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Nothing to be Afraid of? North Korean Political Economy and Economic Reform
Author: Ian Rinehart
Region: Asia
Location: Korea, North
Published April 2, 2012
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Democratic People’s Republic of Korea (DPRK) President Kim il-Sung explained to his counterpart Erich Honecker, President of the German Democratic Republic, in 1977 that building socialism in the DPRK is the foundation for establishing a new social order in the entire nation.1 Socialist principles have guided the North Korean political economy since the country was established after World War II. The 1972 constitution repeatedly stressed the achievement of “true socialism” as a goal and declared that the DPRK “exercises the dictatorship of the proletariat.”2 In the North Korean system, urban residents received monthly rations for household goods distributed at nominal prices, while workers on agricultural cooperatives and state farms received consumer goods in return for agricultural output sold to the state at an artificially low price. The government’s top-down central planning set production-based targets for factories and farms.

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