Analysis of North Korea’s Foreign Trade: 1970‐2001

In the first years following the Korean War (1950‐1953), the centrally‐directed economy of North Korea had been larger in per capita income and had grown more rapidly than the more loosely‐controlled economy of South Korea. However, in the absence of rational and strategic economic planning, these advantages soon reached their limits. By the mid‐1970s, South Korea’s two successful five‐year economic plans put it ahead of North Korea. Loss of allies in the early 1990s, consecutive floods in 1995 and 1996, and a severe drought in 1997 caused the North Korean economy to shrink in the 1990s. Thus, while North Korea had gradually reformed its troubled economic system since the early 1990s, these measures were different from market‐oriented reform. However, in July 2002, North Korea began to introduce the most significant liberalization measures since the start of Communist rule in 1948 (French, 2002). This paper discusses the performancde of North Korean foreign trade and offers suggestions for steps toward globalization to be taken by the country.