Friday, 19 July, 2002, 12:17 GMT 13:17 UK Amended 25th October 2012
Reports from North Korea suggest the authorities have begun moves to end the rationing of rice and sell it on the free market.
The reports, quoting diplomatic sources, say workers are being given pay increases in compensation for price rises.
Correspondents say the reported changes – if confirmed – would mark a major step towards the introduction of a market economy in North Korea, one of the world’s last Communist states. North Korea has relied on rationing to feed its people for decades and has had a centrally planned economy.
But workers’ wages will now be raised in line with their job performance, according to South Korea’s Yonhap news agency.
An unidentified North Korean official in Beijing told Yonhap: “The abolition of the rice rationing system and graded salaries will go into effect this month.”
‘Market forces spreading’
The source said the developments showed “clear indications that some aspects of the market economy are gradually spreading into North Korea’s planned economy”.
But another diplomatic source, who spoke to Reuters news agency, said the new system actually went into operation in June, prompting a sharp increase in wages and prices.
“The rationing system will be replaced with a new economic system in which all transactions and economic activities are settled with the yuan,” he said.
The new system would apply to all North Korean workers including labourers, farmers and bureaucrats, the source said.
Food supplies have been badly affected in recent years by a series of natural disasters and the weakness of the North Korean economy.
After severe famine hit the country in the mid-90s in which several hundred thousand people are said to have died, North Korea has become heavily reliant on international food aid.
But a BBC correspondent in Seoul, Kevin Kim, says that recently the North’s leader, Kim Jong-il’s son, called for a new way of thinking, suggesting he was more open-minded about adopting capitalist systems in his country.
The country – now with a population of 22 million people – has been Communist since 1948 when the state was founded under Kim Il-sung.
North Korea‘s economy is a centrally planned system. The role of market allocation is sharply limited – mainly in the rural sector where some peasants sell produce from small private plots. Although there have been scattered and limited attempts at decentralization, as of mid-1993, Pyongyang‘s basic adherence to a rigid centrally planned economy continues, as does its reliance on fundamentally non-pecuniary incentives. Rumors of reform which surfaced in 2012 after Kim Jong-un assumed leadership appear to have been unfounded; as of Fall, 2012 interviews with North Koreans revealed changes have been only cosmetic with disorganization and corruption remaining endemic. The collapse of communist governments around the world in 1991, particularly North Korea’s principal source of support, the Soviet Union, forced the North Korean economy to realign its foreign economic relations. Economic exchanges with South Korea have begun: see Kaesong Industrial Region. With GDP per capita of less than $2,000, North Korea remains as one of the world’s poorest and least developed countries, in sharp contrast to its neighbor South Korea, which has one of the largest economies in Asia. Who will be ready to move into new markets which will help you grow your market share substantially?
Setting the Stage for the opening up of North Korea Economy
Proposed Fictional Storyboard of the Opening of the First Branch of MacDonalds in North Korea
1)To create MacDonalds as the number one brand in N.Korea
2)To create investor interest for the opening up of N.Korea where you need to create the positive
scenerio where it is possible to get the mass opinion of agreement from everyone in the world
3)Once the stage is set, N.Korea will not challenge US with a missile launch anymore
4)But first you need to dangle a carrot, that is Food Aid without strings attached
Proposed storyboard will showcase the fictional first branch opening of MacDonalds in N.Korea
where there is a huge crowd waiting anxiously in line for the first bite of burgers, then
the highlight will be the customer enjoying his first taste with his family and the satisfaction
that is derived from the taste, cementing MacDonald’s as the number one brand that N.Koreans want
and will chose, instantly reinforcing MacDonald’s new market share. If this campaign kicksoff
worldwide for between 3-6 months, the publicity generated will create unprecedented awareness
of the MacDonald’s brand, and N.koreans will gladly welcome MacDonald’s into N.Korea. Are you game
enough for the challenge?
– Contributed by Oogle.