What caused North Korea to go poor when at first it was rich?
Last Updated: 18.06.2025 06:06
By the early 90s North Korea still had a massively lopsided economy, It was allocating a vast
the 80s was undergoing its economic miracle and democratization. This was a huge problem
Union and Eastern bloc, the reformation of the Chinese economic system and the numerous
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the chains of reliance on other nations. The way to achieve this was by placing all trust in him
up, and all of North Korea's terrible mistakes were about to collapse the entire economy.
Those modern Japanese industries and mines ceased to exist. As Historian Charles K. Armstrong put
factories and how many workers you have at your disposal. How do you know what to price food
of arable land and harsh climate. This would not be too concerning as any economically rational
with the extra work could put you in a dangerous position. An example of this is the mobilization
and no event encapsulated this better than its defeat in the Russo-Japanese War
a product of the last few decades. While North Korea and its tiny economy are now juxtaposed with
over their population. North Korean leadership knows that reform will ultimately improve the
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could gain quick money by selling raw resources to them. Within two years after the war, the economy
the environment unable to cope with torrential rains. Coupled with the goat breeding program
It was given hydro electric dams, railroads, irrigation systems and industrial equipment from
is school children being forced to harvest rice , and doubling of coal mining shifts in the 60s
prosperous and united capitalist Korea on their doorstep and they also wanted to send a message to
it made an international plea for aid to which it would receive. Despite receiving 70% of all needed
much of the only arable land for agriculture and the complete flooding of coal mines. In just 4
was wholly dependent on dramatic amounts of help from the other socialist nations.
Despite this, North Korea, to the surprise of the world, would enter its economic Golden age.
Korea would receive a massive at the time $1.65 Billion dollars worth of patron aid
party communist state was instituted. Later all power was Vested in Kim il Sung who would become
and thus had to adapt in the name of self preservation. There is a famous saying in
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willing to imprison your entire family for minor mistakes, it's easy to see how not being okay
and by carrying out tremendous sacrifice for the state. The Ideology heavily borrowed from Korean
more water was now needed to irrigate the fields and that meant hydroelectric power plants needed
years 5-10% of North Korea's entire population perished. Yet this is just one small example of
the time commitment and seemingly overwhelming challenge, well then I have the answer for you.
Soviet & Chinese Aid
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and it's even been scientifically proven using their award winning technology
collapsing is China. While China now sees North Korea as a nuisance the last thing they want is a
then gives the criminals access to state sponsored distribution and protection and they give North
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no country would lend to North Korea by 1976. At this point
is said to be better than real dollars. It harbors international criminals and employs them, this
not global powers. However China started a long and slow decline just as the Europeans
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The North was blessed with almost all the natural resources, most of the industrial capacity,
For almost all of Korea's existence it was surrounded by much more powerful nations,
After Stalin's death in 1953, the next in line Nikita Khrushchev took on De-stalinization reforms
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their new border then became the new front line of the cold war. The Soviet Union, in control
dictators that fell during the Arab spring. But so did North Korea. They have learned that opening
Prioritizing the Military
mountain goats. Flush with the shrubs they graze upon it seemed like the perfect way to
efforts. North Korea all a sudden did not have enough farmlands to feed its people. Faced with
and industry was unable to function. In just three years the entire economy contracted
Japanese. From then until 1945 Korea was treated with unimaginable exploitation.
hydrothermal power plant, an entire industry surrounding vinylon, a strange material that's
1.2 billion dollars of debt for which they had no capacity to pay back and they didn't. As a result,
it could not rely on trade. As a result North Korea did something it hated more than anything,
from the French to build a fertilizer plant, 160 million from the United Kingdom to build a cement
By the late 19th century and early 20th It was no longer China but Japan that threatened Korea.
their economy or political structure even just a little would start a never ending tidal wave
with the support of the Soviets and later the Chinese, launched an invasion in 1950.
was concerned with North Korea's lopsided economic growth. That's because this heavy industry relied
mandated to serve in the military. This of course dramatically strained the rest of the economy.
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the developing world and for a brief moment it was the most industrialized and advanced
Out of pure necessity it for the first time allowed for markets and minor trading however
for the North Korean regime as its grip on power could easily be broken if the North Koreans saw
3.5 million tons per year to just 45 thousand. This would have a catastrophic ripple effect
built personal palaces, ordered 100 white Mercedes limousines and dined on the finest Italian
The Great Famine
on mobilizing the rural farming population to work in factories but this then diminished the
economy. But North Korea had a problem. Despite years of political instability, South Korea by
projects were way too costly, unneeded and in some cases flawed from their very inception. They were
under the weight of political liberalization and a faltering economy finally collapsed in late 1991,
massive humanitarian crisis along their border and the nuclear crisis that would inevitably
it. “ North Korea had been virtually destroyed as an industrial society”
In a case such as this it would make sense for a nation to take out loans to weather the rough
socialist states to feed and fund itself. But the world was changing rapidly, the Soviet Union
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traditionally defined as capital intensive large scale manufacturing that requires heavy machinery
plan would use its newfound industrial strength to trade for food products. But this is counter
were able to Push the North all the way back to the Chinese border. China, worried about
a capitalist foothold on their doorstep, flooded half a million soldiers into the Korean Peninsula,
inefficiencies in the command economy. Oftentimes this meant avoiding the implementation of more
economic, technological and military superiority over the south. North Korea for a time was so
in 1904. The result of the embarrassing defeat was Japan's uninhibited influence in the region
North Korea's Economic Golden Age
was set for a new much longer spanning conflict. Much like the occupation of Germany after the war,
and Korea was not able to hold off any longer. In 1910 It was now an official colony of the
much better off that it once was pointed too as a shining example of communism in
to a unique set of circumstances. At the heart of it all was the religious like to dominance of the
refused to make concessions and ultimately never reformed to fix the structural problems.
The North Korean economy from the end of the war until the 1970s grew at a titanic
For the first time in their histories the South was now better off than the North and rapidly
and facilities. This produces Steel, Military equipment, ships, chemicals, construction ect. But
industrialized nation in modern history. But one idea arose in the high command of the government
the Japanese built large scale mine and processing plants, developed a thriving fertilizer industry,
to do efficiently and even more so for the less technologically advanced North Koreans. To make
factory and 400 million from Japan for heavy plant equipment. In just 5 years North Korea took on
was larger than it ever had been before and by the early 1960s it was producing exponentially more of
Both Koreas that it is a “Shrimp among Whales”, and that the peninsula has been invaded “900 times
the incredibly prosperous South Korea who now has over 70 times the economic output, things used to
cuisine. Making the necessary changes which would have saved his people would have likely meant his
dramatic amounts of resources to the military. As such and in response to heightened tensions North
asian society. From the quote on quote Ideal socialist state, to the worst place to live
,restorate destroyed factories, and revive farmlands . Along with its vast resources,
The Beginning of the End
economic plan. North Korea would persistently use the Chollima movement to address the massive
Confucianism with concepts of hierarchy as the basis of order and social harmony. Coupled with
you can produce if you don't know how much iron is being made, how much coal is being transported to
and almost all freedoms were curtailed, of course except for those in the ruling class. From then
food, coal or any other factor of production they would mobilize the population to work longer and
on, all prices, all goods, all funds, and all jobs were to be dictated by the government,
in the last 2000 years”. For the last 10 centuries Korea served as a tributary state
by the Americans. Weeks later the largest war in human history was over but immediately the stage
ally. Trade to the Russian Federation collapsed 6 fold, food imports and aid completely stopped
of drugs, fake US currency, sold weapons to international terrorist organization, and
Kim allocating 80% of all resources to developing heavy industry came at the cost of consumer goods
This then leads us to the next major mistake. Insead of slowing down military spending,
Kim was able to walk into Stalin's office, providing a huge list of economic needs,
market economy although it would function more or less like a brutal dictatorship until the 1980s.
nations were now open to the idea of lending to North Korea. 80 million dollars was borrowed
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being stimulated by a socialist competition and Kim's fierce iron grip politically
to stop running. Transportation was halted, electricity generation stopped completely,
coming. This was due in large part to the souring relations between the Soviet Union and China.
Korea still exist? There are two things currently keeping North Korea still afloat. One means of
addressing the fundamental imbalances to the economy, even as the cold war tensions cooled in
“self reliance”. Kim argued that the true peak of Civilization was contingent upon being freed from
In the Very last months of the second world war 1.5 million Soviet troops launched a lightnight
wartime loans and even sent tens of thousands of free workers to rebuild infrastructure
Korea plausible deniability when caught. The money generated from these illicit activities
reform its educational system and modernized its military, but the Russian empire was dying
The over reliance of heavy industry and the utilization of massive labor movements would come
be dramatically different. In fact for decades it was the North who maintained a political,
mostly from the Soviet Union. Not only that but China and the Soviets forgave North Korea of its
of further reform just like in the Soviet Union. They do not have the stomach to risk the economic
But how and why did North Korea receive so much economic aid?
For now the People of North Korea suffer and will continue to until the regime inevitably collapses.
Without fuel the population took to cutting down forests for the winters to stay warm and this made
what is called the “chollima movement”. The North Koreans' lack of sufficient economic data lead to
Korea's unprecedented growth hid the abhorrent structural flaws and catastrophic economic
While Initially it seemed like Northern Victory was inevitable, United Nations combat forces
economic shortages” in which the spirit of the revolutionary cause would allow for superhuman
Korea was split in half and now existed under polar opposite political ideologies;
one of the fastest growing economies on earth. The resurgence of North Korea was due in large part
undergoing an apocalypse. Its people had no food, they had no freedom and they lived under a brutal
food producing capabilities of the Nation. But as we discussed prior, we know that North Korea, even
use. Using their speech recognition they help you to correct your pronunciation and accent,
meaning the United States is still technically at war with North Korea. But Kim Il Sung
and little progress was made over the coming years. In the face of neither side seeing
positions meaning there was a severe lack of experience and no real way to produce
his political opponents and ultimately became the supreme authority of the land. He warped the
trapped by the ideologies that created it and thus can not reform without risking collapse.
totalitarian regime. North Korea was now the worst place to live in the world and millions perished.
making money that we have not yet discussed is state sponsored illicit activities. North Korea
already crippled and because of extreme sancious placed on it from its nuclear weapons program
society with the goal of self reliance meant that North Korea would allocate
its immediate industrial upper hand but its scarcity of food, and the worry that the South,
to the various powerful Chinese dynasties that were by far the most important asian powers if
and military building up. Due to the easing of cold war tensions in the 70s, western European
which angered and threatened China’s leader Mao zedong. From there both competed to be the
other potential socialist nations that they would be looked after by the communist world. But well
command economy modeled after and with the help of the Soviet Union. Land was redistributed,
Korea would undertake a massive military buildup and the militarization of the entire culture.
when North Korea was building massive power plants to meet the energy goals laid out in the official
reforms that China undertook and in response to the Arab spring they have tightened social control
exactly the same as in the Soviet Union. But this was even an impossible task for the Soviets
matters even worse, under Japanese occupation, no Native Koreas held significant administering
everything than South Korea who was then just starting to build their own heavy industry.
it carried out insane mega projects. A few of these include an 1100 square mile land reclamation
conditions in which a nation state is actually partaking in these illegal activities, North Korea
family connection, professional development or even just self improvement, but worried about
of mass mobilization in which the nation would rely on quote “revolutionary zeal to make up any
entire nation by Kim il Sung. He quickly started to rewrite history, banned religion, persecuted
the soviets and food, oil and fertilizer from the chinese. From 1950-1960 North
cheap labor and a huge demand for commodities by other socilaist nations meant North Korea
any rational economic leader would try and utilize its vast resources to balance its budget and
Life After Collapse
All men ages fifteen to forty five and all women aged eighteen to thirty five were
The next terrible decision emerged again from the ideology of self-reliance in the form of
harder to make up for the shortfalls. Coupled with a regime that has total social control and is
continue to prop up its massive military and hold on power. The second thing keeping the nation from
the 70s, North Korea started to take out mountains of debt to finance further heavy industry
death and the end to his limitless consumption. We can see now why changes never occurred.
to take the risk. It could have sold its vast resources to the world but because industry was
North Korea stands as a reminder that nations governed by a small elite fixated on retaining
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durable and highly heat resistant, and the most emblematic of the time, the Ryugyong hotel. The
partook in human traffiking and slave labour in their prison camps. In fact, because of the unique
power plants went offline, and Chemical fertilizer was no longer able to be produced. As such much
lives of their citizens, but reform and revolution of a dictatorship never ends well for the elites
champion for the developing Socialist world and thus both could not afford to lose North Korea
annual massive rainfalls. Now without them, the result was massive mudslides which destroyed
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procure more food for the region. Within two years the goat population tripled.
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However some important economic development did take place. Northern Korea is incredibly
family patriarch. With a deeply embedded cultural tradition of family and respecting your elders it
was the perfectly crafted means of Social control over the North Koreas. This provided the perfect
heavy propaganda the image of the state and Kim himself was warped to resemble that of a
in the best of times, is hardly capable of being self-sufficient in food production due to its lack
and previous loans were no longer being forgiven. Maybe most importantly, Russia was
to remedy this issue. In the harsh and mountainous north they started a massive campaign to breed
and China was undergoing reforms now seeing North Korea as more of a nuisance than as an
In the Aftermath Kim set out to finalize the transition into a complete command economy.
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All farmland and all private property was taken by the state. Markets were outlawed,
foundation in which to control and guide the restoration of the nation and economy. However,
The Liberation of Korea
Economic Envy
times. But as North Korea ruined their debt reputations in the 70s no nation was willing
North ramped up terrorist activities, assasination attemps and despite its now stagnate economy,
North Korea: The Worst Place To Live in the World
own influence in the region. With Russia's help, Korea started to industrialize itself,
in the world, this is the story of how North Korea became so incredibly poor.
into North Korea being rejuvenated and strong enough to fend for themselves the aid just kept
before the capitulation of the Japanese empire. At the same time Hiroshima and Nagasaki were erased
This new political dominance was rooted in the ideology of Juche which roughly translates to
Marxist Leninist theories to his own advantage and to work better with traditional Korean beliefs.
light industry. The Japanese had made the south into the breadbasket to feed its war
the burgeoning middle class and rapid increases in quality of life that the South was now enjoying.
throughout the entire economy. The now complete shortage of fuel meant that coal mining ceased,
started to carve out as much of the world as possible. This gave rise to a new asian power
being backed by the largest economy on earth would catch up quickly, Kim il Sung combined
accurate economic statistics. so when a sociliast government was now tasked with deciding every
in charge. While the Nation starved the next leader Kim Jong Il imported luxury watches,
as an ally. Kim was then able to teeter back and forth between the two when aid was offered and
But the south had almost all of the prime agricultural land and most of the consumer
to the regime's ideology of self reliance and thus this never happened. This then made North Korea
who sought to rapidly industrialize and modernize its military to be able to fend off the Europeans.
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single aspect of the entire economy there was no hope of it working. How do you know how much steel
while the government tried to cover up the skyline dominating abandoned hotel using photoshop. These
in the markets that emerged from the crisis in the 90s. North Korea and its leadership are
badly miscalculated his war effort and most of the North's advantage was swept away by the US’s
by far the most industrialized and urbanized country in Asia in the immediate aftermath of
population. But why did North Korea not change? Today we have witnessed the fall of the Soviet
it would provide the economy the self-reliance he treasured so dearly. Heavy industry is
by 50%. Food was no longer being given for free from other socialist nations,
is making drugs with some of the highest quality in the world, and making counterfeit currency that
project off its coast line, an attempted to build the largest dam in the world, a supermassive
Korean History & Japanese Occupation
food from international humanitarian efforts until the year 2000 it made outrageous demands,
ensue. China is supplying energy and food to make sure this does not happen. Since he came to power
this had the added benefit of greater social control over the population.
But the North Korea you see on the news today with its starving citizens and a leadership hell
is hard to estimate but it has likely brought in billions of dollars to which the regime can then
all at least partially funded by the Soviet Union but as the 80s wore on that fundly began to dry
In 1996 North Korea was in the midst of one of the worst famines experienced by any
and historic rainfalls meant that floods and mudslides took out the remaining farmlands.
productive but expensive equipment, instead using brute force to address economic shortfalls,
under strain further toward the end of the 1960s as the Cold war heated up. Having a
eventually pushing the front line close to its original borders. The front line grinded to a halt
mega projects, it failed miserably. It has now been uncompleted for over three decades and for a
productivity that would outpace any other nation. In essence when North Korea was short of steel,
this was only because the central government had no resources in which to distribute to the
But those shrubs that the Goats quickly devoured held together the loose mountain soil during the
15% a year, quickly dwarfing the small agrarian economy of the south. But how is it possible that
carpet bombing campaings. In fact the United States dropped more explosives on North Korea
But with the fall of the Soviet Union and subsequent economic calamity how does North
officer in the Soviet army during the liberation of Korea. He quickly began to build a Socialist
microcosm of the much larger Cold war. The Soviets and Chinese did not want a strong,
power and gatekeeping the keys to truth are where true human suffering lies. The 20th century gave
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the second world war. Under Japanese occupation North Korea became an industrial powerhouse.
of the North, quickly appointed Kim il Sung, a guerilla fighter in the war who later became an
and 92% off the electrical power generation. In fact for a brief moment in time North Korea was
bent on making nuclear weapons, in a desperate last ditch attempt to maintain power is largely
made countless reservoirs and pumping stations to irrigate the fields, and constructed modern power
How North Korea Still Exists
Ironically, and against the notions of self reliance, North Korea's resurgence
in 2011 Kim Jong- un has largely kept North Korea unchanged and in fact is looking to try and reign
meant he could carry out rapid industrialization and militarization of the whole country. But North
starting in the 70s but ramped up dramatically in the 90s the manufacturing, and distribution
and most importantly agriculture. Even Stalin who himself overemphasized heavy industry
majority of its budget to the military, It had not made significant attempts to pay off its debt
Hotel was to become the tallest in the world, cost 2% of its entire economy and like all the other
pulling ahead. This was symbolized in the 1988 olympic games hosted in Seoul. In response the
As Korea could not stand alone It turned to the Russian empire who was looking to expand their
plants. Infrastructure throughout the country was improved to ship the much needed materials
keeped on flooding in. North Korea was able to thrive economically because it was constantly
rich in natural resources. According to a Goldman Sachs report, North Korea is sitting
thus preferential trade deals, free capital and resources, and access to equipment and technology
significant shortages all the time. Of course Kims answer to this problem was in the form
The Korean War
fully reliant on the untenable aid it received from other socialist nations to feed itself.
decisions that would lead to it eventually becoming the worst place to live in the world.
those Japanese Industries were nationalized, a socialist central bank was created, and a one
then they had dropped on all nations combined throughout the entirety of the second world war.
more of a god then a ruler to the North Koreas. In the South the United states created a democratic
a terrible decision in a country that arguably has the most mismanaged economy in modern times.
the farmlands were now unproductive, and it was almost impossible to even transport harvests.
atop an estimated 10 Trillion dollars worth of mineral deposits, and as such,
if you have no Idea how many hungry mouths there are to feed or how productive your farmlands are.
back to Japan to aid in the war effort. But Japan’s reign of terror came to an abrupt end.
and just like in the aftermath of the Korean war, it was still heavily reliant on other
no longer willing to give oil to North Korea at preferential rates and the supply of it went from
To make matters even worse the floods destroyed underground stockpiles of grain. North Korea was
invasion into Manchuria in an effort to snatch up as much land as possible
to which Stalin would often accept. But why? Initially it was quite simple. Korea was a
From the very beginning, Kim il sung was obsessed with building heavy industry as in his mind
this small nation that was just bombed back into the stone age , was now able to become
rise to Socilist command economies, North Korea is the last remnant of that dying political system.
an ability to advance further an armistice was signed that is still in effect to this very day,