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The Democratic People’s Republic of Korea, more commonly referred to as North Korea,
is an isolated, highly controlled and dictatorial nation, without a free market and with a centrally planned economy controlled by the government.
There is a lack of information on the real everyday life in North Korea because its government isolates the world from the country and its people and vice versa.
Not many people outside of the country know the true nature of the country or its government.
But today we’re going to use what information is known to determine just how rich North Korea is and where the country’s apparent wealth comes from.
But first, let’s take a look at some background information about this mysterious nation.
The modern history of North Korea begins in the early 20th century when Japan occupied
and then formally annexed the Korean Peninsula during the Russo-Japanese War.
In the following years, Korea became more and more modernized, yet there was a price to pay for the significant development it experienced,
and the price was the brutal repression of Koreans under the strict Japanese regime.
After World War II ended, the US and the Soviet Union divided the Korean Peninsula into two parts in 1948.
The anti-Communists were in the south with the capital of Seoul
and the pro-Communists in the north with the center of Pyongyang and the political leader Kim Il Sung
After the Korean War in the early 1950s, Kim Il Sung exercised tight control over the northern country’s economy,
made all private possessions the property of the state, and promoted a radical nationalistic ideology.
The state took over all media and restricted international travel.
At this time, North Korea was doing much better than their southern neighbors.
The so-called “songbun” system was introduced in North Korea, through which the entire population was sorted into separate social classes,
and this classification determined people’s entire lives.
Songbun determines whether an individual is given certain opportunities or even receives adequate food.
What's worse, this regime is still in place today.
North Korea survived the economic collapse and severe famine it had during the 1990s.
It then went on to recover in the early 2000s under the regime of Kim Jong Il,
although many Koreans continue to suffer under the current leadership of Kim Jong-un, who has led the country since 2011.
After the devastating course of events in the 1990s, which led to extreme famine, about 5% of the population dying,
and hundreds of thousands of people crippled due to malnutrition, the country started to slowly recover economically in the 2000s.
The once illegal markets which began as a defense mechanism against famine and devastation
became more established and now are a major part of the North Korean economy.
Also, South Korea began a policy of giving aid to North Korea.
This is known as South Korea’s “Sunshine Policy.”
In addition to receiving aid from South Korea, North Korea has a strong relationship with China, its leading economic and political partner.
Regardless of the strengthening of relationships and partnerships,
Korean people have had many setbacks even after the severe economic collapse and famine that struck them in the 1990s.
In addition to the prevalence of poverty and food shortages, the people suffered under the repressive leadership of Kim Jong Il,
who severely limited their basic freedoms.
In late 2009, the economy went into chaos when a government currency reform program decreased their currency to 1% of its former value.
The government then limited its people to exchange only a small amount of the old currency for the new.
This government decision led to inflation and another food crisis,
but the government official who was responsible for this decision was executed in early 2010.
The sad truth is all of the suffering is most likely unnecessary as North Korea is quite literally sitting on a gold mine.
North Korea is known for its nuclear development and the power of its nuclear arsenal possesses.
Despite numerous warnings and resolutions from the United Nations Security Council,
North Korea violated the international prohibitions against nuclear testing and has performed tests several times in recent years.
Knowing these facts, it is clear that the North Korean government does have the money,
yet most of the budget goes to the development of new and improved nuclear weapons and other military concerns rather than the basic needs of its people.
Another aspect demonstrating that North Korea actually does have the potential to grow economically
is that there may be trillions of dollars’ worth of minerals underground in the country.
Below the nation’s mountainous surface are a variety of minerals as well as gold, iron, silver, and copper to name a few.
Unfortunately, many of the mines are in a state of neglect and are run inefficiently,
and this is why North Korea is not obtaining much income from the natural resources they posses.
Again, it’s impossible to nail down exact numbers for salaries and income in North Korea because of its nature.
But a rough estimate by experts is that most North Koreans live on 1000 to 1700 US dollars a year.
It’s estimated that about 40% of North Koreans supplement their low wages by dealing in the black market.
North Koreans are assigned jobs by the government, and the most common position is being in the military.
North Korea has 1.2 million active soldiers and 7.7 million soldiers in reserves, which means that one-third of North Koreans are part of the military.
The vast majority of North Koreans are struggling to meet their day-to-day needs, but this isn’t the case for a select few.
But if the average salary is so low, how are these Koreans getting rich?
The answer lies in some shady ways of earning money.
Many of the wealthy accumulated their wealth by smuggling and dealing drugs and illegally trading various goods.
That’s how they created illegal markets that are still active, yet very well hidden, even today.
Of course, the richest among the North Koreans is their leader, Kim Jong Un.
You can find out much more about his wealth by checking out our video on the luxurious life of Kim Jong-Un.
Just click in the top right corner to check it out.
Which brings us to the question we’re here to answer today.
It is difficult to put an exact number on the wealth of North Korea since they do not publicly report official economic statistics or national income figures.
All the stats are provided by The Bank of Korea in South Korea and the Ministry of Unification and Korea Trade,
the investment promotion agency for North Korea’s trade.
So, keep in mind, you should take these figures with a grain of salt, these are the best-known figures available.
One indicator of a country’s wealth is the gross domestic product or GDP.
North Korea’s nominal GDP was $32.1 billion in 2018 with an estimated per capita GDP of just $1300.
This ranks it as the 178th richest economy in the world based on that per capita figure.
What causes greater economic woes for the North Koreans is the fact that the government spends over one-third of the GDP on military expenses,
which is hugely disproportionate to the size of the country.
This is a higher percentage than any other country in the world spends on its military, and it isn’t even close.
It’s easy to conclude that North Korea is, in fact, not rich at all, certainly not as rich as the leaders would like it to look like to the rest of the world.
Of course, while the majority of the country is struggling to survive, Kim’s net worth is estimated to be $5 billion,
and you can bet he didn’t earn that amount from his labors.
It’s thought that he regularly uses the state’s funds for his own personal needs and wants,
including a $20 million car collection, at least 17 palaces, and mansions, a private jet, an island, a custom yacht, and hundreds of millions of dollars’ worth of luxury goods.
Kim would like outsiders to think that everyone in North Korea is living a comfortable life, but, as we know, this is far from reality.
With its turbulent history, strong totalitarian political system and poor economy, North Korea is not a paradise for many.
For those who are doing well, income often comes from smuggling drugs, cyberattacks, illegal markets, and financial help from partner nations.
If North Korea used the potential it had, it could easily build up a fortune with the mines of minerals and precious metals and other underground materials.
Another issue is that with the secretive attitude they have towards the rest of the world,
North Korea is closing its doors to potential trade with nations other than China and South Korea.
One thing is for sure: North Korea has a long and difficult road ahead of them before they can be considered a wealthy nation.
And Aluxers, for a rare inside look into North Korea, we suggest checking out the book Nothing to Envy: Ordinary Lives in North Korea.
The author of this book documents the lives of six North Koreans over a span of 15 years.
This book sells for $25, but let us take care of that for you.
Just go to alux.com/freebook and sign up so that you can get the audiobook version for free thanks to our partnership with Audible!
Now that we’re wrapping up, there’s something we’d like to know:
Or would you avoid it at all costs?
Let us know in the comment section.
And, of course, for sticking with us until the end, here's your bonus!
North Korea severely restricts internet access for its citizens. Less than 1% of the population uses the internet.
Also, they have developed a state-controlled, North Korea-only internet service, which allows only a select list of highly censored websites.
Despite the strict regulation of the internet, according to a report by the UN Security Council,
a few North Korean hackers found a way to steal more than $670 million worth of currency and cryptocurrency between January 2017 and September 2018.
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