Economic Reforms in North Korea (1998-2004): Systemic Restrictions, Quantitative Analysis, Ideological Background

North Korea started serious economic reforms in July 2002. The regime's credo is the coexistence of a state-directed economy and a market economy. The weight of the latter will be increased gradually, depending on success and political stability. The paper explores the costs and benefits of the reforms and suggests their support. In the short run, the price reforms resulted in purchasing power gains for everybody, although these gains are now offset by inflation. The reforms have been well prepared ideologically to secure a controlled process. The pragmatic replacement of socialism by nationalism as the core ideology as well as the transformation of the military into the new aristocracy at the expense of the party created new political options for the North Korean government.