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North Korea: Witness to Transformation

North Korea According to the UN

by | October 25th, 2013 | 07:00 am
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When I’m asked where I get my data on North Korea, sometimes I flippantly reply “I make it up,” and then go on to explain that analysis of North Korea is about as much art as science and, in the case of surveys, we are literally creating new data. International agencies, on the other hand, seem to have a troubling compulsion to fill in blank data entries, whether there is much basis for doing so or not.

Nick Eberstadt recently gave me the head’s up that the folks at  the United Nations Statistics Bureau had discovered North Korea, and lo and behold we have national accounts data going all the way back to 1970. Unfortunately they don’t come with consumer warnings.

Given that historically North Korea has not collected economic data on a value-added national accounts basis (the centrally planned economies had an alternative accounting system called “Net Material Product”) it’s hard to imagine how one could construct such a historical record, even if the North showed you their books (which are a state secret). Add in the issues of a wildly overvalued official exchange rate and a botched currency reform resulting in near-hyperinflation, one has to be quite skeptical about the output from such an exercise.  But in the spirit of a consumer watchdog, here it goes.

The first chart below shows the real growth rate of the economy. For 1970-1986 it is based on the estimate of the (South Korean) Bank of Korea. For 1987-2004 the figures are based on written submissions by the DPRK’s Permanent Mission to the UN in New York. From 2005-2010 the source is again the BOK, and the 2011 estimate is produced by the UN Statistics bureau by averaging the previous five years. It is not clear whether the original figures were in North Korean won or dollars. The exchange rates for 1970-1981 were taken from the Nautilus Institute, which in turn got it from another source; for 1982-1987 from the United Nations Office of Partnerships (UNOP); for 1988-2004 submissions of the DPRK UN mission; and then back to UNOP. For what it’s worth, these data show a ratcheting down of the growth rate from more than 10 percent annually in the early 1970s, to -7.2 percent in 1992, and continued shrinkage until a spike of 6.1 percent positive growth in 1999 followed by a generally downward trend through 2011.

nk gdp growth from un

The chart above refers to growth. How about the level of income? The GDP index and the per capita income figures shown below are produced using the GDP sources noted above, and in the case of per capita income, combined with a population estimate. The population estimates come from either the UN Department of Economic and Social Affairs or submissions from the DPRK UN mission. These figures imply that the level of per capita income today ($506) was first achieved in 1974. Peak per capita income ($836) was reached in 1987. Similarly, the real GDP index is lower today than it was in 1981. It reached its peak in 1989.

nk gdp per cap from un

When one examines some of the sub-indices, they move in lock-step by construction (I joked that North Korea had achieve “balanced growth”). But Nick pointed out the remarkable series on agricultural value-added reproduced below.

nk value add in agriculture

According to these data, between 1989 and 1995 value-added in agriculture fell 70 percent, or in absolute terms, by more than total annual value-added in agriculture today. One commentator recently complained that some UN offices don’t pay attention to the work of others. Well, maybe the people who produce the population estimates should take a look at these agricultural figures and reconsider how many people may or may not have died in the famine.

It’s pretty easy to critique data series cobbled together from so many possibly unreliable sources. The real issue is that when the UN puts out these data they don’t add any “buyer beware” caveats. These data don’t have the reliability of, say, the US Census data on housing starts, but one would not know this from the UN website. Anyone who did not know better (I hope this doesn’t include my students at SAIS!) might actually take these data seriously.

Witness for Transformation: we comb UN websites so you don’t have to!