Northern Growth Rate Continues to Decline... Per Capita Income Growth Rate Also Lagging Among Socialist Countries

[Asia Economy Reporter Kim Eun-byeol] North Korea's long-term economic growth rate has been steadily declining. Although the growth rate surged after the Korean War (6.25), it is analyzed that prolonged low growth persisted due to the accumulation of inefficiencies in the planned economy system and worsening imbalances between industries.

According to "Estimation of North Korea's Long-term Economic Growth Rate," published on the 27th by Cho Tae-hyung, head of the North Korean Economy Research Office at the Bank of Korea Economic Research Institute, and Kim Min-jung, associate researcher, North Korea's economic growth rate from 1956 to 1989 was estimated at an annual average of 4.7%.

In the mid to late 1950s, North Korea achieved high growth of 13.7% annually, but the growth rate dropped to the 4% range in the 1960s and is analyzed to have sustained low growth in the 2% range during the 1970s and 1980s. It is explained that after the Korean War ended, there was a period of high growth in the mid to late 1950s, but growth sharply slowed or stagnated afterward, showing a pattern of "one-time high growth."

Director Cho said, "This growth pattern aligns with previous research evaluations that North Korea failed to transition from extensive growth based on increased input of production factors in the early stages of economic growth to intensive growth."

Looking at industries, from 1956 to 1989, agriculture, forestry, and fisheries showed a low growth rate of 2.5% annually, while construction (+8.6%), mining and manufacturing (+7.3%), and electricity, gas, and water supply (+6.7%) showed high growth, and the service sector grew at an average rate (+4.6%).

By period, the growth rates of heavy chemical industry and construction were highest in the mid to late 1950s, and the share of mining and manufacturing expanded from 17% in 1955 to 41% in 1990, confirming that the North Korean economy focused on industrialization.

Director Cho said, "Excessive investment in the industrial sector caused imbalances between industries and accumulated economic inefficiencies, resulting in a significant slowdown in growth rates across industries since the 1960s."

Meanwhile, when comparing North Korea's per capita real income growth with South Korea or other socialist countries, North Korea's relative underperformance was clearly observed.

While South Korea's per capita real income grew rapidly, North Korea experienced significant growth in the mid to late 1950s but showed prolonged stagnation afterward,

and it is estimated that South Korea's per capita income surpassed North Korea's in the mid to late 1960s. From 1961 to 1988, North Korea's per capita real GDP growth rate was 1.0%, the lowest among former Eastern European socialist countries, and compared to Asian socialist countries that showed high growth rates in the 1980s, North Korea's growth was even more sluggish.

This content was produced with the assistance of AI translation services.