DOI QR코드

DOI QR Code

Dollarization in North Korea: Evidence from a Survey of North Korean Refugees

  • Received : 2016.12.07
  • Accepted : 2017.03.07
  • Published : 2017.03.30

Abstract

This study measures the degree of dollarization in North Korea using results from a survey of 231 North Korean refugees. Specifically, we compare foreign currency use of households as both store-of-value substitutes (i.e., asset substitution) and transaction substitutes (i.e., currency substitution) before and after the confiscatory currency reform of 2009. The degree of dollarization has advanced since the currency reform in terms of both asset and currency substitutions. Survey results also indicate that the Chinese yuan is frequently used in the Sino-North Korean border area, whereas the US dollar is predominantly used in non-border areas. Furthermore, foreign currency increasingly serves as a medium of exchange not only for large transactions but also for smaller transactions, such as food purchases.

Keywords

References

  1. Alvarez-Plata, P. and P. Garcia-Herrero. 2008. To Dollarize or De-dollarize: Consequences for Monetary Policy. DIW Berlin Discussion Papers, no. 842.
  2. Balino, T. J. T., Bennett, A. and E. Borensztein. 1999. Monetary Policy in Dollarized Economies. IMF Occasional Paper, no. 171.
  3. Beaugrand, P. 2003. Overshooting and Dollarization in the Democratic Republic of the Congo. IMF Working Paper, no. 03/105.
  4. Calvo, G. and C. A. Vegh Gramont. 1992. Currency Substitution in Developing Countries: An Introduction. IMF Working Paper, no. 92/40.
  5. Central Bureau of Statistics (CBS). 2009. DPRK 2008 Population Census National Report.
  6. Cho, D. H., Park, J., Jung, Y. H., Shin, J. H., Kim, H. J. and E. Y. Kim. 2002. A Study on the Economic Development of North Korea. Seoul: Korea Development Institute.
  7. DailyNK. 2016. North Korea Market Trends. (accessed May 20, 2016)
  8. de Zamaroczy, M. and S. Sa. 2003. Economic Policy in a Highly Dollarized Economy: The Case of Cambodia. IMF Occasional Paper, no. 219.
  9. Feige, E. L. 2003. "Dynamics of Currency Substitution, Asset Substitution and De facto Dollarisation and Euroisation in Transition Countries," Comparative Economic Studies, vol. 45, no. 3, pp. 358-383. https://doi.org/10.1057/palgrave.ces.8100019
  10. Haggard, S. and M. Noland. 2007. North Korea's External Economic Relations. PIIE Working Paper, no. 07-7.
  11. Hanke, S. H. 2013. North Korea: From Hyperinflation to Dollarization?. Cato Institute. (accessed May 20, 2016)
  12. Havrylyshyn, O. and C. H. Beddies. 2003. "Dollarisation in the Former Soviet Union: From Hysteria to Hysteresis," Comparative Economic Studies. vol. 45, no. 3, pp. 329-357. https://doi.org/10.1057/palgrave.ces.8100018
  13. International Monetary Fund (IMF). 2016. World Economic Outlook Database.
  14. International Network for the Human Rights of North Korean Overseas Labor (INHL). 2012. The Condition of the North Korean Overseas Labor. (accessed May 20, 2016)
  15. Jung, H. J. and T. S. Rich. 2016. "Why Invest in North Korea? Chinese Foreign Direct Investment in North Korea and its Implications," Pacific Review, vol. 29, no. 3. pp. 307-330. https://doi.org/10.1080/09512748.2015.1022582
  16. Kang, J. W. 2008. "The Patriarchal State and Women's Status in Socialist North Korea," Graduate Journal of Asia-Pacific Studies, vol. 6, no. 2, pp. 55-70.
  17. Kim, B. Y. and S. H. Jung. 2015. China's Trade and Investment with North Korea: Firm Survey in Dandong. Seoul: Seoul National University Press. (in Korean)
  18. Kim, K. J. 2008. "Change in Foreign Currency Control System in North Korea and Its Increasing Dependence on Hard Currency," EXIM North Korea Economic Review, Spring issue, vol. 5, no. 1, pp. 19-41. (in Korean)
  19. Kim, Y. H. 2014. Cell Phones in North Korea: Has North Korea Entered the Telecommunication Revolution?. US-Korea Institute at SAIS. (accessed May 20, 2016)
  20. Korea Development Bank (KDB). 2015. North Korea Development. Seoul: Korea Development Bank. (in Korean)
  21. Korea International Trade Association (KITA). 2007. Evaluation of 2006 Inter-Korean Trade and Prospects of 2007. (accessed May 20, 2016) (in Korean)
  22. Korea Trade-Investment Promotion Agency (KOTRA). 2011. North Korea's External Trade. Seoul: Korea Trade-Investment Promotion Agency. (in Korean)
  23. Korea Trade-Investment Promotion Agency (KOTRA). 2012. North Korea's External Trade. Seoul: Korea Trade-Investment Promotion Agency. (in Korean)
  24. Korea Trade-Investment Promotion Agency (KOTRA). 2013. North Korea's External Trade. Seoul: Korea Trade-Investment Promotion Agency. (in Korean)
  25. Korea Trade-Investment Promotion Agency (KOTRA). 2014. North Korea's External Trade. Seoul: Korea Trade-Investment Promotion Agency. (in Korean)
  26. Lee, J. K. 2015. "What Determines the DPRK's Anthracite Exports to China?: Implications for the DPRK's Economy," KDI Journal of Economy Policy, vol. 37, no. 2, pp. 40-63. https://doi.org/10.23895/kdijep.2015.37.2.40
  27. Lee, S. K., Kim, S. J. and M. S. Yang. 2012. Dollarization in North Korea. Seoul: Korea Institute for Industrial Economics & Trade. (in Korean)
  28. Lee, S. K., Kim, S. J., Kim, K. H. and Yang, M. S. 2010. North Korean Industries and Firms in the 2000s: Recovery and Operation Mechanism. Seoul: Korea Institute for Industrial Economics & Trade. (in Korean)
  29. Levy Yeyati, E. 2006. "Financial Dollarization: Evaluating the Consequences," Economic Policy, vol. 21, no. 45, pp. 61-118. https://doi.org/10.1111/j.1468-0327.2006.00154.x
  30. Lim, E. C. 2015. "The Formation and Development of Private Financing in North Korea: Patterns, Implications, and Tasks," Journal of Unification Studies, vol. 27, no. 1, pp. 205-242. (in Korean)
  31. Mas, I. 1995. "Things Government Do to Money: A Recent History of Currency Reform Schemes and Scams," Kyklos, vol. 48, no. 4, pp. 483-512. https://doi.org/10.1111/j.1467-6435.1995.tb01281.x
  32. Ministry of Unification. 2016. Statistics on North Korean Refugees. (accessed May 20, 2016) (in Korean)
  33. Noland, M. 2013. Hugely Important: North Korea Running a Current Account Surplus? North Korea: Witness to Transformation, Peterson Institute for International Economics. (accessed May 20, 2016)
  34. Oomes, N. 2003. Network Externalities and Dollarization Hysteresis: The Case of Russia. IMF Working Paper, no. 03/96.
  35. Park, H. -J. 2011. "Commercial Engagements of the Party-State Agencies and the Expansion of Market in the 1990s in North Korea," Unification Policy Studies, vol. 20, no. 1 pp. 213-237. (in Korean)
  36. Rojas-Suarez, L. 1992. Currency Substitution and Inflation in Peru. IMF Working Paper, no. 92/33.
  37. Savastano, M. A. 1996. Dollarization in Latin America: Recent Evidence and Some Policy Issues. IMF Working Paper, no. 96/4.
  38. Shinichi, W. 2007. De Facto Dollarization and its Effect on Financial Development and Economic Growth of Cambodia, Lao PDR and Viet Nam. Paper Presented at Conference on: Policy Options and Challenges for Developing Asia-Perspectives from the IMF and Asia.
  39. Yang, M. S. 2010. The Marketization in North Korean Economy. Seoul: Hanul. (in Korean)
  40. Yu, S. -E., Kim, B.-Y., Jeon, W.-T. and S. H. Jung. 2012. "Determinants of Labor Market Participation and Wages of North Korean Female Refugees in South Korea," Asian Economic Policy Review, vol. 7, no. 1, pp. 113-129. https://doi.org/10.1111/j.1748-3131.2012.01224.x
  41. Zang, H. S. 2009. "Balance of Foreign Exchange of North Korea for 2000 through 2008," Comparative Economic Review, vol. 16, no. 2, pp. 1-48. (in Korean)
  42. Zang, H. S. 2013. "Estimation of and Analysis on the Balance of Foreign Exchanges of North Korea for 1991-2012," Unification Policy Studies, vol. 22, no. 2, pp. 165-190. (in Korean)
  43. Zoryan, H. 2005. "The Measurement of Co-Circulation of Currencies and Dollarization in the Republic and Armenia," European Journal of Comparative Economics, vol. 2, no. 1, pp. 41-65.