ECONOMIC REHABILITATION OF NORTH KOREA 1954-56

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A001100010001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 81
• Document Creation Date: November 9, 2016
• Document Release Date: April 6, 1999
• Sequence Number: 1
• Publication Date: April 25, 1956
• Content Type: IR

Release 1-999~~8:CIA-RDP79-01093A001100010001-5
PROV1S10NAl INTELLIGENCE REPORT
ILITATION OF" NORTH ~ KORE
HA
~
B
C RE
ECONOMI
-1954-56
CIA/RR PR-138
25 April 1956
BEN?RAL INTELLIGENCE AGE.N~Y
CiFFC~E OE RESEARCH AND REPORTS
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A r R `~~ ~E' _ ~J~~E~'~001 1 0001-0001-5
pp owed: For Release 1999Y~~.
~~ ~.g'_F3~ViEWER: X19360
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This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation. of which in any manner
to an unauthorized person is prohibited by law.
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ECONOMIC REHABILITATION OF NORTH KOREA
195+-56
CIA ~RR PR-138
(ORR Project 15.851)
NOTICE
The data and conclusions contained in this report
do not necessarily represent the final position of
ORR and should be regarded as provisional only and
subject to revision. Comments and data which may
be available to the user are solicited.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
S-E-C-R-E-T
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CONTENTS
Summary and Conclusions
I. Population and Manpower
A. Population Trends 6
B. Problems of Labor Supply
1. Agricultural Labor Force 8
2. Industrial Labor Force 8
C. Status of Education and Technical Training ?
1. Status of General Education.. 9
2. Status of Technical Education 10
D. Sino-Soviet Bloc Technical Assistance 11
II. Administration and Planning 13
A.
$?
Three Year Plan (195+-56) 13
Economic Organization l~
1. Administrative Structure - 15
2. Economic Planning 16
3. Extent of Soviet Economic Control 17
4. Extent of Chinese Communist Economic Control 19
C. National Budget and Banking System 19
1. Budget 19
2. Banking System 23
III. Growth Trends within the Economy 25
A. Agricultural Sector 25
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Page
~7... Extent of Land Socialization 25
2. Crop Production 27
3 ? 1955 Food Situation 29
B. Modern Industry ~9
1. Electric Power 29
2. Coal ~ 32
3. Ferrous Metals 33
~+. Nonferrous Metals i6
5. Cement 38
6. Chemicals 1~.0
7. Engineering Industries i~.3
8. Consumer Goods ~ 5
C. Transport and Telecommunications ~+6
1. Rail Transport . ~+6
2. Road Transport . 50
3. Water Transport 52
~+. Air Transport 53
5? Trends in Telecommunications 5~
IV . Foreign Economic Relations 56
A. Economic Relations with the Sino-Soviet Bloc 56
1: General 56
2. Economic Relations with the USSR 56
3. Economic Relations with Communist China 58
4. Economic Relations with the Eastern European
Satellites 5y
B. Economic Relations with Non-Bloc Countries 6(J
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Appendixes
Appendix A. Partial .List. of Officially Reported Materials.
Delivered as Aid to North. Korea during 1954
63
Appendix B. Gaps in Intelligence
67
Appendix C. Source References
69
1.
Estimated Production of Selected Commodities in North
Korea, 1949, 1954, and 1956.
3
2.
Estimated Population of North Korea, by Age Group,
1948 and 1955
5
3.
Estimated Population of North Korea, by Age and Sex,
1955 .........................
6
4.
School Enrollment in North Korea, 1953-55
10
5.
Budget Revenues and Expenditures of North Korea, 1954
and 1955
21
6.
Food Crop Production in North Korea, Selected Years,
1 goo - 5 6
28
7.
Estimated Availability of Electric Power in North
Korea, Selected Years, 1849-56
30
8.
Estimated Availability of Coal in North Korea, 1953-56?
33
g.
Estimated Production of Iron and Steel in North Korea,
Selected Years, 1949-56
34
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10.
Estimated Extent of Restoration of the Iron and Steel
Industry in North Korea, Mid-1955
35
11.
Estimated Damage to the Nonferrous Metals Smelting and
Refining Plants of North Korea, by Capacity, 1950
36
12.
Estimated Production of Nonferrous Metals in North
Korea, Selected Years, 1949-56
38
13.
Estimated Damage to Cement Plants of North Korea, by
Capacity, 1950
39
14.
Estimated Damage to Chemical Plants of North Korea, by
Capacity, 1950
41
15.
Estimated 'T`ransport Performance of North Korea,
1946-56
51
Illustrations
Following Page
Figure 1.
North Korea:
Structure of the Government,
July 1955 (Chart)
14
Figure 2.
Budget of North Korea, 1954-55 (Chart)
20
Figure 3.
North Korea:
Commodities
(Chart )
Estimated Production of Selected
and Services, Peak Year and 1953-56
.
28
Figure 4.
North Korea:
Industrial Reconstruction (Map)
30
Figure 5.
North Korea:
Mineral Resources (Map)
32
Figure 6.
North Korea:
Railroads, Roads, and Main Points
of Entry (Map ) 46
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CIA~RR PR-138 S-E-C-R-E-T
(ORR Project 15.851)
ECONOMIC REHABILITATION OF NORTH KOREA
195 -5
Summary and Conclusions
In spite of tremendous war damage, insufficient manpower, lack of
adequately trained technicians, and poor crop harvests in 1953-55, the
economic rehabilitation of North Korea is progressing steadily as a
result of the continued assistance of` the Sino-Soviet Bloc. The Korean
War rendered the industrial sector of the North Korean economy 66 to
93 Percent inoperable. Damage to the operating capability of specific
industries was as follows: coal and nonferrous metals mining indus-
tries, about 75 percent; ferrous metals industry, about 80 percent;
chemical and cement industries, about 90 percent; petroleum. industry,
about 95 to 1:fl0 percent; and light industry, about 60 percent. In
addition, the agricultural and communications sectors were seriously
damaged.
Economic planners of the Soviet-dominated North Korean regime have
devised a three-phase program of economic rehabilitation and develop-
ment. The first phase in 1953 prepared for rehabilitation work in all
spheres of industry, the second phase consists of implementing a Three
Year Plan (1954-56) of reconstruction beginning in January 1954 and
ending in December 1956, and the third phase is to prepare and imple-
ment a Five Year Plan (to be announced) for the general development
of industry.
As of late 1955, North Korea was well along in the second phase
of this program, registering steady progress in fulfilling most of the
annual goals set for the Three Year Plan, which calls for the restora-
tion of industrial production, with the exception of the chemical and
petroleum industries, to the 1949 level of output by the end of 1956.
The chemical industry will not be fully restored to its 1949 level
until well into the third phase of the program, and the petroleum in-
dustry apparently will not be rehabilitated during the current plan
period.
~ -The estimates and conclusions contained in-this report represent
the best judgment of ORR as of 15 January 1956.
' S-E-C-R-E-T
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Considerable evidence indicates that the actual direction of eco-
nomic planning in North Korea resides mainly in the Soviet advisers
who are attached to the State Planning Committee, the various minis-
tries, and the major industrial plants. There is available no evidence
to indicate that Chinese Communists act as advisers at the ministerial
level or in other top policy positions. Thus it is probable that the
ultimate authority for determination of policy in the economic field
reposes either in the Soviet-trained, long-experienced Party members
of the Cabinet or in their Soviet advisers, or perhaps in both.
The problem of administering the financing of the rehabilitation
program is the responsibility of the Ministry of Finance, which,
acting under the State Planning Committee, drafts and promulgates the
annual national budget. In the budget the national resources are
mobilized and allocated for investment and for use by government de-
partments and enterprises. The most important element in the 1954
budget receipts of roughly US $750 millions was the figure for total
Sino-Soviet Bloc aid, which was listed as approximately US $220 million.
One of the major problems confronting the North Korean regime is
to find sufficient labor, both skilled and unskilled, far its indus-
trialization program. North Korean and Chinese Communist troops have
been used, and government employees and students have been drafted as
unskilled laborers, particularly to meet the seasonal peak labor demand
in the agricultural sector. The shortage of industrial labor presents
a special problem, however, as to both quantity and quality, which
cannot readily be solved by shifting labor from other sectors to the
industrial sector.
The plan for obtaining trained technicians includes (1) on-the-job
and factory-sponsored training; (2) sending students and trainees to
the USSR, Communist China, and the European Satellites for advanced
study and~.;practical experience in both managerial and operational
fields and (3) `utilization of several thousand Sino-Soviet Bloc
technical advisers.
Food crop harvests have been hampered during 1953-55 b,Y inclement
weather., inefficient management of farm cooperatives, and a lack of
adequate irrigation facilities and chemical fertilizers. As a result,
~ The exchange rate is estimated to be 120 North Korean won to 1 US
dollar.
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the ambitious 1956 goal for production of 3.27 million metric tons of
food crops .has been revised to a more realistic goal of 2.73 million
tons. Thus North Korea probably will be at least partially dependent
on food imports from the Sino-Soviet Bloc in 1956.
In the modern industrial sector of North .Korea, the restoration of
production to the lg4g level has varied greatly from industry to indus-
try. Aid by the Sino-Soviet Bloc has enabled the North Koreans to
achieve .good results., especially in the fields of railroad transport
services, electric power, ferrous metals, and textile industries. The
difficulties have been greater and progress less impressive in the
nonferrous metals and chemical industries. The trends in the modern
industrial sector are illustrated in the production of major industries
for 1849 and 1954 and that planned or projected for 1956. Estimate$
of production of selected commodities in North Korea for these years
are shown in Table 1.
Estimated Production of Selected Commodities in North Korea
1949, 1951+, and-1956
Commodity
Unit
191+9
-1954
1956
Electric power
(capacity)
Million kilowatts
1.35-
1
1.35 (Plan)
Electric power
Billion kilowatt
8.2
2
3.8 (Plan)
(production)
hours
Coal-
Million metric tons
4
2.1
5
Pig iron
Thousand metric tons
166
61
320
Crude steel
Thousand metric tons
11+5
50
200
Finished steel
Thousand metric tons
108
37.8
12g.6~
Metallurgical
Thousand metric tons
coke
268
Negligible
200
Iron ore
Thousand metric tons
400
140 .
820
Cement
Thousand metric tons
527
400
650 (Plan)
Copper
Thousand metric tons.
5.6
1
3.5
Lead
Thousand metric tons
9.4
1
7
Zinc
Thousand metric tons
8
Negligible
2
Chemical fer-
Thousand metric tons
tilizers
400
Negligible
150 (Plan)
Cotton fabric
Million linear meters
9.4
22
47.7 (Plan)
Silk fabric
Million linear meters
3.D5
1.06
6.58 (Plan)
~ Throug out this report tonnages are given in metric tons..
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The transport sector of North Korea apparently has made a remark-
able recovery since the end of the Korean War, with Sino-.Soviet Bloc
aid. Transport facilities apparently are adequate for the present
level of economic development, although further restoration of high-
ways is required in areas not adequately served by rail. Greatest
attention has been devoted to the railroads, which constitute by far
the most important freight carrier.
Telecommunications services appear to have improved and expanded
beyond the pre-Korean War level. Wire line networks, which provide