December 21, 2013 07:58
The black and grey market in North Korea have become so vital to the livelihood of most people that the trend is irreversible, pundits believe.
There are no exact statistics showing what proportion of the North Korean economy these burgeoning markets make up. But based on a survey of defectors and a simulation study based on North Korean statistics, pundits believe that between 40 and 90 percent of North Koreans' economic activities and distribution of goods occur in informal trade, either at farmers' markets or in back alleys.
The farmers' markets, which started out as places to sell agricultural produce people had grown in their kitchen gardens in the wake of severe food shortages and the paralyzed rationing system in 1990, developed into large-scale markets, where anything from washing powder to samizdat CDs are sold.
Black markets also grew as smuggling across the Chinese border increased. Now even high-end consumer goods and raw materials can be bought in the markets.
The trend has given rise to moneymen who have gotten rich in informal trade. The mobile phones sold through Egyptian telecom Orascom cost US$200-300. That the network has some 2 million subscribers attests that many North Koreans have cash in hand.
"North Koreans depend on markets for more than 50 percent of their livelihood," claims Prof. Yang Moon-soo of the University of North Korean Studies. "The effects are also felt among the power elites. For example, North Koreans are very sensitive to black-market exchange rates and have some knowledge of market fundamentals, including the principle of supply and demand."
Kim Byung-yeon, an economist at Seoul National University, said surveys of defectors show that the more experience North Koreans have of the market, the more they believe that socialist theories hold no water and the more they tend to accept capitalism. "We need to try and change North Koreans' mindset by helping promote the market there," Kim added.
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