That’s what one North Korean economist claims, and it’s not impossible.
Has North Korea’s economy been growing under sanctions? That’s what an economist in Pyongyang claims. In a recent interview with Kyodo (published here by Japan Times), Ri Gi Song at Pyongyang’s Institute of Economics at the Academy of Social Sciences claimed that North Korea’s GDP per capita grew by 3.7 percent in 2017, a year during which the country was virtually banned from selling its most crucial export goods, and faced very harsh conditions for importing crucial resources such as oil and fuel. When factoring in population growth, the GDP-growth-figure diminishes somewhat to 3.2 percent (see below), but it’s still firmly in the same range.
Strange as it may sound, it isn’t impossible to imagine North Korea’s economy at least not contracting severely during a year of sanctions. GDP growth alone is a poor way of measuring long-run, sustained economic growth and progress. While it may sound counterintuitive, the sanctions, while depressing the economy in certain ways, may have boosted it through other mechanisms. The ban on coal imports from North Korea, for example, may well have boosted certain industries, as I have covered in the past. Because exports have dwindled drastically, the price at which North Korean coal can sell – domestically as well as internationally – gets much, much lower than when it could be sold in greater quantities on a somewhat competitive market. So with lower prices for factors of production, industry could certainly experience growth in the short-run. But this would only be a temporary and meaningless boost, since the losses from unsold goods abroad would be much greater.
In other words, Ri may be partially right, but numbers are also likely inflated for political reasons. Here’s an excerpt from the interview, along with comments:
North Korea’s economy grew 3.7 percent in 2017, a professor of a think tank in Pyongyang said in brushing aside the view that the country has faced an economic contraction against a backdrop of international sanctions.
Even though North Korean economic data has become somewhat more public and plentiful in the past few years, there are still undeniable political imperatives in publishing data that makes the country appear resilient in the face of sanctions. After all, if sanctions aren’t “working” (whatever that may mean), what’s the point in keeping them? That, of course, doesn’t mean that such figures are accurate, wholly or partially.
Ri Gi Song, a professor of the Institute of Economics at the Academy of Social Sciences, said in a recent interview with Kyodo News that North Korea has achieved economic expansion without depending on other nations.
Well, he would say that. That is how Juche is spoken. That doesn’t mean even Ri himself necessarily believes it; it’s simply what you say if you’re a North Korean economist speaking from your official position.
