By Tom Fowdy
Back in June, the Wall Street Journal reported that the economy of North Korea expanded by 3.7% in the year 2024. While figures for the DPRK's economy are released annually by the Bank of Korea in the South, and sometimes subject to political manipulation, their research provides an important window into the world's most secretive state, where, of course, information is notoriously difficult to access.
Although North Korea's economy is small, and thus such figures come from a low baseline, it nonetheless remains apparent that the state is experiencing its highest economic momentum in years and is doing so despite the weight of UN sanctions officially placed on it over its nuclear weapons program. As the Wall Street Journal byline quotes, "the regime is wealthier than ever' but the question is, how?" because such figures certainly do not represent the caricature of the impoverished, starving regime commonly understood in Western discourse.
The answer is quite simple: Geopolitics has shifted in a way which is now preferential to Kim Jong-un, and like it or not, the state is in the strongest position it has been in since the end of the Cold War. Bolstered by renewed relationships with both Russia and China, who see political expediency in supporting his regime amidst greater antagonism with the West, the DPRK is no longer the comprehensively isolated state it was since 1991, and as a result, its economic options have widened after these geopolitical shifts fractured the functionality of the United Nations and International Law.
Since its foundation in 1948, the economic fortunes of North Korea have always been contingent on the broader geopolitical arrangements around it. This is because the regime deems it is unable to compromise political control in exchange for economic freedom under any circumstances, and thus actively seeks to resist opening. As a result, the state depends on foreign backers to drive its centralised economy, and if it is unable to find such backers accepts the political costs of impoverishment, hence, it believes firmly in attaining its sovereignty at any price, as set out in Juche (self-mastery).
Thus, throughout its history, there have of course been two primary, geographically adjacent great powers who back the DPRK: Russia and China, but their willingness to do so has hinged on the geopolitical proximity to the United States. In the 1960s in the height of the Cold War, North Korea received generous backing from both Moscow and Beijing, playing against the Sino-Soviet split opportunistically to gain aid and concessions. This version of the DPRK was not, in fact, poor at all, but it was the wealthiest state in the Communist World and at that time, even wealthier than South Korea.
However, the inefficient nature of its command economy, reliance on politically motivated "subsidy" trade, and the broader of the Soviet world led to its stagnation by the 70s and 80s, with the South leading it behind, and then amidst the collapse of the USSR in 1991 and Boris Yeltsin's alignment with the US, as well as China's courting of the west, the DPRK suffered economic collapse and famine throughout the 1990s. While Beijing provided it a lifeline, the regime itself shunned closeness to China. As a result, this era of "American unipolarity" is what transformed Pyongyang into an isolated survival state pursuing a nuclear deterrent by the turn of the 21st century.
But then the world changed, again. American unipolarity no longer exists, for Russia is locked in a proxy war against the US and its allies in Ukraine, and the West now sees China not as an enemy, so to speak, but as a strategic and economic competitor. North Korea is no longer an isolated annoyance and disruptor to global order, even as it has fully succeeded in obtaining its nuclear deterrent, but it is a partner and buffer, so to speak.
Moscow, itself facing heavy sanctions, has turned to the DPRK for troops, ammunition, manual labour and weaponry, providing a massive export market for Kim Jong-un. China, on the other hand, while more militarily cautious, recognises that North Korea still represents the ideological world it wants to sustain, and is a check on US-backed power in East Asia. Neither nation now supports America's interests at the United Nations, fracturing the institution, and both worked to scupper the panel monitoring the implementation of sanctions on Pyongyang.
This political environment has given Kim Jong-un a free pass to rebuild the DPRK economy, but critically speaking on his political terms. Starting in the 1990s and 2000s, North Korea was experiencing a "bottom-up" de facto, informal marketisation through the force of human need and state failure. Kim's interest, however, has always been to consolidate his power and put this "back in its box." In 2020, he used the pandemic to shut the country's borders down and temporarily cut off the world, re-emphasizing centralisation. He has subsequently rebuilt on Chinese and Russian backing, who buy their goods without exerting political pressure. Using the money from Moscow, he has comprehensively redeveloped Pyongyang, pouring resources into sustaining the support of the regime's core.
In conclusion, North Korea is now experiencing its best economic spell since the end of the Cold War, largely as a result of favourable geopolitics. The DPRK state prioritises its own central control above all else, amidst fragile regime security, and only believes economic growth is acceptable on its own sovereign terms. As a result, China and Russia, needing backing, have granted Kim Jong-un a clear escape route from the period of economic devastation it experienced from the end of the Cold War and a reliance on informal markets. However, continuing heavy sanctions from the West, combined with the rigid nature of the country's political system and intentional insularity, will, of course, put a clear ceiling on just how prosperous the country can become. But for Kim Jong-un, that was never the priority, since the regime stays intact, sovereign, and militarily dangerous, there is no need for change.
The views do not necessarily reflect those of DotDotNews.
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