Underground Markets in North Korea

14 Pages Posted: 13 Aug 2009

Date Written: September 4, 2009


On May 15, 2007, the North Korean government issued a “portrait project” decree, requiring people to display their loyalty by cleaning up portraits of the Great Leader at homes, at workplaces, at government offices, and so on. Much ado was made over people’s efforts to clean up portraits, polish their frames, or buy new ones. Shortly thereafter, an official inspection was conducted with great fanfare. When the inspection was over, however, some officials began to wonder where the picture frames had come from. After all, the official command economy had virtually ceased to function since the early 1990s. An investigation into the matter revealed the shocking fact that the frames had been made, distributed, and sold through the shadow economy. The outside world is well aware of the “totalitarian” side of North Korea. Much less well known, however, is the “capitalistic” aspect of the country in which an illicit “bottom-up marketization” has enveloped the everyday lives of people for the last 15 years or so. The goal of this paper is to shed light on this heretofore unexamined aspect of North Korea.

Even in western societies, it is difficult to obtain reliable data about the shadow economy due to its secret nature. The problem is exacerbated in socialist countries like North Korea because of their closed nature. There is, however, an important source of information. During the Great Famine (1995-1999), hundreds of thousands of North Koreans left their country in search for food. As a result, there are more than 9,000 North Korean refugees living in South Korea. Through their testimonies, these refugees have provided valuable information about various aspects of North Korean society. In the process of studying these testimonies, I have collected about 700 cases which shed light on the North Korean shadow economy. By analyzing these cases, we can gain a better understanding of many aspects of the booming shadow economy in North Korea, such as who the main actors are (the agency question), how they get their items in the first place (the supply mechanism), how they move items from one place to another (the distribution mechanism), and who consumes these items (the consumer question).

Suggested Citation

Joo, Hyung-Min, Underground Markets in North Korea (September 4, 2009). APSA 2009 Toronto Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1452129

Hyung-Min Joo (Contact Author)

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

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