North Korea's Economic Transformation: A Tale of Contrasts
The Post-War Divide
In the aftermath of the Korean War, North Korea and South Korea had nearly identical GDP per capita. However, this economic parity would not last. By the mid-1970s, a significant divergence emerged as South Korea's economy surged ahead, while North Korea's remained stagnant.
The Divergent Paths
Several factors contributed to this economic gap. South Korea embraced free-market principles and foreign investment, while North Korea pursued an isolated, centrally planned economy. This isolationist approach stifled innovation and hindered economic growth.
GDP and Military Spending
North Korea's GDP has remained relatively low in recent decades. In 2024, it was estimated at $2124 billion, significantly below South Korea's $1.8 trillion. Despite its limited economic output, North Korea allocates a substantial portion of its budget to military spending. Between 2010 and 2020, military expenditures accounted for an estimated 20-30% of North Korea's GDP.
North Korea's Industrial Profile
In 2022, North Korea's GDP by industry was dominated by agriculture and manufacturing. The agricultural sector accounted for 20% of GDP, while manufacturing contributed 30%. However, these sectors face significant challenges, including limited technological advancement and a lack of skilled labor.
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