North Korea’s economy

When the lights go out

Satellite data shed new light on North Korea’s opaque economy

VIEWED FROM space at night, North Korea looks like the recently released first image of a black hole: an abyss, ringed by the brilliant glow of South Korea, China and Russia, from which nothing can escape. But the Hermit Kingdom does emit a bit of light, which orbiting satellites detect. And nocturnal luminosity is one of the few reliable sources of information about the country. It implies that North Korea’s economy is poorer, more volatile and more vulnerable to weather than formerly thought.

Night lights are a strong proxy for economic activity. A new paper by the IMF finds that they explain 44% of the variation in countries’ GDP per person—as close a tie as that between a person’s height and hand size. In places where records are poor or manipulated, night lights offer an alternative measure of output. One study found that among countries with similar luminosity, autocracies reported GDP growth 15-30% higher than democracies did.

Nowhere are good economic data rarer than in North Korea. The most detailed numbers come from South Korea’s central bank, which derives them from figures on production volumes of various goods. When adjusted for the cost of living in a developing Asian economy, the bank’s most recent estimate of North Korea’s annual GDP per person is enough to buy goods and services that would cost $2,500 in America.

The picture painted by night lights, however, is even grimmer. In 2013 a group of scholars compared luminosity and GDP within rural China, obtaining an equation to estimate economic output from light. A forthcoming paper by World Data Lab, a startup, and a team of researchers applies this formula to North Korea. It yields a standard of living that would cost $1,400 a year in America, making North Korea one of the world’s ten poorest countries.

The data also suggest that the economy has been unusually volatile. In 2013-15 luminosity fell by 40%. That implies a 12% reduction in GDP, including 19% in the capital region, Pyongyang. Since 2016, however, the country has brightened again.

International sanctions are unlikely to have produced this darkening. They were made stricter in 2016-17, just as luminosity rose. A drop in the prices of North Korean exports, like coal, may have played a part.

But the main cause was probably weather. North Korea relies on hydropower, and in 2015 it was parched by a drought. The Bank of Korea also reckons that electricity, gas and water output fell by 13% in 2015.

The economy may not have shrunk as much as the dimming suggests. Recessions caused by power cuts could disproportionately reduce lighting. Many North Koreans own solar panels, which power daytime activity not shown in night lights. And state buildings, whose illumination is a political choice, make up much of the capital’s glow. As with physics inside a black hole, no one knows what economic laws apply within North Korea’s eerie silhouette.

Nonetheless, a 40% drop in luminosity indicates a serious recession. And this year the government has admitted publicly that heatwaves, floods and drought have caused a dire food shortfall. The regime appears much better prepared to weather trade sanctions than the wrath of nature.