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World

What North Korea's Economy Looks Like

MARY LOUISE KELLY, HOST:

The U.S. negotiating position at the summit underway in Hanoi rests on an assumption that North Korean leader Kim Jong Un wants to develop his country's economy - wants to open it to the world - and that he wants this badly enough that he may be persuaded to bargain away some, or all, of his country's nuclear weapons. In truth, North Korea's once fully communist system was already cracked open back in the 1990s, fueled by famine and by the loss of Soviet support. And today, the black market flourishes on scales both small and large. Travis Jeppesen writes about this in an essay headlined "Shopping In Pyongyang." It's in The New York Times Magazine. Jeppesen has made multiple trips to North Korea, including to study Korean at a university there. He joins us now from Berlin. Travis Jeppesen, hello.

TRAVIS JEPPESEN: Hello.

KELLY: So start with the data, or what little there is of it, because data on North Korea's economy is famously hard to come by. What do we actually know about its size, about the black markets, about its interaction with the rest of the world?

JEPPESEN: Well, like you said, data is very hard to come by. For one reason, the North Koreans don't publish this kind of data. However, there are some South Korean economists who have studied this phenomenon by taking surveys mostly with North Korean defectors, and many of them have concluded that 90 percent or even more of daily consumer transactions take place in these markets.

KELLY: When you say these markets, what are you talking about?

JEPPESEN: They were originally black markets that sprung up during the years of the famine, but in recent years, a lot of them have been legitimized by the government and have become fully functional white markets. And then there are a variety of sort of semi-legal grey markets. And so if you have money in North Korea, you can buy virtually anything you want.

KELLY: Another phenomenon underway in North Korea is the rise of a class of nouveau riche. Their name is the donju. Describe who they are.

JEPPESEN: These are kind of the - what we would call the yuppies of North Korea who enjoy positions of a certain prestige in society. Oftentimes, they're wearing expensive jewelry, Rolex watches or Western brands.

KELLY: You described meeting one for a drink at his favorite gastropub, and he shows up in Dolce & Gabbana and neon Nikes.

JEPPESEN: Yes, yes. Yeah.

KELLY: And how do they have money? They're participating in the grey economy, black, white - where's their money coming from, and what are they spending it on?

JEPPESEN: The donju, because they are now given permission essentially, to engage in moneymaking activities, they basically are taking commissions, and they're taking kickbacks. They are able to enjoy the profits that they make, and they pass along the rest to their protectors in the government. So it almost forms an alternate taxation system in a country where there is no official income tax.

KELLY: To be clear, this is not the norm in North Korean society. There's still poverty throughout much of the country.

JEPPESEN: Oh, yes. Yeah, yeah. Even though, you know, you can see these people in increasing numbers on the streets of Pyongyang, it is true that probably the vast majority of North Koreans are still living in poverty. And certainly, I saw evidence of great poverty.

KELLY: Let me ask you the big picture question, which is what risk does all of this interaction with the outside world pose for Kim Jong Un - I mean, in the sense that loosening his regime's grasp on the economy might risk loosening the regime's grasp on power?

JEPPESEN: Yeah, it's an interesting question. However, if we look at the great big example next door, China in the 1980s under Deng Xiaoping was able to find a way to sort of open up the economy while at the same time maintaining its one-party system. So I believe that Kim Jong Un is hoping he can go in a similar direction.

KELLY: That's writer Travis Jeppesen. Thanks so much.

JEPPESEN: Thank you very much.

KELLY: Jeppesen's book about his time in North Korea is called "See You Again In Pyongyang."

(SOUNDBITE OF SPOON'S "INSIDE OUT") Transcript provided by NPR, Copyright NPR.