This paper evaluates Kim Jong-un’s economic policies on markets, outlines the economic activities of North Korean households in markets, and analyzes the effects of economic sanctions on such activities. First, it argues that Kim Jong-un has adopted a pragmatic approach to utilize markets for an economic recovery. However, such an approach is still within the boundaries of socialism, and not a transition toward a market economy. Second, it confirms that marketization is prevalent in North Korea in terms of participation rates and earnings. Indeed, the participation rate in market activities was over 70% and the share of market income in total household income exceeded 90% in 2012-2019. Third, the economic sanctions imposed against North Korea in reaction to its nuclear and ICBM tests diminished average household income by 25%, with households belonging to the top and bottom 20% income quintiles hit particularly hard. Additionally, sanction-induced income shocks were heterogeneous across different professions; the average income of those in the external sector was halved while that of traders at domestic markets dropped by 23%.

Abstract

Ⅰ. Introduction

Ⅱ. Kim Jong-un’s Policies on Markets

Ⅲ. Data

Ⅳ. Types of Market Activities

Ⅴ. Impact of Sanctions on Market Activities

Ⅵ. Conclusion

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