Thread by @Xy5Z89

-THREADE-
#NorthKorea #Pyongyang #ECONOMY

A study found that the rate of increase in total factor productivity of the North Korean economy has been negative since the 1970s.

This means that the capital and labor input to the economy continued to increase, but the efficiency of the economic structure steadily declined. The researchers said, "It clearly shows that long-term growth can only be promoted by (North Korean) system change."

Pyo Hak-gil, Professor Emeritus of the Department of Economics at Seoul National University, Cho Tae-hyung, head of the North Korean Economic Research Department, the Bank of Korea, and Kim Min-jeong,

A country's economic growth rate consists of three things: total factor productivity, which means how much capital and labor inputs have increased, and how efficiently the production factors such as capital and labor are used.

The more labor and capital are invested, the larger the economy is, but for sustainable growth, invisible productivity such as technology development and management innovation must also increase.

As a result of dividing the factors of North Korea's gross domestic product (GDP) growth into these three, the researchers found that North Korea's gross factor productivity contributed positively to economic growth from 1956 to 1969, but has had a negative effect ever since.

The growth rate of total factor productivity recorded negative in the years 1970~1989 and 2000~2009, when the North Korean economy grew quantitatively. The researchers said, "North Korea achieved exponential growth in the early stages of economic growth,

but after that, growth stagnated or showed sluggish recovery mainly due to a decrease in total factor productivity." In particular, in 2017-2018, when high-intensity sanctions against North Korea became visible, the rate of increase in total factor productivity recorded -4.8%.

This is a significant drop from 2010-2016 (-0.8%). The researchers said, "As the North Korean economy recovered after 2000, the rate of decrease in total factor productivity has been significantly reduced, but since 2017,

due to the impact of high-intensity sanctions on North Korea, total factor productivity has again exhibited a significant negative." The analysis suggests that the North Korean economy needs a lot of reform and opening up in order to survive.

The researchers said, “As the rate of increase in total factor productivity in North Korea continues to decline, it seems necessary to improve the system in the direction of improving productivity, efficiency,

and creativity through innovation in the ownership structure and operation method of companies and farms.” "It is urgent to switch from a closed economy to an open economy above all to get out of the country's sluggish growth situation."