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South Korea vs. North Korea

Economy

South KoreaNorth Korea
Economy - overview

After emerging from the 1950-53 war with North Korea, South Korea emerged as one of the 20th century’s most remarkable economic success stories, becoming a developed, globally connected, high-technology society within decades. In the 1960s, GDP per capita was comparable with levels in the poorest countries in the world. In 2004, South Korea's GDP surpassed one trillion dollars.

Beginning in the 1960s under President PARK Chung-hee, the government promoted the import of raw materials and technology, encouraged saving and investment over consumption, kept wages low, and directed resources to export-oriented industries that remain important to the economy to this day. Growth surged under these policies, and frequently reached double-digits in the 1960s and 1970s. Growth gradually moderated in the 1990s as the economy matured, but remained strong enough to propel South Korea into the ranks of the advanced economies of the OECD by 1997. These policies also led to the emergence of family-owned chaebol conglomerates such as Daewoo, Hyundai, and Samsung, which retained their dominant positions even as the government loosened its grip on the economy amid the political changes of the 1980s and 1990s.

The Asian financial crisis of 1997-98 hit South Korea’s companies hard because of their excessive reliance on short-term borrowing, and GDP ultimately plunged by 7% in 1998. South Korea tackled difficult economic reforms following the crisis, including restructuring some chaebols, increasing labor market flexibility, and opening up to more foreign investment and imports. These steps lead to a relatively rapid economic recovery. South Korea also began expanding its network of free trade agreements to help bolster exports, and has since implemented 16 free trade agreements covering 58 countries—including the United State and China—that collectively cover more than three-quarters of global GDP.

In 2017, the election of President MOON Jae-in brought a surge in consumer confidence, in part, because of his successful efforts to increase wages and government spending. These factors combined with an uptick in export growth to drive real GDP growth to more than 3%, despite disruptions in South Korea’s trade with China over the deployment of a US missile defense system in South Korea.

In 2018 and beyond, South Korea will contend with gradually slowing economic growth - in the 2-3% range - not uncommon for advanced economies. This could be partially offset by efforts to address challenges arising from its rapidly aging population, inflexible labor market, continued dominance of the chaebols, and heavy reliance on exports rather than domestic consumption. Socioeconomic problems also persist, and include rising inequality, poverty among the elderly, high youth unemployment, long working hours, low worker productivity, and corruption.

North Korea, one of the world's most centrally directed and least open economies, faces chronic economic problems. Industrial capital stock is nearly beyond repair as a result of years of underinvestment, shortages of spare parts, and poor maintenance. Large-scale military spending and development of its ballistic missile and nuclear program severely draws off resources needed for investment and civilian consumption. Industrial and power outputs have stagnated for years at a fraction of pre-1990 levels. Frequent weather-related crop failures aggravated chronic food shortages caused by on-going systemic problems, including a lack of arable land, collective farming practices, poor soil quality, insufficient fertilization, and persistent shortages of tractors and fuel.

The mid 1990s through mid-2000s were marked by severe famine and widespread starvation. Significant food aid was provided by the international community through 2009. Since that time, food assistance has declined significantly. In the last few years, domestic corn and rice production has improved, although domestic production does not fully satisfy demand. A large portion of the population continues to suffer from prolonged malnutrition and poor living conditions. Since 2002, the government has allowed semi-private markets to begin selling a wider range of goods, allowing North Koreans to partially make up for diminished public distribution system rations. It also implemented changes in the management process of communal farms in an effort to boost agricultural output.

In December 2009, North Korea carried out a redenomination of its currency, capping the amount of North Korean won that could be exchanged for the new notes, and limiting the exchange to a one-week window. A concurrent crackdown on markets and foreign currency use yielded severe shortages and inflation, forcing Pyongyang to ease the restrictions by February 2010. In response to the sinking of the South Korean warship Cheonan and the shelling of Yeonpyeong Island in 2010, South Korea’s government cut off most aid, trade, and bilateral cooperation activities. In February 2016, South Korea ceased its remaining bilateral economic activity by closing the Kaesong Industrial Complex in response to North Korea’s fourth nuclear test a month earlier. This nuclear test and another in September 2016 resulted in two United Nations Security Council Resolutions that targeted North Korea’s foreign currency earnings, particularly coal and other mineral exports. Throughout 2017, North Korea’s continued nuclear and missile tests led to a tightening of UN sanctions, resulting in full sectoral bans on DPRK exports and drastically limited key imports. Over the last decade, China has been North Korea’s primary trading partner.

The North Korean Government continues to stress its goal of improving the overall standard of living, but has taken few steps to make that goal a reality for its populace. In 2016, the regime used two mass mobilizations — one totaling 70 days and another 200 days — to spur the population to increase production and complete construction projects quickly. The regime released a five-year economic development strategy in May 2016 that outlined plans for promoting growth across sectors. Firm political control remains the government’s overriding concern, which likely will inhibit formal changes to North Korea’s current economic system.

GDP (purchasing power parity)
$2.035 trillion (2017 est.)
$1.974 trillion (2016 est.)
$1.918 trillion (2015 est.)

note: data are in 2017 dollars

$40 billion (2015 est.)
$40 billion (2014 est.)
$40 billion (2013 est.)

note: data are in 2015 US dollars
North Korea does not publish reliable National Income Accounts data; the data shown are derived from purchasing power parity (PPP) GDP estimates that were made by Angus MADDISON in a study conducted for the OECD; his figure for 1999 was extrapolated to 2015 using estimated real growth rates for North Korea's GDP and an inflation factor based on the US GDP deflator; the results were rounded to the nearest $10 billion.

GDP - real growth rate
3.1% (2017 est.)
2.9% (2016 est.)
2.8% (2015 est.)
-1.1% (2015 est.)
1% (2014 est.)
1.1% (2013 est.)
GDP - per capita (PPP)
$39,500 (2017 est.)
$38,500 (2016 est.)
$37,600 (2015 est.)

note: data are in 2017 dollars

$1,700 (2015 est.)
$1,800 (2014 est.)
$1,800 (2013 est.)

note: data are in 2015 US dollars

GDP - composition by sector
agriculture: 2.2% (2017 est.)
industry: 39.3% (2017 est.)
services: 58.3% (2017 est.)
agriculture: 22.5% (2017 est.)
industry: 47.6% (2017 est.)
services: 29.9% (2017 est.)
Population below poverty line
14.4% (2016 est.)
NA
Household income or consumption by percentage share
lowest 10%: 6.8%
highest 10%: 48.5% (2015 est.)
lowest 10%: NA
highest 10%: NA
Inflation rate (consumer prices)
1.9% (2017 est.)
1% (2016 est.)

NA

Labor force
27.75 million (2017 est.)
14 million (2014 est.)

note: estimates vary widely

Labor force - by occupation
agriculture: 4.8%
industry: 24.6%
services: 70.6% (2017 est.)
agriculture: 37%
industry: 63% (2008 est.)
Unemployment rate
3.7% (2017 est.)
3.7% (2016 est.)
25.6% (2013 est.)
25.5% (2012 est.)
Budget
revenues: 357.1 billion (2017 est.)
expenditures: 335.8 billion (2017 est.)
revenues: 3.2 billion (2007 est.)
expenditures: 3.3 billion (2007 est.)
Industries
electronics, telecommunications, automobile production, chemicals, shipbuilding, steel
military products; machine building, electric power, chemicals; mining (coal, iron ore, limestone, magnesite, graphite, copper, zinc, lead, and precious metals), metallurgy; textiles, food processing; tourism
Industrial production growth rate
4.6% (2017 est.)
1% (2017 est.)
Agriculture - products
rice, root crops, barley, vegetables, fruit, cattle, pigs, chickens, milk, eggs, fish
rice, corn, potatoes, wheat, soybeans, pulses, beef, pork, eggs, fruit, nuts
Exports
$577.4 billion (2017 est.)
$512 billion (2016 est.)
$45.82 billion (2017 est.)
$2.908 billion (2015 est.)
Exports - commodities
semiconductors, petrochemicals, automobile/auto parts, ships, wireless communication equipment, flat displays, steel, electronics, plastics, computers
minerals, metallurgical products, manufactures (including armaments), textiles, agricultural and fishery products
Exports - partners
China 25.1%, US 12.2%, Vietnam 8.2%, Hong Kong 6.9%, Japan 4.7% (2017)
China 86.3% (2017)
Imports
$457.5 billion (2017 est.)
$393.1 billion (2016 est.)
$43.75 billion (2018 est.)
$3.86 billion (2016 est.)
Imports - commodities
crude oil/petroleum products, semiconductors, natural gas, coal, steel, computers, wireless communication equipment, automobiles, fine chemicals, textiles
petroleum, coking coal, machinery and equipment, textiles, grain
Imports - partners
China 20.5%, Japan 11.5%, US 10.5%, Germany 4.2%, Saudi Arabia 4.1% (2017)
China 91.9% (2017)
Debt - external
$384.6 billion (31 December 2017 est.)
$384.1 billion (31 December 2016 est.)
$5 billion (2013 est.)
Exchange rates
South Korean won (KRW) per US dollar -
1,130.48 (2017 est.)
1,160.41 (2016 est.)
1,160.77 (2015 est.)
1,130.95 (2014 est.)
1,052.96 (2013 est.)
North Korean won (KPW) per US dollar (average market rate)
135 (2017 est.)
130 (2016 est.)
130 (2015 est.)
98.5 (2013 est.)
155.5 (2012 est.)
Fiscal year
calendar year
calendar year
GDP (official exchange rate)
$1.54 trillion (2017 est.)
$28 billion (2013 est.) (2013 est.)
Stock of direct foreign investment - at home
$230.6 billion (31 December 2017 est.)
$180.1 billion (31 December 2016 est.)
$1.878 billion (31 December 2015 est.)
$1.9 billion (31 December 2013 est.)
Taxes and other revenues
23.2% (of GDP) (2017 est.)
11.4% (of GDP) (2007 est.)

note: excludes earnings from state-operated enterprises

Budget surplus (+) or deficit (-)
1.4% (of GDP) (2017 est.)
-0.4% (of GDP) (2007 est.)
GDP - composition, by end use
household consumption: 48.1% (2017 est.)
government consumption: 15.3% (2017 est.)
investment in fixed capital: 31.1% (2017 est.)
investment in inventories: 0% (2017 est.)
exports of goods and services: 43.1% (2017 est.)
imports of goods and services: -37.7% (2017 est.)
household consumption: NA (2014 est.)
government consumption: NA (2014 est.)
investment in fixed capital: NA (2014 est.)
investment in inventories: NA (2014 est.)
exports of goods and services: 5.9% (2016 est.)
imports of goods and services: -11.1% (2016 est.)
Gross national saving
36.6% of GDP (2017 est.)
36.3% of GDP (2016 est.)
36.6% of GDP (2015 est.)

NA

Source: CIA Factbook