Editing Economy of North Korea (section)

===Efforts at modernization since 1991===
Following the [[collapse of the Soviet Union]] in 1991, the principal source of external support, North Korea announced in December 1993 a three-year transitional economic policy placing primary emphasis on agriculture, light industry, and foreign trade. However, lack of fertilizer, natural disasters, and poor storage and transportation practices caused the country to fall more than a million tons per year short of grain self-sufficiency.<ref name=Bloomberg2016 /><ref name=UPI2016 /> Moreover, lack of foreign exchange to purchase spare parts and oil for [[electricity generation]] left many factories idle.<ref name=RandPark2010Dissertation />

The shortage of foreign exchange because of a chronic trade deficit, a large foreign debt, and dwindling foreign aid has constrained economic development. In addition, North Korea has been diverting scarce resources from developmental projects to defence; it spent more than 20% of GNP on defence toward the end of the 1980s, a proportion among the highest in the world. These negative factors, compounded by the declining efficiency of the central planning system and the failure to modernize the economy, have slowed the pace of growth since the 1960s. The demise of the [[socialist republic]]s in the Soviet Union and East European countries—North Korea's traditional trade partners and benefactors—has compounded the economic difficulties in the early 1990s.<ref name="Savada1994"/>

Economically, the collapse of the Soviet Union and the end of Soviet support to North Korean industries caused a contraction of the North Korea's economy by 25% during the 1990s. While, by some accounts, North Korea had a higher per capita income than South Korea in the 1970s, by 2006 its per capita income was estimated to be only $1108, one seventeenth that of South Korea.<ref>Amal Mattoo, ''Power, Ideology, and Resistance to Reform in North Korea'' (May 2015): 3.</ref>

Experimentation in small scale entrepreneurship took place from 2009 to 2013, and although there continue to be legal uncertainties this has developed into a significant sector.<ref name="38north-20170329">{{cite news|url=http://38north.org/2017/03/aabrahamian032917/|title=A Eulogy to Women in Business Training|last=Abrahamian|first=Andray|date=March 29, 2017|work=[[38 North]]|access-date=April 18, 2017|archive-url=https://web.archive.org/web/20170419102256/http://38north.org/2017/03/aabrahamian032917/|archive-date=April 19, 2017|url-status=dead|publisher=U.S.–Korea Institute, Johns Hopkins University School of Advanced International Studies}}</ref> By 2016 economic liberalisation had progressed to the extent that both locally-responsible and state industrial enterprises gave the state 20% to 50% of their output, selling the remainder to buy raw materials at market-based prices akin to a free market.<ref name="38north-20160726">{{cite news |url=http://38north.org/2016/07/gtoloraya072616/ |title=Deciphering North Korean Economic Policy Intentions |author=Georgy Toloraya |publisher=U.S.-Korea Institute, Johns Hopkins University School of Advanced International Studies |work=[[38 North]] |date=July 26, 2016 |access-date=August 4, 2016 |url-status=dead |archive-url=https://web.archive.org/web/20160730061744/http://38north.org/2016/07/gtoloraya072616/ |archive-date=July 30, 2016 }}</ref>

In 2014, the Enterprise Act was amended to allow state-owned enterprise managers to engage in foreign trade and joint ventures, and to accept investment from non-government domestic sources.  Under the new rules the enterprise director became more like the western [[chief executive officer]], and the chief engineer had an operational role more like a western [[chief operating officer]]. As of 2017 it was unclear if the Taean Work System (described above) still in practice operated to give local people's committees much influence.<ref name=38north-20171221>{{cite news |url=https://www.38north.org/2017/12/pward122117/ |title=Market Reforms with North Korean Characteristics: Loosening the Grip on State-Owned Enterprises |last=Ward |first=Peter |publisher=U.S.-Korea Institute, Johns Hopkins University School of Advanced International Studies |work=[[38 North]] |date=December 21, 2017 |access-date=March 5, 2018 |archive-date=March 6, 2018 |archive-url=https://web.archive.org/web/20180306023133/https://www.38north.org/2017/12/pward122117/ |url-status=live }}</ref>

In 2017, Dr. Mitsuhiro Mimura, Senior Research Fellow at Japan's Economic Research Institute for Northeast Asia, who has visited North Korea 45 times, described it as the "poorest advanced economy in the world", in that while having comparatively low GDP, it had built a sophisticated production environment. He described the recent rise of entrepreneurial groups through "socialist cooperation", where groups of individuals could start small enterprises as cooperative groups. Managers in state-owned industries or farms were also free to sell or trade production beyond state plan targets, providing incentives to increase production. Managers could also find investment for expansion of successful operations, in a process he called "socialist competition". A state plan was still the basis for production, but was more realistic leaving room for excess production.<ref name=38north-20170907>{{cite news |url=http://www.38north.org/2017/09/jbaron090717/ |title=What if Sanctions Brought North Korea to the Brink? "Well, in 1941..." |last=Baron |first=Jeff |publisher=U.S.-Korea Institute, Johns Hopkins University School of Advanced International Studies |work=[[38 North]] |date=September 7, 2017 |access-date=September 11, 2017 |archive-date=September 8, 2019 |archive-url=https://web.archive.org/web/20190908041008/https://www.38north.org/2017/09/jbaron090717/ |url-status=live }}</ref>

In 2020 North Korea halted its economic reforms that were seen as a risky gambit to unleash market forces, and the government shifted back its focus towards more central planning and state control over the economy.<ref>{{cite web |last1=Andrei |first1=Lankov |title=Diplomatic shifts belie continuity in North Korea |url=https://eastasiaforum.org/2024/01/26/diplomatic-shifts-belie-continuity-in-north-korea/ |website=eastasiaforum.org |date=January 26, 2024 |publisher=East Asia Forum |access-date=6 October 2024 |archive-url=https://web.archive.org/web/20240712231819/https://eastasiaforum.org/2024/01/26/diplomatic-shifts-belie-continuity-in-north-korea/ |archive-date=12 July 2024 |language=english}}</ref><ref>{{cite magazine |last1=The Economist |title=Kim Jong Un rediscovers his love of central planning |url=https://www.economist.com/asia/2021/07/01/kim-jong-un-rediscovers-his-love-of-central-planning |website=economist.com |access-date=6 October 2024 |archive-url=https://web.archive.org/web/20240709180132/https://www.economist.com/asia/2021/07/01/kim-jong-un-rediscovers-his-love-of-central-planning |archive-date=9 July 2024}}</ref>