North Korea is largely isolated and disengaged from the world’s economy. Data collection is extremely challenging, and reported statistics on the economy remain largely speculative, requiring careful evaluation. North Korea’s economic freedom score is 1.5, making its economy the least free in the 2013 Index.
North Korea remains an unreformed and essentially closed dictatorial state. Despite experimenting with a few market reforms over the past decade, the world’s most repressed economy adheres firmly to a system of state command and control that upholds the regime’s long-standing songun (“military first”) policy. The Workers’ Party tightly controls every aspect of economic activity.
The impoverished population is heavily dependent on government subsidies in housing and food rations, and the state-run rationing system has deteriorated significantly in recent years.North Korea may be attempting to open its economy slightly by encouraging limited foreign direct investment. However, the dominant military establishment and ongoing leadership transition make any substantial near-term economic policy changes unlikely. Normal foreign trade is minimal, with China and South Korea being the most important trading partners.
