How the North Korea Economy Operated: Late 90s through 2000s; Black Market, Bribes, No Banks


Throughs the life of a young teenage trader, we learn how North Korea’s economy worked. The central character in this story started at 13 by illegally trading socks. Even though what she did was illegal, the government had a difficult time trying to put a stop to it.

North Korea was more strict than Russia in their communistic practices. The government strived to make everyone equal in rationing. They studied how low the bare minimum can be for food rationing to each person so they survive. Some people, who worked a little harder, received a couple extra handfuls of rice to account for the extra energy expenditure. They didn’t want people trading for any profits.

The government almost banned banks in the 1970s. But realized it would be a bad idea. North Korea largely depended on imports from China and Russia. And still needed to account for the transactions. No country can be completely sovereign.

When the Cold War ended in the 1990’s, Russia stopped exporting to North Korea. China soon followed and the economies became very stagnant as the people struggled to eat.

Juyung was born in 1991. She grew up in the Northern City called Tung Jin, also known as the Iron City. It is close to the border of China. The people of Tung Jin had very few possessions or luxury things like TV. When someone was able to earn a nice product, they would readily show it off. For example, socks were a luxury. When someone could secure a pair, they would pull up their pants a little to show them off. It was very cold in North Korea and socks were badly needed.

One of Juyungs friends had relatives to visit in China and would always come back with nice things. Juyung noticed that her friend sold a pair of Tom and Jerry socks and decided she wanted to sell socks too. She then bought socks from her friend for 1,000 Won each and tried to sell them for 1,500 to local people. However, not many people could afford her price, so she dropped it to 1,300 Won. Other girls liked the socks and began buying them from her.

Since shops were not allowed in cities it is a challenge to advertise what you are selling. You could look inside various buildings and see small store fronts set up inside people’s homes with no advertising outside of it. They mostly relied on word of mouth advertising.

Juyung managed to set up a little sales display in the corner of a warehouse. She didn’t have to be too concerned about keeping her store a secret. Instead, the police took bribes from her, in the form of cigarettes. The soldiers felt like they were not paid enough by the government so they let a lot of the illegal activities persist.

She moved on to other business dealings such as with wholesale. She traded pigs and brewed her own alcohol. She could practice her free trade in the black market without any repercussion. There were no contracts, copyrights, loans, or banks to deal with. Every deal was performed on an honor system. She accumulated a lot of money in the process.

North Korea eventually instilled a big crack down on illegal trade and changed the currency. Everything that the business owners accumulated was virtually worthless. However, this didn’t stop the trading and people stopped trusting currency after that. Instead of of accumulating money, people turned to amassing other goods, like rice, or equipment. This spiked the prices of commodities which raised prices for them significantly, which was not what the government wanted to happen.

Eventually, Juyung moved out of North Korea and now lives in South Korea. She teaches people about North Korea.

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