The North Korean economy in the New Year’s speech: signs of a shifting focus
Examining past addresses offers some hints at changing priorities
NK Pro analysis reveals:
- The amount of the speech given over to economic matters is indeed markedly greater than prior years. This appears to reflect the concentration on the economy following the declared shift away from focusing on the nuclear program;
- State construction projects remain an important part of the speeches, with Samjiyon and Wonsan Development Zones receiving prominent mention;
- Arable farming, animal husbandry, and fisheries issues featured more prominently in earlier years, while electricity and heavy industry have been more emphasized in the last few years;
- Science and technology, including the training of specialists and the dissemination of scientific and technical knowledge, have featured prominently in every speech since 2013;
- Changes to incentives, planning, and management have been mentioned in every speech going back to 2013, but the issues and focus have changed with central government systems-building becoming more important;
- Light industry has faded in general significance, and this may point to a sector that is increasingly independent of central government planners, is less in need of investment resources from the center, or has been deprioritized for other reasons;
- Incentives and changes to economic management remain an important part of the government’s message, with 2019 seeing the most specific details of government priorities.
The New Year’s Address
The New Year’s Address, revived as institution by Kim Jong Un in 2013, presents a limited window into the North Korean government’s priorities on in the year ahead.
Until this year, the military typically featured very prominently in the speech, though the number of references to the military has declined markedly since 2013.
Conversely, the number of references to nuclear issues (weapons, threat, war et al) peaked last year. This year, however, the military industrial complex was hailed for its contribution to the civilian economy, with its weapons production and innovation in that area no longer being emphasized.
Indeed, this year, the economy has taken center-stage, marking the switch to a focus on the economy with the announced completion of nuclear weapons program. Fittingly, the number of references to the term nearly doubling on 2018.
That said, however, every year that Kim has addressed the North Korean people, he has discussed economic matters, with an agenda that has changed in focus, if not dramatically in content.
In the early years (2013-15), arable farming, livestock and fishing were the first or second economic item discussed. These Kim dubbed them the ‘three axis’ in 2014 that would resolve food issues in the country.
The year 2014 marked the 50th anniversary of the promulgation of Kim Il Sung’s Theses on Agriculture, and Kim also drive to increase the number of greenhouses in the country, with such drives alongside other forms of more industrial food production continuing to feature in more recently as well.
Agriculture has been lower down Kim’s agenda since then, but innovations in seed breeding were highlighted in 2017 and 2018, and a drive toward mechanization and the use of scientific methods continued to be mentioned, the relative prominence in the economic agenda has markedly declined since 2015.
At the same time, the relative prominence of science and technology, i.e. technical and technological solutions to economic problems, has changed little. It was top of the economic agenda in 2015, but has been mentioned in every speech since 2013.
It has also received significant coverage in the press and, unlike incentive and management issues, several book-length studies (like this one on a particular slogan Kim used) that is sold to foreigner who visit the country. It also featured first in this documentary about Kim’s activities in the year.
At the same time, it has generally been sectors largely controlled and funded by the central government (utilities, heavy industry, transport) that have been most prominent in recent years. They generally receive the most coverage because they are priorities of central government policymakers, and because they receive state funding and in-kind support for new projects.
These included power plants and tourism construction projects this year, but have included a range of other construction projects in prior years.
In 2016 it was electricity, in 2017 it was the Five Year Economic Strategy that had been launched in 2016 (but was not announced in the New Year’s Address that year), and in 2018 it was metallurgy which received first mention. This year it was electricity again, indicating that the big push to develop (revive) that sector has not finished as yet.
In 2017, the speed battles were prominent, while they have subsequently disappeared as an general ‘economy-wide’ activity, as opposed to being a tactic used in specific state investment projects or particular sectors (like forestry).
By contrast, light industry is mentioned every year, but not as a recipient of state investment, but as an industry that has to do better and produce more. This may be an indication that many light industrial manufacturing (such as textiles, food processing etc.) are self-financing, and do not receive funds from the central budget.
Services, aside from construction, usually go unmentioned, indicating a high level autonomy and decentralization in many parts of the service economy – the exception being tourism.
Managing the economy
There was less economy-related content in the years 2015-2016, but the issue of management of the economy became more prominent.
Changes to North Korea’s enterprise management system, and the state’s relationship to markets, began to change in the wake of the failed 2009 currency reform. Some elements of these changes are visible (in retrospect) in earlier New Year’s Speeches from Kim Jong Un.
For instance, in 2013, Kim called for an improvement in economic management methods, and for the [successful] experiences to spread throughout the economy. The previous year, agricultural changes (smaller work teams and material incentives) begun to take hold.
In 2015, having introduced the Socialist Enterprise Responsibility Management System in May 2014, he called for all units to mobilize all available resources, draw up their own operations strategy, and stamp out ‘import disease’.
The changes introduced in 2014 and additional changes made in 2015 have not been mentioned in any real detail in the New Year’s Address. But this year perhaps contained the largest number of references to issues to be resolved in economic management – with reference to issues to be resolved in planning, pricing, and financing.
Given trends in economic management under Kim Jong Un, this may involve a mix of rule-writing for lower units in the economy and continued emphasis on autonomy.
The New Year’s Address has become a way to introduce slogans and phrases that are then used and interpreted in laws, and in texts about management issues (that appear in research journals). Sentences uttered Kim often end up being quoted, paraphrased and interpreted subsequently by lower-level policymakers and those who implement policy.
However, the New Year’s Address can be read both in part as a means to indicate priorities and/or new policies, and to announce policies that have already been implemented and that the government now wants the world to know about.
It is, however, far from clear from the slogans and broad generalities what the words about changes to the economic system will signify in practice. This means that while the words can be interpreted at the time in the context of changes that have thus far occurred, their full implications only become clear later.
The New Year’s Address is the only speech that Kim Jong Un gives every year and is freely accessible in real-time. Indeed, many of the North Korean leader’s speeches and remarks are not made publicly available soon after or at all.
The economic component of the speech is an important statement of both government investment priorities, and a leading indicator of economic management policies. There are limits, however, to what can be deduced from Kim’s message on the economy front.
Edited by Oliver Hotham
Featured image: KCNA
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