aid in the mid-1960s delayed its completion until 1970. It was followed by a Six-Year Plan (1971–1976). Although declared a success, it too was extended one year, suggesting that the state was having trouble meeting its economic targets.

To promote economic production Kim attempted to kindle revolutionary zeal and launched military-style campaigns. Attempts were made to meet economic targets by applying as much labor as possible. Office workers, students, and soldiers all were sent on construction projects to help with the spring planting or autumn harvests. In 1974, the regime launched the Three-Revolutions Teams movement. Inspired, at least in part, by the Red Guards in China’s Cultural Revolution, teams of young revolutionaries went into mines, factories, and other production centers to increase output by stimulating the revolutionary enthusiasm of the workers. They attacked “bureaucratism” and called on workers to develop innovative solutions to problems. Speed battles were launched in which workers and farmers were urged to labor tirelessly for days on end to spur production. After 1978, China abandoned this approach for a more market-oriented economic development. North Korea, however, persisted in it.

By the early 1970s, the North Korean leadership had come to realize how dated its technology was. Most of the country’s power plants and steel mills were from the colonial period. Kim Il Sung may have also become concerned over South Korea’s rapid industrialization under Park. In 1972, he began a buying spree of Western plants and machinery. Petrochemical, textile, concrete, steel, pulp, and paper manufacturing plants were purchased, but the equipment was too sophisticated, the country lacked parts or money to buy them, and the electricity supply was often unreliable, rendering many of these purchases of limited use. Furthermore, North Korea was unable to earn the foreign exchange to repay the loans and eventually defaulted on them. The country was starved of foreign currency to buy needed materials for industry as well as luxury items for the elite. Remittances from Koreans living in Japan provided some hard currency, but in the 1970s the DPRK began to engage in counterfeiting, drug smuggling, and other illicit activities, many carried out through an Office 39 tasked with the purpose of acquiring badly needed foreign exchange.

In the 1980s Pyongyang launched large-scale, poorly conceived, showy development plans that were largely failures, such the West Sea Lock Gate, a massive reclamation project that drained a coastal area, producing only land too salty for any agricultural use. Huge sums were squandered on display projects, such as a virtually unused express highway between Pyongyang and Kaesong that existed only to impress visitors, or the world’s tallest hotel that was never completed due to structural problems. Among the most severe problems were energy and food shortages that only became worse in the 1980s, seriously hampering the economy.

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