Background and History
North Korea is a mysterious hermit kingdom that has long been an area of concern for the rest of the world. Isolated from the rest of the global community, North Korea has consistently proved itself to be a challenging nation to deal with. Despite its secretive nature and ongoing challenges on the international stage, North Korea also has a thriving economy that has made significant advances in recent years.
Though it has faced isolation from the majority of the world, North Korea has found allies in China and Russia. It has long held association ties with its allies for assistance over food, fuel, and other necessities. Even with this assistance, however, many question how North Korea manages its economy and where it obtains money to sustain it.
North Korean Revenue Sources
North Korea obtains revenue from several sources of money that provide a steady stream of income. Perhaps the most prominent source is from illicit activities such as drug trafficking, counterfeiting, weapons smuggling, and money laundering. This criminal activity brings in a significant amount of money that goes directly to the state coffers.
North Korea also receives revenue from its legal exports, although not many countries are willing to maintain trade partnerships with the regime. The country is heavily reliant on coal, iron ore, lead, and other resources that are sold abroad, notably to countries such as China. Additionally, the North Korean government has also been known to invest in several overseas businesses, such as those in Africa and India.
North Korea is a member of the UN and collects dues regularly while also receiving government aid from countries such as South Korea. Even with this income, however, the North Korean economy is still significantly underdeveloped and unable to meet its own needs.
Foreign Investments
To bolster its economy and draw aid from foreign countries, North Korea has begun to aggressively pursue foreign investment opportunities. It has allowed western companies to establish industrial zones or free trade zones in the country, drawing in capital from outside sources. The government has also begun to open up the tourism industry and has granted access for foreigners to do business in the country. This has created a significant source of revenue for the North Korean regime and has added to the country’s overall wealth.
Despite the influx of foreign investment, however, the majority of money that enters the country is quickly diverted away from the public through tax loopholes, mostly by the ruling class. The government also invests the foreign investment money in large-scale infrastructure projects, such as building roads and bridges, which further contribute to the North Korean economy.
Political Sanctions and Money Supply
North Korea has managed to remain relatively isolated from the international community, but it is not immune to international pressure. Political sanctions imposed by the UN and other countries on North Korea have greatly affected the government’s access to international sources of money. The sanctions have limited the regime’s ability to access the international financial system, which has forced the government to adopt unorthodox measures to ensure the availability of money.
In order to make up for the lack of money coming from abroad, North Korea has created a state-controlled cash economy that distributes money directly from the government to citizens. This type of economic system is heavily reliant on the state’s ability to produce money, as well as its ability to control inflation, which can be extremely difficult in the face of international sanctions.
Foreign Assistance and Economic Impact
With the implementation of international sanctions and the restrictions on access to the international financial system, the North Korean government has struggled to make ends meet. This has led to a situation where North Korea has become increasingly reliant on foreign aid and assistance to sustain its economy. This foreign aid has helped to counterbalance the effect of sanctions, as well as to provide much-needed assistance to the North Korean people.
North Korea’s economy has been significantly affected by the international sanctions, but the nation has still managed to remain resilient and afloat. Despite its struggle to keep up with the rest of the world, North Korea has been able to maintain a strong presence on the international stage and has made significant advances in its economic standing in recent years.
Cross-Border Trade
The North Korean government has also been increasingly relying on cross-border trade to make up for the lack of access to the international financial system. This has led to an increase in the number of businesses operating on the border between North Korea and its neighbors, such as China and Russia. These businesses have been able to provide a significant source of income for the North Korean economy.
The trade that occurs between North Korea and its neighbors is typically done in cash, as many of these businesses are not allowed to use the international banking system. This has led to a situation where North Korea is able to secure much-needed revenue from these transactions. This money is then used to support the North Korean economy and bolster its international standing.
Impact on North Korean Citizens
The money that comes into North Korea from its various sources has a significant impact on the citizens of the nation. It has allowed the North Korean government to provide jobs for the people, as well as funding for infrastructure projects. Additionally, the money has been used to purchase food, fuel, and other necessary items for the citizens of the country.
Despite the significant impact that the influx of money has had on the North Korean people, it has also had a significant effect on the country’s international standing. North Korea has been able to use its money to build strong diplomatic relationships with other nations, as well as to gain access to much-needed resources and aid.
Conclusion
North Korea is a unique country with a unique economic system. Despite being isolated from the rest of the world and facing international sanctions, North Korea has managed to survive and even make advances in its economy. The government of North Korea has managed to secure a steady flow of money from various sources, both legal and illicit, to make up for its lack of access to the international financial system.
Due to its ability to secure money from its various sources, North Korea has been able to sustain its economy and even make advances in recent years. This money has had a significant impact on the North Korean people, as it has allowed the government to provide jobs, fund infrastructure projects, and purchase necessary items for its citizens.
