Neighboring country collects data: How long will North Korea’s economy last?

Germany has achieved what North and South Korea are far from achieving: reunification. A catalyst at the time was the ailing GDR economy. In South Korea, experts are therefore keeping a close eye on how the neighbors are doing economically.

“It can happen any day, and then you have to be prepared. A collapse of North Korea.” That’s what South Korean President Yoon Suk-yeol said recently. Cho Taehyoung is one of those who specifically deals with such a scenario from an economic point of view. He has led a small team at Bank of Korea since 2017. A friendly man who smiles a lot and is not allowed to reveal everything.

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With a view to German reunification in 1990, the economist says while sipping his lemon tea: “We will also be one country in the future, and we have to prepare for that day.”

Cho’s work, as he describes it, is even harder than that of a truffle pig. Not only does he have to search and find a lot, but he also has to assess and weight information from the communist neighboring country – and sometimes discard it again.

An important component are statistics on imports and exports with China, the North Korean regime’s most important trading partner. “These data are regularly released by China.” And that shows how much North Korea has exported to the People’s Republic.

Refugees provide information

Another insightful source is North Korean refugees. Around 33,000 live in the south. Of particular interest to the central bank are those who work as journalists, rely on previous contacts at home for their work and then publish data on rice or petrol prices, for example.

Neither Cho nor any of his six employees interview North Korean refugees themselves, but they use reports from the National University of Seoul, which collects data from surveys every year, for further assessments. The main focus here is on everyday issues, explains Cho:

Satellite images and research trips

All this information is interesting to better assess the current situation in the dictatorship. “We recently received some very interesting satellite data,” Cho said. Because a satellite delivers images around the clock, the scientists can see, for example, how much and where the lights are on in the north at night. They compare this with their own country and try to draw conclusions about the economic situation.

Or they put satellite images from different time series next to each other and see whether and what has changed. What Cho doesn’t say, but it is known: Satellite data are of course also used to get information about work at the nuclear facility or to see whether, for example, a military parade is planned.

Although Cho doesn’t stand at the border with binoculars to see if smoke is rising from a chimney – occasional excursions are part of his job: “Sometimes I travel near the Chinese border, the border between China and North Korea. And then there are there people we hear from about what’s going on in North Korea.”

Combination skills and healthy distrust

During the corona pandemic, the North Korean economy and thus the people were in a very bad situation, Cho is sure of that. He uses the increased prices for staple foods such as rice and corn as evidence. Grain production has declined, but not as much as in the 1990s, for example, during the great famine in North Korea.

All the information collected, he admits, would always have to be questioned again. Refugees can exaggerate, tell untruths, export data may not be correct. This is especially true for the sparse data that North Korea sends to global organizations – such as the World Health Organization during the pandemic.

“We have to be very careful and always question: Is that possible?” A lot of data is linked, the job in Cho’s team requires deduction skills.

Hacker attacks and foreign workers

“Some questions,” says Cho honestly, “we can’t answer either.” For example, how much the regime made from hacking and crypto exchanges.

Whether and how much North Korea earns with foreign workers is also an open question. Their use has long been banned, but according to Cho: “If these corrupt people can do something, then they will do it.” Refugees have repeatedly reported about restaurants in China or factory workers.

“And you know, then there are these dictators in Africa who want bronze statues.” The North Koreans have all these crazy skills to build statues like that, Cho says, laughing.

Fewer and fewer refugees

Overall, work has become more difficult for Cho and his team. On the one hand, because there is only sparse data and fewer and fewer people are able to escape from the dictatorship. According to the South Korean white paper for reunification, there were just 63 people in 2021 – almost 1,000 fewer than in 2019.

But also with regard to his mission to be prepared for a reunion, the reality is increasingly challenging. The income gap between North and South Korea is huge. Most recently, according to Cho Taehyoung, the average per capita income in South Korea was around $35,000 per year, compared to only around $1,000 in the neighboring country. Twice as many people live in South Korea than in the north.

With respect and the help of the USA

The difference between North and South Korea is therefore much greater than it was between East and West Germany in 1990; That’s why reunification on the Korean peninsula has to be different than in Germany, says the scientist: “We believe that gradual integration is more necessary than very rapid, radical integration.”

You have to show respect to the people in the north for this case. But whether politicians will see it that way is of course questionable, the financial expert points out.

In the opinion of the Korean central banker, the USA should become more active and not just wait and see if things can move forward again after years of deadlock on the issue of disarmament. According to Cho, only if North Korea’s voice is listened to more will things change.