The effort to halt the North Korean ballistic missile and nuclear weapons program has resulted in more scrutiny of the ramshackle North Korean economy, and the causes of the growing hunger, privation and extreme poverty up there. North Korea has a miniscule GDP ($30 billion), which is pathetic compared to South Korea ($1.3 trillion), Japan ($5 trillion) and China ($11 trillion, second only to nearly $20 trillion for the United States.) It wasn’t always this way. For about 35 years, from the late 1940s to the 1970s, North Korea was a lot better off economically than now. This was largely because the heavy industry developed in Korea during the Japanese occupation (1910-45) was concentrated in the north, where most of the raw materials (coal, iron ore) were, and still are. The south was largely agricultural.
The Korean War (1950-53) devastated both Koreas but South Korea got the worst of it and, for two decades after the war, the north was seen as economically better off than the south. This was partly because of the head-start in industrialization but also because of generous Russian subsidies that ended when the Soviet Union dissolved in 1991. South Korea finally got its economic growth going in the 1970s and by the 1980s was seen as moving ahead of North Korea. Since then the economic gap between north and south has grown much wider.
One of the things that made the economic situation worse in the north was the post-1990s decision to spend more on the military than the economy. The well-being of the population was never the highest priority in the north. Keeping the Kim dictatorship in power was seen as far more important and those Russian subsidies included a lot of military equipment and advice on how to run a “Stalinist State”. That is a police state based on lots of fear with swift and brutal retribution against any dissidents. Josef Stalin died three months before the fighting stopped in Korea and that was no coincidence. When Soviet era archives were briefly accessible in the early 1990s, it became clear that the Korean War was Stalin’s idea and, without his support, it would never have happened. The post-Stalin Russian government denounced Stalin and Stalinism for terrorizing the population and government officials, as well as wrecking the economy. With Stalin dead Russia put more effort into economic development and less into the military. That only lasted about a decade and in the early 1960s a less benevolent and more militaristic government came to power. This was done with what amounted to a military coup that led to an arms race that played a key role in bankrupting the Soviet Union and causing the dissolution of the Russian empire. South Korea appreciated this, North Korea did not. The famine and economic collapse that took place in the north during the 1990s (due to loss of Russian subsidies) saw ten percent of the population starve to death and the economy beginning a long period of decline, and reform, which is still underway.
In 2006 the second ruler inf the Kim dynasty, Kim Jong Il (son of founder Kim Il Sung) decided that for the Kims to survive North Korea needed nuclear weapons and longer-range ballistic missiles. He secretly established a new government department, Bureau 21, to finance this effort. Bureau 21 got a larger and larger portion of the government, and military, budget. This meant spending on infrastructure (transportation, utilities and health) declined while the military, and especially Bureau 21, got a larger share of the shrinking economic pie. For example, the military and Bureau 21 get about a quarter of GDP and even as the economy suffers under economic sanctions (because of Kim's nuclear and missile program) Bureau 21 maintains spending while even the military faces unprecedented cuts.
The third ruler in the Kim dynasty, Kim Jon Un, took power in 2011 and put even more resources into Bureau 21, which he renamed Bureau 11. The name change indicated increased funding and priority for the nuclear and missile programs. The decisions to give Bureau 21/11 priority over everything else has endangered the Kim dynasty because for the last decade there has been growing corruption in the government, even the army and secret police, as North Koreans fend for themselves to survive. Senior members of the North Korean government have been defecting in growing numbers and Kim Jong Un has been executing senior government and military officials he suspects of disloyalty.
If all this appears self-destructive and will ultimately destroy the Kim dynasty, it is. But Kim Jong Un shows no interest in changing course. China could arrange a change of rulers in North Korea but does not want to get involved because staging a coup or whatever in North Korea is messy, expensive and unpredictable. South Korea and the U.S. have also made contingency plans for “direct action” against North Korea. This “southern solution” would have to deal with the Chinese, with or without China carrying out its “northern solution.” Kim Jong Un is well aware of these two solutions and is hustling as quickly as he can to create a reliable nuclear deterrent against the northern and southern solution. That is probably not possible or practical but Kim seems to think he has no other choice. It’s a mess up there, in so many ways and has been for centuries. That’s another story that only the Chinese seem to be paying close attention to.