02 October 2017

The Explainer: Korean Economic Models

Under the influence of the Soviet Union, North Korea became a Communist State under Kim Il-sung. The Soviet Union propped up the Kim regime with military and economic aid. On the economic front, Pyongyang adopted a socialist economic model, where everything was owned by the state; however, as the country was controlled by the Kim family, its economy became a Kim family enterprise.

On the other hand, South Korea, under the U.S., took the democratic path to governance. Democracy and its attendant institutions, like a free press and an independent judiciary, took shape in South Korea. A free market economy took root in the democratic South – freedom of economic activity, private enterprise and a culture of consumerism became a way of economic life. The South is one of the most technologically advanced nations in the world. Some of its private enterprises like Samsung, LG, and Hyundai are global mega brands. 

A Comparison of the Two Koreas – Basic Data
Parameter
North Korea
South Korea
Area (in km2)
1,20,540
100,210
Population (in million)
25.3
51.4
GDP (in U.S.$ billion)
25
1498
Per Capita (in U.S.$)
1,000
29,114
Data source: Wikipedia

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