The Economy of the DPRK and South Korea in the Postwar Period

SECRET Copy Nº 2

N 344/dv 16 May 6[0]

THE ECONOMY OF THE DPRK AND SOUTH KOREA IN THE POSTWAR PERIOD

(a brief memorandum)

I. THE DPRK

The economic policy of the Korean Worker's Party in the postwar period has been directed at the priority development of heavy industry with the simultaneous development of light industry and agriculture.

The volume of industrial production in the DPRK grew by an annual average of 42% in the five postwar years, and by 53% in 1959. The first five-year plan (1957-1961) was fulfilled by July 1959 in the level of industrial production, that is, in 2.5 years. In 1959 the level of industrial production had risen by 6.1 times compared to the prewar year 1949 and exceeded the level set by the five-year plan for 1961 by 15%. However, in 1959 the targets of the five-year plan to produce electric power, extract coal, produce cast iron, steel, rolled products, copper, zinc, cement, mineral fertilizer, and textiles were not fulfilled. Thus, the five-year plan was not fulfilled through the leading sectors of heavy industry.

The high growth rates and the early fulfillment of the five-year plan for gross industrial production was achieved to a considerable degree as a result of putting into operation new industrial capabilities created with the aid of socialist countries.

The production of the most important types of industrial products in the DPRK is described by the following data:

Labor productivity in industry rose by only three percent in industry in 1959, and in construction even declined by two percent. The number of manual laborers and office workers in the economy in that same year increased by 42% and was 1,392,000 people.

Nineteen-sixty was planned as "the year of tightening" of reserves to finish the five-year plan for all industrial sectors. The plan for 1960 provides for a 12.5% increase of gross industrial output.

The cooperation of agriculture was concluded in 1958 in the DPRK and a consolidation of the agricultural cooperatives was carried out. Three thousand and eight hundred and forty-three agricultural cooperatives were created instead of 13,309. As a result of carrying out considerable irrigation work the area of irrigated land now reaches 800,000 hectares, or one-third of planted areas.

Grain farming is the basis of DPRK agriculture. In 1959 the planted area for corn was reduced by 348,000 hectares as a result of a miscalculation by planning organizations. The gross grain harvest was 3.4 million tons this year, that is, somewhat less than in 1958.

The gross harvest of grain, industrial crops, and vegetables in 1959 is described by the following data:

(in thousands of tons)

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…1958 - 4%, but in 1959 industrial production declined somewhat.

Unlike the DPRK South Korea has an extremely low level of industrial development. Industrial production is only 13% of the total volume of national production. There is almost no metallurgy, machinebuilding, or other sectors in the country, and electric power, and the mining and chemical sectors of industry are poorly developed.

South Korea lags considerably behind the DPRK in all primary economic indicators, and especially in per capita industrial production.

* - millions of square meters [Mln. m²]

South Korea, which was the entire country's granary before the liberation of Korea, now does not provide its own domestic needs in agricultural products. The gross grain harvest in South Korea in the best harvest year of 1958 was 3.75 million tons, that is, about 170 kg per capita, but in the DPRK with considerably less area under cultivation it was 3.4 million tons, that is, 340 kg per capita.

Animal husbandry is poorly developed in South Korea. The total number of livestock at the end of 1958 was 1,001,000 cattle and 1,324,000 pigs.

South Korea imported 987,000 tons of grain in 1958, mainly wheat; in 1959 it was about 950,000 tons.

During the period after the liberation of Korea the United States gave South Korea about $2.8 billion of aid, to a considerable degree from the importation of consumer goods (about 70% of the total amount of the aid).

The standard of living of the employed population in South Korea is somewhat higher than in the DPRK. However, considering the fact that every fifth person fit for work is completely or partially out of work at the same time as the DPRK population is fully employed, one can conclude that the average standard of living of the population in South Korea is lower than in the DPRK. This conclusion is confirmed by the average norms of the consumption of the main food product throughout the country, grain. In South Korea the consumption of grain per capita is 510 grams in the countryside and 360 grams a day in the rest of the population. In the DPRK it is respectively 620 grams and 570 grams a day.

CHIEF OF THE USSR MFA FAR EAST DEPARTMENT

[handwritten]: I. I.  (I. TUGARINOV)

[handwritten]: authenticated: [illegible signature]

2-GS/vzh

Nº 802-dv

16 May 1960

[illegible handwritten name in

the lower left-hand corner of

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