For example, the NIS estimates manufacturing output in North Korea by counting from reconnaissance planes or satellite photos the number of days that smoke can be seen coming from factory smokestacks, and how many and how often workers come and go. The agency guesses at the country's grain production by measuring the size of farms from similar photos. To figure out cement or iron supplies, the NIS assesses how many kilometers of new road have been built that year.

A poster from the movie 'Joint Security Area.'

Every year South Korea's National Statistical Office releases 76 kinds of compiled statistics on North Korea, 49 of which are provided by the NIS. That means most of the statistical data comes from these dubious collection methods. Inaccurate statistics are one of the hurdles preventing smooth inter-Korean economic cooperation. To galvanize cooperation, North Korea should provide accurate statistics, experts say.

Statistics on North Korea are inevitably faulty because North Korea, the "hermit kingdom," operates behind a veil of secrecy. Under Kim Il-sung and Kim Jong-il, North Korea has never released any data on its GDP or consumer prices. Almost all economic information is classified as top secret and off-limits for outsiders. "Despite being the closest to us, North Korea is still the farthest country as far as statistics are concerned," said Choi Chun-sin, the director general of the Bank of Korea's economic statistics department.

With no official information on prices or exchange rates, the BOK calculated North Korea's GDP based on South Korea's prices and exchange rates. Last year the Ministry of Unification asked the BOK to reexamine its North Korea statistics. As a result of that re-estimation, the BOK reported that the real size of North Korea's economy is believed to be about one quarter of what was reported earlier.

This sort of unreliable information poses a serious stumbling block to both government policy on the North and cross-border corporate cooperation. "The most promising area in inter-Korean economic cooperation is development of North Korea's natural resources," said Lee Seung-chul, vice president of the Federation of Korean Industries. "But to explore this, we need data and statistics based on real surveys. The only data we now have are 30 to 40 years old."

Dong Yong-seung, the head of North Korea research at the Samsung Economic Research Institute, said, "For full-fledged inter-Korean exchange and cooperation, South Korean enterprises need to make lively investments in North Korea. To this end, they need reliable statistics to estimate costs and profits."

Economists and businesses emphasize that it is essential to exchange reliable information so that inter-Korean cooperation projects can produce results. "Some South Korean researchers and economists who follow North Korea closely want (President Roh Moo-hyun) to focus instead on pushing the North to engage in substantive economic research and disclosure," the Wall Street Journal wrote on Monday. "That would help South Koreans understand the impact of their investments."

Prof. Zang Hyoung-soo at the division of Economics and Finance at Hanyang University said, "Three years before it sought external economic cooperation, Vietnam began overhauling its entire national statistical system with the help of an international organization. North Korea needs to benchmark Vietnam's example."

(englishnews@chosun.com )