A banner promoting North Korea’s 150-day economic production campaign in August. Photo: Ben Piven

Part 6 of 6 in our Inside the Hermit Kingdom series on the people and culture of North Korea. Worldfocus multimedia producer Ben Piven writes about the contrast between the North Korean economy and the booming economies of South Korea and China.

“Why does South Korea produce Samsung, LG, and Hyundai?” I asked Jong, our 25-year-old North Korean tour guide.

She said that North Korea will manufacture sophisticated goods once the essentials — electrification and rice production — are covered. But the blank look on her face suggested that she better not discuss the issue.

Then, she perked up when someone asked about her own ideal job. She replied matter-of-factly, “I’d be a businesswoman.”

Jong’s 5,000 KPW (Korean People’s Won) monthly salary is equivalent to around $1.67. The official rate for the North Korean won is 142 per U.S. dollar, but due to severe inflation since the mid-1990’s, the black market rate is over 3000 KPW to $1.

Housing, health care and education are free in North Korea. But with her meager salary, Jong on her own could never afford the television or computer which her family of four (including her mother, father and grandmother) possess. Euros, dollars and Chinese yuan are needed for major purchases.

In North Korea, tourists are not permitted to enter non-tourist shops or purchase the local currency, since a negligible amount of foreign currency could buy out an entire store. Opening up shops and currency to the market would cause economic humiliation.

North Korea’s GDP is $1,700 per capita, 1/15 of South Korea’s, according to the CIA Factbook. Tied with Cote D’Ivoire and just a tad wealthier than Chad, North Korea is poorer than Laos and Cambodia. North Korea went from one of the most prosperous East Asian countries in the 1970s to the least prosperous today.

A Yalu River bridge once connected North Korea with China but was bombed out by the U.S. during the Korean War. Photo: Ben Piven

It wasn’t always this way. Having relied on the Soviets for economic inputs, North Korea developed faster than South Korea in the aftermath of the 1953 armistice that concluded the Korean War. The country’s infrastructure was mostly built from the late 50s to the early 70s, when the Soviet system was strong.

But by the 1980s rural South Korea had transformed into a tech-savvy urban tiger, and the stunted north turned more repressive after a number of aborted attempts to liberalize the economy.

The Juche state ideology — which emphasizes economic self-reliance  — intensified around 1982, almost certainly in response to South Korea’s explosive economic growth. Today, the paradox is that North Korea may be isolated,  but it’s not self-reliant. The authoritarian state relies heavily on food and fuel aid from abroad — as well as, some say, criminal activities.

David Rose explains in Vanity Fair how the Office 39 slush fund supplies Kim’s personal coffers, his inner circle and the missile defense program. Annual revenues from decidedly un-Juche activities, including crystal meth sales and human trafficking, may surpass $1 billion.

North Korea suffers economically from a strict economic embargo. Photo: Ben Piven

According to Rose, the D.P.R.K. is also the world’s top producer of “supernote” counterfeit $100 bills. Since the government cannot legally borrow cash, military sales and criminal rackets generate enough hard currency to keep the regime from collapse.

Since Kim Jong-il implemented songun (military-first budget policy) in 1994, the nuclear program has propped up the regime but stunted the people’s health and welfare. And economic sanctions have further impoverished ordinary Koreans.

On our officially-sanctioned tour, we gawked at workers burning rubber shoes to pave roadways and saw only one functioning crane in five days. Like the country’s infrastructure, corn and rice plots were orderly but dilapidated. Peasants worked in large groups, then napped individually in tiny wooden shacks.

Except for one rainy day, our bus was lonely on the roadways. Endless queues of people waited for antique Soviet trams and buses, while government officials drove fancy German cars. The only billboards advertised Pyonghwa Motors, co-owned by Sun Myung Moon’s Unification Church and under license from Fiat.

Officially, 2012 (Kim Il-Sung’s 100th birthday, known as Juche 100) will mark the completion of several projects, including the pyramidal Ryugyong Hotel, begun in 1987 but halted in 1992 due to severe shortages. Though the country’s tallest structure, the 105-story building is absent from tourist maps.

A North Korean phone on the country’s only cellular network. Photo: Ben Piven

The top two floors are being renovated as an office for Egyptian telecom magnate Naguib Sawiris, whose Orascom employees are also installing the nation’s first cell service, KoryoLink. The company has already enlisted over 50,000 subscribers at $25 per month. Sawiris also recently launched Ora Bank, another joint venture with a North Korean government partner. (North Korea’s ties with Egypt date back to the 1973 Yom Kippur War. In return for air force squadrons, North Korea later received scud missiles).

Some Americans believe that more economic engagement is the best way to bring North Korea in from the cold. There are some signs that the Juche nation is slowly bending to Western commercial pressures - witness the Taedonggang beer ad, Pyongyang pizza craze, and a new Singaporean-owned fast food restaurant.

But for now, despite the rapid globalization on its borders, North Korea remains in an economic deep freeze.

- Ben Piven

Worldfocus regulars Marcus Mabry, the International Business Editor for the New York Times, and Roben Farzad, a senior writer for BusinessWeek, join Daljit Dhaliwal to discuss the implications for the Obama administration.

They talk about whether the Chinese will influence U.S. policy on issues ranging from Afghanistan to health care because of this new reality.

The Hong Kong International Finance Center. Photo: Flickr user swisscan

Most world markets seem to be on their way upwards. Some countries have indeed pulled their economies out of recession, and many economists say that the U.S. is moving in that direction.

Although leading economic indicators signal increasing strength in the American economy, jobs remain scarce. Analysts predict that third-quarter growth will be positive for the first time in four quarters.

From your perspective, is the economy getting better?

Tell us what you think in the comments section below. Please remember to be respectful and on-point in your comments. Malicious or offensive comments will be deleted and repeat offenders will be banned.

Worldfocus correspondent Edie Magnus and producer Ara Ayer interviewed Velasco in Santiago in July.  His interview will be featured in several Worldfocus stories on Chile, including Chile squirrels away copper fortunes and spends prudently. This is part of our ongoing series looking at how other nations tackle complex policy issues.

In this wide-ranging discussion,  Velasco speaks about Chile’s privatization of social security, its past and present economic policy, and the lessons advisors have learned from economic cycles of the past.

Correspondent Martin Himel reports from Canada.

A few weeks ago Ivette Feliciano attended an event where Chile’s first female president, Michelle Bachelet, was honored by the Americas Society for her administration’s economic and social achievements navigating the global economic crisis.

She credited her country’s quick recovery after the crisis to her administration’s decision to put away money made when the price of copper was high a few years back. Copper is one of Chile’s main exports.

Watch President Bachelet answer Ivette’s question in the video below:

As the British government begins to sell some of its own property to close budget deficits, analysts wonder whether the United States will follow suit.

Marcus Mabry, the International Business Editor for the New York Times, speaks to Martin Savidge about the current state of the world economy.

Sunday’s vote for members of the lower house of parliament gave Merkel a comfortable center-right majority, thanks to a strong performance by the pro-business Free Democrats, who will become the key partner in Merkel’s alliance. As she prepares for a second four-year term, she made it clear that she will continue to seek consensus as Germany weathers the economic crisis.

Nikolaus Piper, a senior correspondent in New York for the German daily Suddeutsche Zeitung, joins Martin Savidge to discuss the major issues of the German election and Merkel’s victory.

They discuss the debate over next steps in the war in Afghanistan, as top U.S. military commanders call for yet more American troops. They also examine the global economic summit in Pittsburgh — what the leaders accomplished as their ranks increased from a group of eight to a group of 20.

The country votes for members of its lower house of parliament, who in turn choose the head of the government.

Barnaby Phillips of Worldfocus partner Al Jazeera English reports from Hamburg, a port city hit hard by the global recession.

Nina Hachigian is joined by Bruce Jones, the director of the Center on International Cooperation at New York University and senior fellow and director of the Managing Global Insecurity Initiative at the Brookings Institution.

The agenda for this week’s meeting of the Group of 20 developed and developing nations is full, but when the leaders of all these countries sit down in Pittsburgh to discuss banking regulation, energy and poverty alleviation, one question will not be on the table — the question of who should be at the table in the first place.

Deciding which nations will sit at the global decision-making table is more politically charged than whether to tie bankers’ bonuses to the risks they take or whether countries can and should stop subsidizing fossil fuel consumption. Resolving which nations will try to forge consensus on these and other critical questions, however, is key to determining whether any resolving actually gets done.

The current G-20 — which in fact consists of roughly 27 countries — came to life when the Bush administration was in a big hurry to address the global financial crisis back in 2008. The previous global leadership forum, the Group of 8 — the United States, Japan, Germany, Great Britain, France, Italy, Canada and Russia — lacked the participation of newly emerging economic powers such as China and Brazil as well as several other major economies such as Saudi Arabia and South Korea. A global crisis requires global participation, and the G-8 was clearly the wrong tool for the job.

Since the G-20 already existed at the ministers’ level, President George W. Bush moved it up a notch to create a new forum. Pittsburgh marks the fourth time this group of leaders has met, but it still operates on an ad hoc basis and the confusion of who attends is undermining confidence in its ability to deliver. The challenge now is to forge a G- grouping that actually works.

The first problem with the current G-20 is that its membership is somewhat arbitrary. It is loosely based on economic weight, but Argentina, whose economy is not in the top 20, attends meetings and Poland, which is in the top 20, does not. If the G-20 were comprised of the actual top economies, then at least extremely time-consuming and distracting squabbles over who is in or out would be minimized. Using objective criteria for membership also has the aura of fairness in determining eligibility.

To increase legitimacy by increasing representation, the Center for American Progress proposed a variation of this idea earlier this year. The plan would take the top two economies from each of five regions of the world and then fill in with the next 10 largest economies. The group could also evolve over time, with membership recalculated every five years to reflect the actual economic and power realities of the moment. That “refresh” makeover would ensure that the group doesn’t quickly become a relic.

Another approach would be to base membership not just on economic weight but also population. One version proposed by the Brookings Institution’s Managing Global Insecurity project, would be to combine economic weight and population in determining the rankings of the top 16 countries.

Both the CAP and Brookings’ approaches allow for the inclusion of important populous countries such as Indonesia, Saudi Arabia, Turkey and Nigeria in addition to the big emerging economic powers that are now in the G-20. This has the potential to make the group’s decisions resonate with a far wider set of countries. That would help ensure greater global compliance with any decisions the leaders of these countries agreed to take.

The difficulty with all of these proposals, as President Barack Obama points out, is how do you explain to the 17th or 21st country that it is not welcome? That’s tough politics.

Hence a third answer is popular these days, which is to have a core of powerful countries act as the new G-grouping and then vary the membership depending on the issue. But if the politics of who’s at the G-20 table are thorny, why repeat them every single time a new meeting is convened? Surely better to take a tough decision once, rather than endlessly renegotiate it.

The choice of a global leaders-level summit grouping involves tradeoffs of important attributes. The new grouping should be broadly representative to maximize its legitimacy, but small enough to be effective. It should tie membership to responsibility, but also serve to shape the choices of less responsible, yet powerful, actors. Ideally it would be inclusive but small, representative but value-based, and legitimate, but effective.

That may simply be an unattainable goal in today’s world. Thus the Obama administration and other governments at the G-20 summit next week need to decide what attributes are most important and then brave the consequences. We believe that the most important balance to strike is between efficiency and buy-in — largely confining the club to those with actual power in the world economy and global security but bringing in a few countries that represent broader regions or groupings of states.

Right now, with the G-8 still active and the G-20 also meeting, the window is open for the Obama administration to develop a consensus around a new grouping of global leaders, or perhaps more than one, that could play a key role in global cooperation for decades to come. If they don’t seize this moment, however, important issues could drift, setting back progress.

If this issue isn’t tackled head on and some degree of stability brought into global decision making, both resentment and uncertainty will rise. That puts at risk the broader strategy that President Obama has outlined of forging broad cooperation on critical issues, such as non-proliferation or the upcoming talks in Copenhagen to forge a global carbon-emissions accord. These are problems that can’t wait for solutions.

- Nina Hachigian and Bruce Jones

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Photo courtesy of Flickr user iwasaround under a Creative Commons license.

In Pittsburgh, the Europeans will be pushing for more regulation of the capital markets and groups like hedge funds and rating agencies.

For more, read Worldfocus blogger Nina Hachigian’s thoughts: Deciding who decides at the G-20 summit

John Authers, the investment editor for the Financial Times, joins Daljit Dhaliwal to discuss what’s likely to happen at the G-20 summit.

Those cheaper imports have grown substantially over the last five years, and now account for about one of every five tires purchased in the U.S. At the same time, production of American-made tires has declined and more than 5,000 jobs have been lost.

On Monday, China hit back, filing a complaint with the World Trade Organization and announcing an investigation into whether U.S. chicken and automotive products are being dumped at unfairly low prices in China.

Do you think China will overtake the United States as the world’s leading economic power?

Tell us what you think in the comments section below.

Daniel Rosen of the Rhodium Group, an economic research firm, joins Daljit Dhaliwal to discuss the larger implications of the trade dispute with China.

As Nicole Johnston of Worldfocus partner Al Jazeera English reports, this comes with both benefits and drawbacks.

Roben Farzad, a senior writer for BusinessWeek, joins Daljit Dhaliwal to discuss the swings in the Chinese market and what the drops mean for the global economy.

Data released Wednesday show that consumer spending rose in Europe in the second quarter of the year. That’s another encouraging sign that the global recession may be easing.  Still, unemployment in Europe and the U.S. remains high.

How confident are you that the global recession is ending?

Tell us what you think in the comments section below.

Kenji Kohno is the Washington bureau chief of the Japanese television network NHK and discusses what this historic election means for Japan and U.S. relations.

Clinton pledged to expand America’s support for Somalia’s weak interim government as it struggles against Islamic extremists. As she makes her way through Africa, economic development and human rights are also expected to be high on the agenda.

Emira Woods, the co-director of Foreign Policy In Focus at the Institute for Policy Studies, joins Martin Savidge to discuss Clinton’s agenda in Africa and U.S. goals in Somalia.

Below, view an interactive map exploring Hillary Clinton’s tour of Africa. Click on a country to view her plans.