The North Korean Economic Dilemma: Whether to Sustain the Present Regime or Execute Economic Reforms -An Analysis of the Economic Relationship with the Former USSR/Russia and China

It is well known that North Korea has been suffering from acute economic crises since the 1990's. Although the country's food shortage was revealed in 1995, North Korea had already been confronted with economic difficulties by then. The difficulties appear to have been chiefly caused by three changes in external trade patterns of North Korea. Firstly, at the beginning of the 1990's, North Korea's imports from Russia largely decreased in comparison with that from the Soviet Union in the 1980's, which had been the most important source of obtaining materials for North Korea. Imports from Russia continued to decrease in the 1990's. Secondly, from 1994 to 1996, the physical volume of cereals annually imported by North Korea from foreign countries was remarkably small, compared with that imported until 1993. Thirdly, in the latter half of the 1990's, North Korea's imports of energy from China, which has been the largest obtainable energy source for North Korea from abroad since the beginning of the 1990's, fell significantly. These changes in turn appear to have seriously damaged the North Korean economy. North Korea has been expected to carry out economic reforms in order to im prove its economic condition. Since July 2002, this country has introduced new eco nomic polices. Although they have market-oriented features, we are not able to regard them as economic reforms. They are only improvement measures taken in the planned economic system. North Korean leaders, including Kim Jong Il, appear not to be able to execute fundamental economic reforms, even if they understand that the reforms are indispensable for improving their economy. This is most likely because having