This article is the second in a series by Natalia Matveeva on North Korea’s early economic history. Read part one here.
In 1956, North Korea’s three-year plan (1954-1956) for the reconstruction and development of the national economy was declared successfully fulfilled. Since the DPRK already had experience in carrying out one-and three-year plans, it was decided to try planning for a longer period and, like in the USSR, draw up a plan for five years.
The five-year plan (1957-1961), which was to deal with actual development rather than post-war reconstruction, was the first of its kind in DPRK history and a source of pride for the North Korean leadership, who saw it as an important step forward in socialist construction.
Yet, before it could be implemented, the draft of the plan had to be run by and get approval from both the Soviet and Chinese “friends.”
Kim Il Sung publicly declared the primary objective of the plan to be satisfying the people’s needs in food, housing, and clothing. The draft proposed an average annual increase of 21% in heavy industry output, or a 2.5-fold increase in five years, and a one-third increase in grain production by 1961.
But while the investments in agriculture were planned to be two times higher than during the three-year plan, out of all the capital investment roughly half was to go into heavy industry, while agriculture and light industry combined accounted for mere 12 percent of the investments. In terms of proportions, that was not much of a change from the three-year plan.
This was perhaps one of the last occasions for a long time to come when the PRC and the USSR were in accord on a matter concerning North Korea: both criticized the draft of the five-year plan, though, admittedly, Soviet State Planning Committee was more critical.
The Soviet verdict was that the goals for the plan were set “without the appropriate consideration of the country’s economic capabilities” and that the proposed increase of industrial production simply could not be obtained in the current situation without putting too much strain on the economy.
Officially, the Workers’ Party of Korea Central Committee fully accepted and agreed with the Soviet and Chinese suggestions
They pointed out that in the mining industry, for example, the figures for ore production were in certain cases higher than the total geologically-estimated capabilities of the mines.
Agricultural production was perhaps the only area where the Soviet officials were generally satisfied with the target figures. However they, along with the Chinese, advised that the North Korean state increase the share of investment in agriculture by diverting some of the funds from heavy industry.
Officially, the Workers’ Party of Korea Central Committee (WPK CC) fully accepted and agreed with the Soviet and Chinese suggestions, promising to revise the draft plan accordingly and lower the target figures for industry.
But while the first five-year plan officially began in January 1957, the control figures were not finalized until a year and a half later (which basically meant that during that time there was no plan).
In summer 1958 the Law on the first five-year plan was finally adopted by the Supreme People’s Assembly. By then the rift between the PRC and the USSR had become more pronounced, following the International Conference of Communist and Workers’ Parties in Moscow in November 1957. The PRC no longer suggested that North Korea slow down the heavy industry development, and moreover had announced its own Great Leap Forward.
When adopting the Law on the Plan the WPK CC proclaimed that the problem of food and clothing had been mainly solved and the primary task should be the development of heavy industry simultaneously with the development of light industry and agriculture.
The annual increase of industrial production was put at 36% instead of the 21% in the original draft, and the majority of capital investment remained allocated to industry.
In September 1958 the WPK CC Plenum raised the question of intensifying the pace of the metallurgical industry development even more. North Korea needed more metal for the development of machine-building, to produce machines and industrial equipment.
The Plenum decided to increase the production of cast iron, steel, iron ore in 1959 to the levels exceeding those set for 1961, the final year of the plan.
The PRC no longer suggested that North Korea slow down the heavy industry development, and moreover had announced its own Great Leap Forward
To achieve that, the Plenum, building on the perceived successes of the Chinese Great Leap Forward, recommended among other measures to construct small-scale furnaces wherever possible, including the local industries and collective farms.
The completion of the collectivization campaign earlier that year facilitated the consolidation of resources and funds for investment in heavy industry development. As a result, the increase in industrial production in 1958 was at the target figure of 36%, yet in agriculture, the plan for the state procurement of grain was not fulfilled.
For 1959 the WPK CC put forward an even more ambitious goal to double the production of 1958. Kim Il Sung expressed certainty that the targets for industrial output set for the five-year plan could be achieved by August 15th, 1959, the 14th Anniversary of the liberation of Korea.
However, it soon became evident that the country’s industrial capabilities, already strained by the high goals of the previous year, could not provide such a rapid increase. The targets were lowered to a 50% increase in industrial output compared to the levels of 1958. Yet that still could not be achieved just by the intensification of production.
The Ministries and enterprises, attempting to fulfill the tasks set by the Party and the State Planning Committee, resorted to extensive means and attracted about 430,000 new workers from the countryside.
This, in turn, resulted in the shortage of workforce in the agricultural sector and in the increased burden on the public distribution system, as the new urban workers became included into it.
However, it allowed the North Korean industry to achieve and even surpass the target of a 50% increase in production in 1959, and the growth was reported at 53%.
Based on industrial output, the first five-year plan was declared fulfilled in July 1959. Where the famous Soviet slogan called for the “fulfillment of a five-year plan in three years,” North Korea managed to outdo it and complete its five-year plan in two and a half years.
The results in industry, indeed, appeared impressive. The average annual industrial growth was at 44 percent, and the reported levels of industrial production surpassed the levels originally set for 1961 by 15 percent.
However, even Kim Il Sung had to admit that the plan for 1959 was set “too high” and “tense”, although most of the blame was put on the State Planning Committee, the Ministers, and the workers in the field, who were “carried away” by the “successes of 1957 and 1958.”
Agriculture and consumer goods manufacturing significantly lagged behind; the tasks of the five-year plan were not completed in housing construction and in terms of improving the living standards.
Even Kim Il Sung had to admit that the plan for 1959 was set “too high” and “tense”
Moreover, as the Soviet officials rather critically noted, the plan was declared fulfilled based on results not in the main industry branches, as the goals in energy production, coal, steel, flat iron, copper, zinc, cement, fertilizer production were also not achieved.
While the results of the five-year plan were less disastrous than of the Chinese Great Leap Forward, the race to fulfill the too-high targets, especially in 1959, overexerted the economy and created imbalances in the economic structure.
Thus instead of starting on a new plan, North Korea had to declare the next year “the year of adjustment” and dedicate it to the rectification of the disproportions incurred during the five-year plan.
This article is the second in a series by Natalia Matveeva on North Korea’s early economic history. Read part one here.In 1956, North Korea's three-year plan (1954-1956) for the reconstruction and development of the national economy was declared successfully fulfilled. Since the DPRK already had experience in carrying out one-and three-year plans, it was decided to try planning for a longer
Natalia Matveeva is a Ph.D. student at the London School of Oriental and African Studies (SOAS), focusing on the economic and political development of North and South Korea in the late 1950s-early 1960.