Foreign aid statistics « North Korean Economy Watch

Archive for the ‘Foreign aid statistics’ Category

Hyundai projects picking up this year – still not profitable

Monday, May 19th, 2008

UPDATE: Although the Daily NK originally reported stellar growth rates in 2008 for Hyundai’s North Korea projects, today the Choson Ilbo highlights that profits are still elusive:

According to the Financial Supervisory Service on Sunday, Hyundai Asan suffered a net loss of W9.64 billion (US$1=W1,041) in the first quarter this year, three times greater than the W3.34 billion in the corresponding quarter last year.

Despite the large number of tourists, which, at 125,000 as of mid May this year, nearly doubled since last year, it is the largest loss reported since the tours to Mt. Kumgang began in 2004. Over 45,000 people have traveled to the North Korean city of Kaesong since the tour program began in December 2007, and it is almost certain that the company would reach its goal of 100,000 tourists for this year.

So what is the explanation given for this?

The reason for such struggle is the weakness of the won against the U.S. dollar, since North Korea charges admission fees to Kaesong and Mt. Kumgang in dollars — US$ 100 for one and $80 for the other per person for three days and two nights. As the dollar has risen more than 10 percent since the beginning of the year, from W940 to W 1,040, so has the initial cost. The tour program to Kaesong has reportedly gone into the red already. Moreover, Asan has to pay off $200 million of North Korean foreign debt in return for the license to develop Mt. Kumgang granted in 1999.

ORIGINAL POST
From the Daily NK:

According to the Ministry of Unification, despite the stalemate between North and South Korea, cooperation and exchange at the civilian level have increased rapidly in the months of January to April compared to the previous year.

Compared to the same period last year, North-South trade increased by 37% (corresponding to USD 410.099 million the same period last year) and the coming and going of people and the tour of Geumgang Mountain increased by 144% and 76% respectively, contributing to a significant rise in civilian cooperation and exchange.

Related to the North-South trade, following the expansion in economic cooperation, commercial transactions (regular trade + processing of brought-in materials + economic cooperation) increased by 53.3% (to USD 531,960,000) compared to the same period last year (USD 346,990,900). Only, uncommercial trade decreased by 53.8%, recorded at USD 29,570,000 according to the reduction in aid to North Korea.

69 enterprises are operating in the Kaesong Industrial Complex as of April 2008 and 44 of them seem to be constructing factories. It is anticipated that 100-some enterprises will be operating by the end of the year.

The first quarter production volume increased 71% or by USD 6,770,000 compared to the same period last year. The export amount declined 58% to USD 13,280,000. The total number of North Korean workers is 26,885 and South Korean sojourners 1,018, the latter rising by 52.6% from the previous year, despite the evacuation of South Korean personnel.

The Mount Geumgang and Kaesong tours, compared to last year, are maintaining a huge growth rate. The number of Mt. Geumgang tourists have increased 76% to 100,510 and the Kaesong tour, which began in December of last year, logged 40,525 visitors thus far.

The number of coming and going of people, excluding the Mt. Geumgang and Kaesong Complex tourists, increased by 144% within the year to 93,019 and such a growth rate seems to have originated from the hike in visitors related to economic cooperation and North-South trade as well as the Complex itself. Only, the number of visitors related to aid to North Korea was reduced from 2,935 to 1,129.

Although the increase in tourism numbers was expected, the positive spin put on the Kaesong Zone contradicts earlier reports.

Read the full stories here:
North and South, Politics at a Stalemate, Economic Cooperation Is Bright
Daily NK
5/14/2008
Jeong Jae Sung

Hyundai Asan Losses From N.Korea Tours Mounting
Choson Ilbo
5/19/2008

Posted in 2002 Economic reforms, Economic reform, Foreign aid statistics, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), Manufacturing, Mt. Kumgang Tourist Special Zone, Political economy, RoK Ministry of Unification, Statistics, Tourism, Trade Statistics | Comments Closed

US resumes food aid to DPRK

Saturday, May 17th, 2008

UPDATE:
North Korea acknowledges US aid in domestic media. From the Choson Ilbo:

North Korea on Saturday said through its official Korean Central News Agency (KCNA), “The food aid of the U.S. government will help settle the food shortage in (North Korea) to a certain extent and contribute to promoting the understanding and confidence between the peoples of the two countries.” This announcement came 12 hours after the U.S. offer of 500,000 tons of food aid to the Stalinist country.

On Sunday, North Korea also reported on the U.S. offer of food aid through North Korea’s state-run Korean Central Broadcasting Station, a broadcaster designed for domestic audience, and Radio Pyongyang, a broadcaster designed for overseas audience.

Full story here:
Pyongyang Reacts Promptly to U.S. Food Aid Offer
Choson Ilbo
5/19/2008

ORIGINAL POST
The USAID press release is below. USAID is supplying 500,000 metric tons of aid to North Korea. This comes in at 12.5% of the approximately 4 million tons needed to support the population per year (according to Noland, Haggard, Weeks).

Supposedly USAID and the DPRK have reached an agreement on monitoring the distribution of aid – to make sure it gets to where it is needed most. The specifics of this deal have not been made public as far as I am aware (if any readers know the procedures, please pass them along).

USAID press release:
Resumption of U.S. Food Assistance to the North Korean People
May 16, 2008
Press Office: 202-712-4320
Public Information: 202-712-4810

WASHINGTON, D.C. – The United States and the Democratic People’s Republic of Korea (DPRK) have reached an understanding on the parameters of a program for the resumption of U.S. food assistance for the North Korean people. International organizations and experts have expressed concern about a severe food shortage in North Korea, and the DPRK has explained to the United States that it faces a major shortfall in food supplies. In response, the United States has pledged significant assistance. The two sides have agreed on terms for a substantial improvement in monitoring and access in order to allow for confirmation of receipt by the intended recipients.

The United States intends to provide the DPRK with 500,000 metric tons in food commodities over the course of a 12-month program beginning in June 2008, with the World Food Program (WFP) to distribute approximately 400,000 tons and U.S. NGOs approximately 100,000 tons. The United States and the DPRK have agreed on a framework to allow WFP and NGO staff broad geographic access to populations in need and the ability to effectively monitor the distribution of U.S. commodities. The food aid will come from the Bill Emerson Humanitarian Trust. The exact commodity mix and delivery schedules will be based on the outcome of a joint needs assessment to be conducted in coming weeks.

An experts’ meeting will be convened in Pyongyang in the near future to work out operational matters and commence detailed implementation of the program. Premised on a successful outcome of those discussions, the United States will deliver a first shipment in June, in light of the urgency of North Korea’s food shortfall. This program has developed through close coordination and extensive consultation with experts in the South Korean government.

Posted in Food, Foreign aid statistics, International Aid, UN World Food Program, USA | 1 Comment »

US to offer DPRK food aid. Seoul still waiting to be asked.

Tuesday, May 13th, 2008

According to the Financial Times (h/t One Free Korea):

The US has agreed to give North Korea 500,000 tonnes of food aid under a new deal that would allow monitors unprecedented access to oversee distribution in the Stalinist state.

Washington will supply 400,000 tonnes via the United Nation’s World Food Programme, while US non-governmental organisations will distribute another 100,000 tonnes, according to people familiar with the agreement. One US official told the Financial Times that President George W. Bush would approve the deal “within days”.

In order to ensure the food reaches ordinary North Koreans, Pyongyang has agreed to extensive monitoring, including random inspections that several observers said were “unprecedented”. It would also allow “port to mouth” inspections to reduce concerns that food would be siphoned off for the elites that support Kim Jong-il, the North Korean leader.

Pyongyang will also allow more monitors into North Korea than under previous food programmes, and will allow them to visit a greater number of areas.

North Korea will receive an initial shipment of 50,000 tonnes in early June. Once Mr Bush formally approves the deal, US experts will meet counterparts from North Korea, the WFP and NGOs to decide what kind of food is needed.

…And contrary to its previous report on 5/11/08 that South Korea was preparing to donate a nearly USD$10 million aid package to the DPRK, despite never being formally asked for it, Yohnap today reports that Seoul is doing no such thing. The trial balloon carrying the aid must have popped somewhere over the DMZ.

Read the full stories here:
US to send food to N Korea under new deal
Financial Times
Demetri Sevastopulo
5/13/2008

Seoul set to approve 10 bln won in aid for N. Korea: official
Yonhap
5/11/2008

Gov’t denies rice aid to be sent to N. Korea via int’l body
Yonhap
Shim Sun-ah
5/13/2008

Posted in Agriculture, Food, Foreign aid statistics, International Aid, UN World Food Program, USA | Comments Closed

Haggard-Noland on North Korea’s economic integration

Tuesday, April 8th, 2008

Stephen Haggard and Marcus Noland published a piece focusing on North Korea’s economic integration. Download it here: petersoninstitute.pdf

Although not the focus of the piece, here is an excerpt:

A first corollary of the injunction to avoid top-down approaches is that any collective development assistance must be extended in support of economic reform. Experience throughout the developing world demonstrates that assistance will have only marginal effects and may even have negative consequences if not coupled with policy changes. It is not simply that aid sustains the regime; since aid is fungible, even purely humanitarian aid will have that effect. The problem is that too much aid can delay or even undermine the reform process. Whatever the multilateral mechanism that ultimately emerges, it should encourage reform and economic opening in the North.

A second corollary of the injunction against top-down approaches is the importance of engaging the private sector: through trade, foreign direct investment, private capital flows (including remittances), and sheer expertise. Economic rehabilitation will require investment in social overhead capital, which will be led primarily by the public sector. But if North Korea is to evolve toward a self-sustaining market-oriented economy, private-sector involvement will be crucial. Participation of foreign firms means that projects are subject to the market test of profitability, and it encourages North Korean authorities to think of economic engagement in terms of joint gain rather than as political tribute.

(and)

North Korea is in need of depoliticized technical assistance for a whole panoply of issues running from the mundane but critical, such as developing meaningful national statistical capabilities, through basic agricultural and health technologies, to social infrastructure of a modern economy. This infrastructure includes policy mechanisms to manage macroeconomic policy, including through reform of the central bank; specify property rights and resolve commercial disputes; regulate markets, including financial markets as they emerge; establish and implement international trade and investment policies; and so on.

Read the full paper here:
A Security and Peace Mechanism for Northeast Asia: The Economic Dimension
Staphen Haggard and Marcus Noland
Peterson Institute Policy Brief
April 2008

Posted in China, Economic reform, Foreign aid statistics, Foreign direct investment, International trade, Price liberalization, Private property, South Korea, Trade Statistics | Comments Closed

(Update) Lee Jong-seok slams Bank of Korea (and CIA) estimates of North Korean economy

Wednesday, March 12th, 2008

UPDATE 2: On March 6, 2008 the CIA World Fact Book on North Korea was updated. Yonhap reports that the CIA’s estimate of North Korean GDP in 2007 (adjusted for PPP) is unchanged from 2006 at $40 billion and that per-capital GDP has increased from $1,800 to $1,900. But the story also reports that the CIA has estimated an increase in North Korea’s population–23,301,725 in 2007, up from 23,113,019 in 2006.

So my quesiton is this…

If GDP is unchanged, how do you increase per capita GDP without reducing the population numbers?

On a side note…one of my former economics professors used to say, “Stalin increased per capita GDP in the Soviet Union by reducing the denominator.”

Update 1: From Dr. Petrov:
Per-capita GNI at $368 to $389 seems to be right [from the revised estimate below]. It’s approximately 1/3 of the Soviet figure by the time it collapsed (around $1000 per-capita). These days North Koreans still live poorer than people in the USSR.

Original Post: Yonhap reports that Lee Jong-suk, former Minister of Unification and senior fellow at the Sejong Institute, claims that the South Korean Bank of Korea has radically overestimated North Korea’s Gross National Income and military spending.

In August, the Bank of Korea (BOK) announced that North Korea’s nominal gross national income (GNI) amounted to US$25.6 billion in 2005, about 35 times smaller than South Korea’s. GNI refers to a nation’s gross domestic product plus its trade loss or gain arising from changes in trade. The bank also estimated North Korea’s per-capita GNI at $1,108 that year, about 17 times smaller than that of its rival South Korea.

The U.S. Central Intelligence Agency’s (CIA’s) latest estimate of North Korea’s nominal GNI is $40 billion.

“If the BOK statistics are true, North Korea’s per-capita GNI represents two thirds of China’s $1,736, and nearly double Vietnam’s $616,” Lee said in a monthly magazine published Friday by the institute in the southern suburbs of Seoul. “Nobody would believe it if someone said North Korea is two times wealthier than Vietnam that is close to resolving its food problems,” Lee said.

The bank used a “wrong method” of employing South Korea’s price and value-added rate information in calculating North Korea’s GNI, the expert said. One dollar is about 150 North Korean won and about 950 South Korean won.

Lee said he commissioned financial experts to calculate North Korea’s GNI using “a method generally used by countries over the world” while in office. “North Korea’s GNI came to $8.4 to 8.9 billion with a per-capita GNI at $368 to $389 based on the 2005 foreign currency market rate,” he said, adding the estimates better reflect North Korea’s economic reality.

North Korea’s defense spending would be around $2.1 to $2.6 billion, not $5 billion, when the same calculation method is used, he said.

Read all of the stories here:
N. Korea’s GDP estimated at $40 billion: CIA
Yonhap
3/12/2008

N. Korean economy overestimated says expert
Yonhap
3/8/2007

Posted in Foreign aid statistics, GDP statistics, Labor conditions/wages, RoK Ministry of Unification, Statistics | 4 Comments »

Washington to ship fuel oil to NK this month

Tuesday, February 5th, 2008

Ecerpt from the Korea Times
Jung Sung-ki
2/5/2008

The U.S. government is preparing to ship a second batch of 54,000 tons of fuel to North Korea this month, a U.S.-funded radio station reported Tuesday.

Radio Free Asia (RFA) said the U.S. State Department was scheduled to report the shipment plan to Congress in the coming days.

Under a multinational nuclear deal reached in February last year, South Korea, the United States, China and Russia promised to provide 50,000 tons of oil in turn to the poverty-stricken North. Washington sent the first batch of 46,000 tons of fuel to the North last October, while other nations have fulfilled their pledges.

Japan, another participant at the six-party talks, refused to participate in the aid plan due to a dispute with the North over Japanese citizens kidnapped by North Korean agents in the past.

Posted in Energy, Foreign aid statistics, International Aid, Oil, USA | Comments Closed

2007 Biggest year for inter-Korean exchange, at USD$1.79 billion

Monday, January 7th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-10-1
1/10/2008

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. Exchanges between the two Koreas began in 1989, and topped one billion dollars for the first time in 2005. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of North Korea’s non-Korean trade volume of 2.996 billion USD in 2006.

Inter-Korean commercial trade was worth 1,431,170,000 USD, 54 percent higher than the 928 million USD in 2006, while non-commercial trade fell 13 percent, from 421,660,000 dollars in 2006 to only 366,720,000 dollars last year. Overall, commercial trade made up over 80 percent of cross-border exchanges, proving that inter-Korean exchanges continue to grow based on commercial transactions. Commercial trade growth was centered around the mining and fishery sectors (52 percent) and increased production in the Kaesong Industrial Complex (48 percent). Textiles and other goods processed on commission also grew by 30 percent.

Additional manufacturing by companies entering the KIC, as well as the installment of equipment used to increase output by those manufacturers already established in the first phase of the complex, saw a great jump last year. Additionally, South Korea loaned the North 80 million USD for equipment, cloth, soap, polyester fibers, synthetic leather, and other materials to be used in light industry, while the North repayed 2.4 million USD (3 percent) of the loan by delivering 1,000 tons of zinc. This was the first example of the North repaying funds to the South, and shows opportunities for the two Koreas to fulfill each other’s needs and carry out friendly economic cooperation in the future.

With increases in domestic use and export of Bukhan Mountain’s minerals and timber, improvements in communications, customs, and transport issues at the KIC and a growing number of companies moving into the complex leading to an increase in production and manufacturing activity, inter-Korean exchanges are expected to continue to grow in the future.

Posted in Economic reform, Foreign aid statistics, Foreign direct investment, Inter-Korean summit, Kaesong Industrial Complex (KIC), Labor conditions/wages, Light Industry, Manufacturing, Political economy, RoK Ministry of Unification, Special Economic Zones (Established before 2013), Trade Statistics | Comments Closed

N. Korea repays Seoul aid with minerals

Friday, January 4th, 2008

In the 1980s Pepsi went on sale in the Soviet Union [as did eventually Coke]. Since the hard currency needed to buy the syrup was scarce, the Soviets traded it for Vodka (which they presumably had plenty of)–At least this is what I was able to piece together when I visited the USSR as a teenager.

Yonhap (January 4, 2008) reports that North Korea has adopted the same basic strategy to repay its external debts. This is a positive move on the part of the North because it is the first time the North has made an effort at repaying its external bills.

(excerpt from Yonhap) The South-North Korea Exchanges and Cooperation Support Association said 500 tons of North Korean-produced zinc, worth about US$1.2 million, arrived in the port of Incheon on Thursday and was unloaded on Friday. It was the second repayment by the communist country for economic assistance provided by Seoul.

Although the amount agreed upon by both countries for 2007 has been paid in full, the installment represents only 3 percent of the North’s total debt to South Korea [appx. USD$80 million]. Pyongyang had agreed to pay Seoul with $2.4 million worth of mineral ore to reimburse it for aid.

[…]reportedly mark[ing] the first time the North has redeemed any of its debt.

Posted in Finance, Fiscal & monetary policy, Foreign aid statistics, Mining/Minerals, Political economy, Trade Statistics | Comments Closed

Kaesong output increases 150 pct: Unification Ministry

Friday, December 28th, 2007

Yonhap
12/28/2007

The total output of a South Korea-built industrial complex in North Korea’s border town of Kaesong totaled over US$180 million this year, shooting up 150 percent from a year ago, Seoul’s Unification Ministry said on Friday.

“The total production by businesses at the Kaesong industrial complex recorded an estimated $185 million this year, up about 150 percent from $74 million last year,” the ministry said in a press release.

Posted in Economic reform, Foreign aid statistics, Foreign direct investment, Kaesong Industrial Complex (KIC), RoK Ministry of Unification, Special Economic Zones (Established before 2013), Trade Statistics | Comments Closed

South to Send Steel Plates to North

Sunday, December 9th, 2007

Korea Times
Yoon Won-sup
12/9/2007

South Korea will provide 5,100 tons of steel plates to North Korea on Dec. 17 in a six-party deal that involves the provision of energy or alternatives to North Korea in exchange for the North’s disablement of its nuclear facilities by year’s-end, government officials said Sunday.

U.S. President George W. Bush sent a personal letter to North Korean leader Kim Jong-il last week urging him to keep his word on the disablement and declaration by Dec. 31.

The shipment is the first alternative to oil sent to the North under the agreement, although participants in the six-way talks have been taking turns to provide 50,000 tons of heavy fuel oil to the North every month recently.

Posted in Foreign aid statistics, International Aid, Manufacturing, South Korea, Steel, Trade Statistics | Comments Closed

North Korean Economy Watch