r is at an early stage of
development as is the expansion of private sector initiatives.
Foreign financial aid from UK, Japan, Australia, New Zealand, and
China equals 25%-50% of GDP. Remittances from workers abroad account
for more than $5 million each year.

Korea, North
North Korea, one of the world's most centrally planned
and isolated economies, faces desperate economic conditions.
Industrial capital stock is nearly beyond repair as a result of
years of underinvestment and spare parts shortages. Industrial and
power output have declined in parallel. The nation has suffered its
tenth year of food shortages because of a lack of arable land,
collective farming, weather-related problems, and chronic shortages
of fertilizer and fuel. Massive international food aid deliveries
have allowed the regime to escape mass starvation since 1995-96, but
the population remains the victim of prolonged malnutrition and
deteriorating living conditions. Large-scale military spending eats
up resources needed for investment and civilian consumption. In
2003, heightened political tensions with key donor countries and
general donor fatigue threatened the flow of desperately needed food
aid and fuel aid as well. Black market prices continued to rise
following the increase in official prices and wages in the summer of
2002, leaving some vulnerable groups, such as the elderly and
unemployed, less able to buy goods. The regime, however, relaxed
restrictions on farmers' market activities in spring 2003, leading
to an expansion of market activity.

Korea, South
Since the early 1960s, South Korea has achieved an
incredible record of growth and integration into the high-tech
modern world economy. Four decades ago GDP per capita was comparable
with levels in the poorer countries of Africa and Asia. Today its
GDP per capita is 18 times North Korea's and equal to the lesser
economies of the European Union. This success through the late 1980s
was achieved by a system of close government/business ties,
including directed credit, import restrictions, sponsorship of
specific industries, and a strong labor effort. The government
promoted the import of raw materials and technology at the expense
of consumer goods and encouraged savings and investment over
consumption. The Asian financial crisis of 1997-99 exposed
longstanding weaknesses in South Korea's development model,
incl