EverydayKorea.com

A Country Study: North Korea

North Korea Foreword Acknowledgements Preface Country Profile Country Geography Society Economy Transportation and Telecommunications Government and Politics National Security Introduction Chapter 1 - Historical Setting (Bruce G. Cumings) Historical Setting The Origins of the Korean Nation The Period of the Three Kingdoms Korea under Silla Unification by Kory The Chosn Dynasty: Florescence Dynastic Decline Korea in the 19th Century World Order The Legacy of Japanese Colonialism The Rise of Korean Nationalism and Communism The National Division and the Origins of the DPRK The Korean War The Post-War Economy and Patterns of Industrialization Corporatism and the Chuch'e Idea International Relations Chapter 2 - The Society and its Environment (Donald M. Seekins) The Physical Environment Topography and Drainage Climate Environmental Protection Population Size and Growth Rate Population Structure and Projections Settlement Patterns and Urbanization Koreans Living Overseas Social Structure and Values Confucian and Neo-Confucian Values Chosn Dynasty Social Structure The Traditional Family and Kinship The Colonial Transformation of Korean Society Tradition and Modernity in North Korea Chuch'e and Contemporary Social Values Classes and Social Strata Urban Life Village Life Family Life The Role of Women The Role of Religion Ethnicity, Culture, and Language in Contemporary Society Contemporary Cultural Expression Literature, Music and Film Architecture and City Planning The Korean Language Education Educational Themes and Methods Primary and Secondary Education Social Education Higher Education Adult Education Public Health Chapter 3 - The Economy (Joseph S. Chung) Economic Setting Korea under the Japanese Occupation Developmental Strategy Economic Development and Structural Change Record of Economic Performance Postwar Economic Planning Budget and Finance Organization and Management of the Economy Planning The Ch'ongsan-ni Method The Taean Work System Mass Production Campaigns Industry Development in Major Sectors Mining and Metal Processing Manufacturing Services and Marketing Agriculture, Forestry, and Fisheries Resource Development Production and Distribution of Crops and Livestock Organization and Management Forestry Fisheries Infrastructure Transportation and Communications Railroads Maritime Transportation Civil Aviation Roads Telecommunications Energy and Power Foreign Economic Relations Economic Assistance Foreign Trade Foreign Investment and Joint Ventures Inter-Korean Economic Cooperation Economic Outlook Chapter 4 - Government and Politics (Pan Suk Kim) Relationship Between the Government and the Party The Korean Workers' Party Constitutional Framework Organization of the Government The Supreme People's Assembly The Executive Branch The President and Vice Presidents The Central People's Committee The State Administration Council The Judiciary Local Government Political Ideology: The Role of Chuch'e Party Leadership and Elite Recruitment Party Members Party Cadres The Ruling Elite Leadership Succession Mass Organizations The Media Foreign Policy Inter-Korean Affairs China and the Soviet Union Japan The United States Prospects Chapter 5 - National Security (Guy R. Arrigoni) Military Heritage The Armed Forces National Command Authority Formulation of National Security Policy The Army Organization and Disposition Weapons and Equipment Special Operations Forces Military Capability, Readiness, Training, and Recent Trends The Navy Organization and Disposition Weapons and Equipment Military Capability and Coastal Defense The Air Force Organization and Disposition Weapons and Equipment Trends, Training, Readiness, and Military Capability Air Defense Civil Aviation Officer Corps: Recruitment and Education Military Conscription and Terms of Service Reserves and Paramilitary Forces Role in National Life Relations Between the Military and the Korean Workers' Party Military Doctrine and Strategy The Evolution of North Korean Military Thought Emergence of the New Doctrine Operational Practice in the 1980s and 1990s Employment in Offensive Scenario Defense Industry and Infrastructure Military Industry Special Weapons Chemical Weapons Missile Developments The Nuclear Option Foreign Military Relations Relations with China and the Soviet Union Relations with the Third World Incidents and Infiltrations: Targeting South Korea Geopolitical Changes: New World Order and North Korean Security Internal Security Social Control The Public Security Apparatus The Judicial System Historical Influences The Judiciary Punishment and the Penal System Prospects Appendix. Tables Bibliography

Foreign Investment and Joint Ventures

Direct foreign investment in North Korea had been virtually absent until 1984, when North Korea made a surprising turnabout by proclaiming the Joint Venture Law. The twenty-six-article law on joint ventures appears to have been fashioned after China's law on the same subject. Joint ventures are allowed in "industries necessary for the people's economy," specifically electronics, automation equipment, metals, machine building, chemicals, food processing, clothing-processing industries, consumer goods, construction, transportation, and tourism. Overseas Koreans, particularly those in Japan, are singled out as parties who might wish to participate in joint ventures. Foreign participants are allowed to repatriate profits. There are no stated limits on foreign equity shares. A Ministry of Joint Venture Industry was created in 1988 but in 1990 was scaled down to a bureau, presumably under the Ministry of External Economic Affairs, which handled foreign market development, foreign investment, and joint ventures.

Attempts to accelerate the transfer of hoped-for and muchneeded advanced technology and the infusion of capital through joint ventures has had limited success. Until the early 1990s, North Korea was unable to attract major investment by West European or mainstream Japanese firms. Many factors influence the slow pace and low level of participation in joint ventures by firms other than those owned by Choch'ongryn (General Association of Korean Residents in Japan) (see Glossary)--an organization of North Korea-supporting Korean residents of Japan. In fact, the majority of joint venture deals have been concluded with Choch'ongryn firms. Of a total of 100 joint ventures reported toward the end of 1991, with a total capitalization of 13 billion yen (approximately US$96.5 million), over 70 percent involve Choch'ongryn firms.

Because the foreign debt problem still is unresolved, North Korea has not improved its shaky credit rating. As a result, Western firms consider any venture with North Korea highly risky. Although the joint venture law is liberal with regard to the repatriation of profits, the dearth of hard currency holdings make profit repatriation questionable, thus discouraging potential investors. Another inhibiting factor is the relatively small size of the domestic market, particularly in terms of per capita income. Moreover, the market's restrictive nature--with prices and distribution channels controlled by the state--make the prospect of successful penetration both dim and problematic.

Approximately ten joint ventures have Chinese participation; other partner countries include the Soviet Union and Bulgaria. The largest joint venture project is the Hamhng Rare Earth Separator Plant, which has both Chinese and Choch'ongryn participation and an investment of approximately US$10.25 million. There also are thirty overseas joint ventures; they are mostly in the former Soviet Union with a few in China. The majority of the firms are engaged in light manufacturing. The first joint venture with China, begun in 1989, was a marine fishery products firm located in Ch'ngjin that had an initial capitalization of US$1 million. The Hich'n-Gorky joint venture company run by the Hich'n Machine Tool General Works of North Korea and the Gorky Machine Production Complex of the Soviet Union was commissioned in October 1989. Other projects under way include a joint shipping company, a luxury hotel, a store selling soft drinks, a department store, an apparel plant, a restaurant, a silk fabric plant, and a gold mine. Both Kim Il Sung and Kim Jong Il attended an exhibition of goods produced by a joint venture with Choch'ongryn firms from Japan in P'yongyang on April 13, 1991; the first such event ever held in North Korea.

Data as of June 1993

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