South+Korean+economy+37+times+bigger+than+NK’s

Website- http://www.koreatimes.co.kr/www/news/biz/2011/01/123_79235.html Date-Jan 5th __Summary:__ In this article, the author gives some statistics about South Korea’s and North Korea’s Economy. Author Oh Young-jin has given positive statements about the economy such as South Korea’s per-capita gross national income (GNI) is $17 175 at the end of 2009, about 18 times larger than the $960 tallied for the North. The people in South Korea are earning way more money than the citizens do in North Korea. It is also closely related to the economic development, because a country with higher GNI means the people have a higher standard of living. Based on the statistics above, South Korea has a better standard of living, meaning the people might have higher life expectancy, less employment and more

This article is generally focused on the macro level of the economy of the countries because it doesn’t focus on an individual firm or company but compares the economy as a whole in the world. According to the article, “Pyongyang still insists on its military-first policy with much of its scarce resources being devoted to maintaining its armed forces.” This means North Korea is putting the production of military goods into priority, instead of ordinary goods. However, the heavy concentration on military products is not helping North Korea’s economy. In 2009, the exports and imports by the North were at $1.1 billion and $2.4 billion respectively, and in contrast, the South exported $363.5 billion worth of products while imports were $323.1 billion. The imports and exports have strongly contributed to the GDP of South Korea while the contribution to NK’s economy is minuscule.

See Diagram below



This diagram is a PPC that represents North Korea's products. Assuming full resources are being used, point A would be where North Korea is at. North Korea has decided to focus on military, therefore it would produce a lot of military goods. As a result, a small amount of scare resources are used on industrial good. It has an increasing opportunity cost.

It also talks about the fact that because North Korea has a command economy and it decides to focus on military; it lost its head start over the South in 1945. However A command economy does have some benefits over the free market economy such as unemployment can be reduced because the government can plan the allocation of labor in accordance with production and labor skills. Overall, South Korea’s economy is better than North Korea’s based on the statistics shown in the article.

__Economic Terms__: PPC: a graph that shows different rates of production of two goods and/or services that an economy can produce efficiently in a time period with scare resources(factors of production) Factors of Production:Land,Capital,Entrepreneurship,Labor Macroeconomics: The field of economy that studies the aggregate economy GDP: The total value of goods produced and services provided in a country over 12-month period. Economic Development:welfare of the people, the living quality Opportunity Cost: next best choice when an economic decision is made Command Economy: An economy where supply and price are regulated by the government. The government chooses what to produce, how to produce and for whom to produce. Free Market Economy: An economy where markets aren't regulated by the governemnt. The people get to decide what to sell and the price of the products.

__Evaluation:__ It is very interesting that North Korea has been focusing on military rather than economic growth. I believe the North Korean government should set some fiscal policies that will help increase the economic growth first and then focus on military growth. North Korea should also promote export because it is a great way to increase GDP. However, it depends on North Korea's opportunity cost. North Korea might have an increase in opportunity cost as it it is moving from military to investments and more, therefore a cost-benefit analysis is suggested to evaluate different choices. On the other hand, South Korea is growing rapidly. If this trend continues, South Korea's economy will even be more superior to North Korea's.