Why did China become a economic powerhouse while its neighbour country North Korea is a poor, famine striken country?

by ublant
elcapitansmirk

It's probably more valuable to contrast North Korea and South Korea, given that they are similarly-sized and started from roughly the same point post-WWII (my understanding is that most industry was focused in the North at the time, so if anything they would have had a head start).

But I suppose you're asking because North Korea and China are both "communist" countries. But there are many differences. First of all, demographics: China has had over a billion people for some time, while NK has been around 20-25 million since the 1970s. China was poor for so long because of a series of external and internal conflicts and policies that damaged its economy - basically it had the highest share of global GDP for centuries (estimated, obviously) before collapsing in the early 19th century (just as industrialization took off in the west).

China dealt with the unequal treaties, Taiping Rebellion, collapse of the Manchus, the warlord period, civil war, and Maoism before steps were taken to correct its path (under Deng) somewhat. According to Acemoglu and Robinson (and others), it took some less-bad, less extractive policies to put China on a path to catch-up growth. (Read Why Nations Fail, the book and blog, for more info on why this happens - and doesn't - in certain countries).

As for North Korea, while there was strong growth up to the 1960s, as there were in many socialist countries, this was a somewhat natural recovery from wartime and a result of top-down industrialization. Its policies were/are still heavily extractive and focused on how the pie is divided rather than causing growth. It's flirted with attempts at liberalization and seeking outside investment, but these have been limited, halting, and small overall - incomparable to the scale undertaken in China starting in the 1980s. Furthermore, the collapse of the USSR eliminated a lot of the subsidies NK was dependent on just to get by.