Juche - Effects On The Economy

Effects On The Economy

While Juche was not the sole cause of North Korea's famine and unstable economy, the idea drastically impacted the country's economic system.

In 1957-1961, the Five Year Plan prioritized the reconstruction of major industries destroyed by the war, and placed consumer goods at the bottom of the priority list. This bias toward rebuilding major industries, "combined with unprecedentedly large amounts of aid from the Soviet bloc, pushed the economy forward at world-beating growth rates in the 1950s and 1960s". Where everyday consumer items such as pens and watches had been rare in post-war North Korea in 1949, by the mid-1960s North Korea's economy was growing faster than that of South Korea.

Under Juche, North Korea's economic goal became to “build a rich and strong state that can guarantee our nation's chajusong (freedom)." Kim Il-sung proposed to protect the chajusong of the national economy by relying on domestic resources and seeking independence from foreign resources. In adherence to the Juche principles of chaju (independence in politics) and charip (self-sustenance in the economy) as outlined by Kim Il-sung in 1965, the country isolated itself from rest of the world. North Korea had only minimal diplomatic relationships with other nations until the collapse of the Soviet bloc forced it to create new alliances.

It may be noted that the charip idea of a self-contained economy was unlike other countries that withdrew from the world economy such as Albania under Enver Hoxha and Myanmar (Burma), two countries that "withdrew" to no apparent purpose as their economies idled along or got worse; North Korea didn't idle but grew until the 1980s.

In theory, North Korea's withdrawal from the world economy was designed to create self-reliance and independence from other countries. In practice, however, the nation was forced to rely on the USSR, and later China, to sustain its livelihood. One example of the need for foreign aid occurred in 1986, when Kim Il-sung set a production goal of ten million tons of grain. When the plan failed and the country produced only four million tons of grain, it turned to foreign aid to provide an additional two million tons of grain. The six million tons of grain it managed to obtain was the bare minimum needed to feed its population.

North Korea's economic crisis continued through the 1990s. "Most of the blame was attributed not to North Korea's ponderous socialist system but to 'the collapse of socialist countries and the socialist market of the world,' which 'shattered' many of P'yongyang's trade partners and agreements.” The fall of the socialist market and trade partners led North Korea into a crisis that was unmanageable within their economic system. As a result, in contradiction to the Juche philosophy of autarky, North Korea established the Najin-Sonbong free economic and trade zone during the mid-1990s.

Investors from firms in Hong Kong, the United Kingdom, Japan, France, South Korea, the United States, and other countries opened manufacturing facilities in the DPRK. The Shell Oil Corporation (in 1995) is one of the large, multinational corporations that invested in the open trade area. Near the parallel, North Korea also opened the city of Kaesong for exports until 2010, when South Korea imposed economic sanctions after the sinking of a South Korean warship.

The Juche principle of chawi (self-defense in national defense) has caused North Korea to spend much of its capital for military purposes, reducing the amount available for economic development. It is estimated that 25 percent of North Korea's annual budget goes to the military. Kim Jong Il explicitly expressed an "army first" policy in the mid-1990s.