North Korea economy question.

[An_Gadai]

According to the wikipedia entry for North Korea:

North Korea

@wikipedia

By 1960, North Korea was among the wealthiest countries in the world and the most industrialized country in Asia with a GDP per capita of $1,947 and more developed than today’s wealthiest countries such as Australia, Austria, Belgium, Denmark, Finland, France, Japan, Italy, Netherlands, Norway, South Korea, Switzerland and the United Kingdom. At the time, North Korea’s GDP per capita was four times larger than Japan, whose economic development was comparable with that of Tanzania, Tonga and Mozambique with a GDP per capita of $471.

I have a list of questions.

1. Is the above true?
2. If true, how come NK’s economy was so strong during this period?
3. Hi, Opal!

[Captain_Amazing]

You might want to read this:

http://countrystudies.us/north-korea/46.htm

In brief:

1. They got enormous amounts of aid from the Soviet Union and China.

Various factors explain the very high rate of economic development of the country in the 1950s and the general slowdown since the 1960s. During the reconstruction period after the Korean War, there were opportunities for extensive economic growth–attainable through the communist regime’s ability to marshall idle resources and labor and to impose a low rate of consumption. This general pattern of initially high growth resulting in a high rate of capital formation was mirrored in other Soviet-type economies. Toward the end of the 1950s, as reconstruction work was completed and idle capacity began to diminish, the economy had to shift from the extensive to the intensive stage, where the simple communist discipline of marshalling underutilized resources became less effective. In the new stage, inefficiency arising from emerging bottlenecks led to diminishing returns. Further growth would only be attained by increasing efficiency and technological progress.

[Tapioca_Dextrin]

At the time, North Korea’s GDP per capita was four times larger than Japan, whose economic development was comparable with that of Tanzania, Tonga and Mozambique with a GDP per capita of $471.

As Humpty Dumpty pointed out, you can make words mean whatever you want them to mean. According to the site that Wiki cites the GDP figures were as follows

Guam: $47,451.70 per capita
Faroe Islands: $20,833.33 per capita
United States: $2,881.10 per capita

GDP per capita seems to be a pretty silly number.

[Giles]

@Tapioca Dextrin

GDP per capita seems to be a pretty silly number.

It’s normally a pretty sensible number, but it can get out of whack in countries/territories with a small population and something out of the ordinary with the economy.

However, the figures for the latest available year, 2005, look more reasonable, with the top country being Luxemburg at about $80K per capita being more comparable with the US at about $42K per capita, and

[FoieGrasIsEvil]

I suppose that Kim-Jong-Il’s massive and economically unsupportable military buildup is what is causing current levels of famine. It isn’t like the farmers have a choice of whom they are feeding or whom they are selling their produce (rice) to.

[Measure_for_Measure]

According to Angus Maddison’s The World Economy, A Millennial Perspective, North Korea had a per capita GDP of $1105 in 1960 (1990 international Geary-Khamis dollars).

Let’s do some comparisons with 1960 GDP per capita:
Argentina: $5559
Brazil: 2335
Japan: 3988
Australia: 8865
France: 7543
Canada: 8947
US: 11,328

The Wikipedia entry as reported in the OP is not remotely accurate.

[Measure_for_Measure]

So what gives? I suspect that the North Korean GDP is valued at the official exchange rate at the time, which was presumably over-valued and subject to currency controls. That is, a North Korean wanting to trade his Quatloos for dollars or yen wouldn’t have much luck. Within centrally planned economies the ability to turn locally earned money into foreign goods is limited: only the elite have access to certain well-stocked stores.

Those few foreigner tourists wanting to buy North Korean currency in the day though would pay through the nose, unless they had access to the black market.