THE ECONOMIC DEVELOPMENT OF NORTH KOREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600340426-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: August 16, 2011
• Sequence Number: 426
• Publication Date: September 12, 1950
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
p
0%VIDENTIAI
ASSIFICATION CODI=IDENTIA1 .
CL
CENTRAL INTELLIGENCE AGENCY
REPORT
INFORMATION FROM
CD NO
FOREIGN DOCUMENTS OR RADIO BROADCASTS
.
COUNTRY
Korea
SUBJECT
Economic
DATE DIST. a7 41950
HOW
PUBLISHED
Monthly periodical
WHERE
NO. OF PAGES 5
PUBLISHED
Moscow
DATE
PUBLISHED
Aug 1949
SUPPLEMENT TO
REPORT NO.
THIS DOCUN[NT CONTAINS IIY luATIOI A?FICTIIIS TNt NArIDNAA O[Nll SO
A! NSANIIY OF [!-IONAS! ACT SA
Il
NII T
OTATU Y
or TNS ANITlD V. S. C.. St AND Al. Al AYIUOYD. IT! TNANDYIDIION ON 511[ SAV RATION
ITO CONT:MTS IM AYV YAN MSS TO Al UNAUTNOIR[D MI.DON IS -NO?
OI NISITID !~ . YSPIODUCTION ON IN'. SONY IS -NOMI' ' ?D ?_
THE ECONOMIC DEVELOPMENT OF NORTH KOREA
The area of cultivated land in Korea in 1938 amounted to about 4,500,000
hectares, almost 70 percent of which was in the hands of the landlords.
;!he principal crop in Korea is rice. The annual harvest of rice amounts
to 2,700,000 to 3 million tone. In 1938, 2,9GO,000 tons :sere harvested, of
which 7t0,000 to 000,000 tons were grown in North Korea.
under the Japanese, tae export of rice from Korea increased year by year.
s reducedetoalesstthanihmes, alf while
per rice
person Japan
Fro
tthemaverage1920 of
As a result of the land reform adopted by the Provisional People's Com-
mittee in North.Korea in March 1946, about one million hectares of arable land
were confiscated, atd the land was distributed among those who worked it.
uss,eholdsandwelrandfreedless dagger
Farm ceiv
ctare about1700,000.TeM reedthanmore500than,0002peasant2,000
to the landlords.
In the very first year after the introduction of the land reform, the
gross production of agriculture increased by 9.2 percent. In 1948 it was 40.5
percent above the level of 1946 (from the report of Kim I1-song to the Sec-
ond Session of the Supreme People's Assembly, February 1949).
In the effort to increase agricultural production, many outstanding peas-
ants attained harvests 4 or 5 times the usual amount. North Korea was trans-
formed into a region of large harvests which satisfied the needs of the coun-
try.
The situation is completely different in South Korea, where American Mar-
shall Plan economic "assistance" has tightened the noose around the neck of
t"e $orean.peasant. The amount of cultivated land in South-Korea p was reduond
from 3,305,000 hectares in 1943,to 2,1461,000 in 1947 - 194
Years hof~mili-
of south Korea is stasvievsufferedahungermthrough se eral newspaper
Sinmun-has asked, "Why have tary administration when 70 percent of the population is engaged in agriculture?"
. NFIDEt[WL
CLASSIFICATION CONFIDENTIAL
STATE
ARMY
DISTRIBUTION
? 9
Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
1
The answer is that American policy in Korea is no less reactionary than was
that of the Japanese. The long-awaited land rei)rm in South Korea has not
been carried out. Just as before, most of the agricultural production re-
mains in the hands of a small group of landlords and merchant-moneylenders,
who, with the help of the American administration, export about a million
tons of rice to Japan every year,
In North Korea, which is rich in various mineral and metallic ores, are
concentrated the principal Korean industrial enteririses. In 1945 there
were more than a thousand industrial pl^nts there, with about 250,000 workers
and employees, The nationalization carried out in North Korea transferred
the industrial enterprises to the hands of the people. The Democratic Peo-
ple's Republic of Korea has gained the ability to develop its own industry
systematically and to eliminate its one-sided character, created by many
years of domination by Japanese capitalists.
few industries which were important from a military standpoint notably the
mining, ferrous and nonferrous metallurgy, power; and chemica.i industries.
Construction of a number of large plants similar in size to the existing
metallurgical plant built in 1918 in Kyomip'o, P'yengan Namdo, was begun in
the prewar period: the electrometallurgical plant in Songjin, Aamgyong
Pukto, the metallurgical plant in Ch'ong,in, HaamtggyonglPu Pukto, thenenectro- e,
metallurgical plant in Ranch on, the ferrous
Hamgyong Pukto77, and others.
The following figures show the production capacity of North Korean fer-
rous metallurgy (in thousand tons);
Pig iron
Steel
Rolled iron
Ferroalloys
Coke
Production Capacity
of Plants*
Maximutn Annual
Output
886
480
325
140
417
107
11
6
1,080
725
A. Grazhdantsev, Korea, 1948.
From Japanese statistics for. 1940 - 19440
The Japanese mainly developed the extractive and basic processing indus-
tries in Korea. There was almost no machine-building industry there. Light
industry, except for individual plants belonging to Japanese, consisted main-
ly of household or semihousehold enterprises and did not meet the needs of the
country.
The weak spot in North Korean ferrous metallurgy is the lack of coking
coals, which are imported from China, Manchuria, and Sakhalin. There has been
considerable developme.it of nonferrous metallurgy in North Korea. The princi-
pal plant is the one in Chinnamp'o, which produces about 80 percent of all the
crude copper in Korea, 39 percent of the.lead, and 100 percent of the zinc.
According to Japanese statistics, the capacity of the plant in 1944 for the
production of the principal nonferrous metals was as follows (in tons): crude
0&11 ~~,~~TIM.
VIV
Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
copper. 7,600, lead concentrate 19,'(00, electrolytic copper 1,500, electrolytic
zinc 5,000, and electrolytic lead 7,200.. The Japanese exported the ferrous
and nonferrous metals to Japan for their metalworking and machine-tool indus-
try.
The chemical industry is one of the most extensively developed of the
other industries of North Korea. The annual capacity of the largest chemical
enterprise (the Hungnam combine, comprising sever plants) was as follows (in
tous): ammonium sulfate 450.000, sulfuric acid 370,000, calcined soda 6,600,
caustic soda 13,200, and calcium carbide 80,000. In addition the combine pro-
duced a great number of other basic chemical products and by-products. It had
about 29,000 employees in 1944.
According to incomplete data the hydroelectric-power resources of North
Korea amount to about 5 million kilowatts. Taking advantage of cheap Korean
labor, the Japanese built large hydroelectric. plants du,?ing their last 15 years
in Korea, According to its rated capacity of 700,000 kilowatts, the Sup'ung.
hydroelectric plant is one of the largest in the country. It was built to pro-
vide power for the big defense industry plants and also to the industrial re-
gions of Manchuria and the Liaotung peninsula. Also of large capacity are the
Chang-Jon Hang, Pujon Gang, and Hoch'on Gang hydroelectric plants, whose power
1; used mainly by the Hungnam chemical combine. The total capacity of the hy-
droelectric plants in North Korea at the time of the Japanese occupation
amounted to 1.5 million kilowatts (A. Grazhdentsev, Korea, 1948).
Korea has considerable deposits of raw materials necessary for the devel-
opment of industry. According to data from the KQrean press, there are pros-
pected reserves in excess of one billion tons of iron ore, 4 million tons of
wolfram ore, 3 million tons of manganese ore, 2 million tons of zinc ore, 400
million tons of anthracite coal, and 340 million tons of lignite. There are
also deposits of lead and nickel and considerable reserves of silver and gold.
Working of limestone and graphite deposits is of great importance in North
Korea. Deposits of rare metals have also been discovered in North Korea.
In 1944, 3,220,000 ton of iron ore were mined in Korea, of which
3,100,000 were mined in North Korea. The main source of iron ore is the Mu-
san deposit, the reserves of ,which amount to about one billion -cons. Of the
other ores, Japanese industrialists were especially interested in wolfram, of
which 2,800,000 tons were mined in 1944. Nickel is the most important of the
nonferrous metals to Korean industry; 57,400 tons of it were mined in 1944.
In terms of ore converted into metal,. 19,500 tons of lead, of which 11,200
were mined in North Korea, and 15,000 tons of zinc, of which 11,300 were from
North Korea, were mined.
The value of gold production in Korea increased from 9 million won in
1931 to 69 million von (24 million US dollars) in 1937. However, during the
war, the equipment of the gold mines was dismantled and transferred for min-
ing other metals.
The coal industry is of tremendous economic importance to the Democratic
People's Republic of Korea? In 1944, 7.6 million tons of coal were mined in
Korea, of which 6 million were mined in North Korea.
A wealth of natural resources, exploited in roe interests of the people,
creates favorable prospects for the development of the productive forces of
the Korean People's Republic. The industry of North Korea, partially'de-
stroyed by the withdrawing Japanese, is being successfully restored. The
plan for industrial production in 1948 was exceeded by 5.5 percent.
In the session of the Supreme People's Assembly held in February of this
year, the Law on the Plan for the Restoration and Development of the National
Economy of North Korea (for 1949 - 1950) was adopted. Tne basic tasks of the
cad IgN?ilA.
Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
Total exports,
plan are the restoration of the plants destroyed by the Japanese, the complete
utilization of productive capacity, and an increase in agricultural production.
Until 1945 Korean foreign trade was in the hands of Japan, from which came
almost 941percent of Korean imports and to which went 80 to 90 percent of her
exports. Most of the rest of the foreign Grade was with Manchuria and Formosa,
and only 2 to 3 percent with countries of Europe and America. Following is the
volume of Korean foreign trade accor&ing to Japanese statistics (in million
yen);
Imports
Exports
Balance
1941
1,519
973
-546
1942
1,491
944
-547
1943
1,543
914
-629
1944
1,105
1,155
+ 50
Besides importing industrial and railroad equipment for the construction
of Japanese enterprises in Korea, Japan flooded the Korean me.rket with prod-
ucts of her Industry (cotton cloth, cheap watches, etc.).
The chief exports of Korea were agricultural products, ferrous and. non-
ferrous metals, iron ore, and textile raw materials.
Korean Exports (in million yen)
94i 1942 1943 1944
973 944 .914 1,155
t
Agricultural produc s
(rice, beans)
200
234
--
216
Ferrous metals
78
80
102
120
Nonferrous metals
77
68
77
115
Ores
37
38
31
40
Textile raw materials
(raw silk, hemp)
82
41
29
36
The situation in South Korea did not change with the expulsion of the Jap-
anese. Foreign trade there has been monopolized by American business men. The
Americans export up to a million tons of rice a year, to Japan leaving the
Koreans on a starvation ration as before, and they export to Korea as "aid"
products and goods which find no market elsewhere.
The situation is different in North Korea. Chief among the exports of
North Korea are lead, zinc graphite, t:,mouium sulfate,. acetylene black, fer-
rous metals, soda products, and other goods. The principal imports are coking
coal, petroleum products, machine tools, railroad equipment, cotton cloth, etc.
..:ft~IVFOQ~'I~f rfAC
Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600340426-1
The Korean constitution adopted by the People's Assembly in September 1948,
provides that. foreign trade shall be carried on by the state. Foreign trade
transactions by pritite individuals and associations are permitted only under
the control of the state.
Ever since the liberation of Korea from the Japanese imperialists by the
Soviet Army, foreign trade between North Korea and the Soviet Union has in-
creased year by year. This has had ber.aficial effects both on the development
of North Korean industry and in raising the living standards of the Korean
people. The Mardi 1949 agreement for economic and cultural cooperation, pro-
viding for-further developInt. and strengthening of economic and cultural re -
lations between the Soviet Union and the Democratic People's Republic of
Korea., and the agreements for exchange of goods, payments, and credit, which
provide for a significant increase in exchange of goods, have created favorable
conditions for the fulfillment of the Two-Year Plan and for raising the cul-
tural and material living conditions of the Korean people.
rokilkt
OWPOI.
Sanitized Copy Approved for Release 2011/08/17: IA-RDP80-00809A0006003404261