problems, including a lack of arable
land, collective farming practices, and chronic shortages of
tractors and fuel. Massive international food aid deliveries have
allowed the people of North Korea to escape mass starvation since
famine threatened in 1995, but the population continues to suffer
from prolonged malnutrition and poor living conditions. Large-scale
military spending eats up resources needed for investment and
civilian consumption. In 2004, the regime formalized an arrangement
whereby private "farmers markets" were allowed to begin selling a
wider range of goods. It also permitted some private farming on an
experimental basis in an effort to boost agricultural output. In
October 2005, the regime reversed some of these policies by
forbidding private sales of grains and reinstituting a centralized
food rationing system. By December 2005, the regime terminated most
international humanitarian assistance operations in the DPRK
(calling instead for developmental assistance only) and restricted
the activities of remaining international and non-governmental aid
organizations such as the World Food Program. Firm political control
remains the Communist government's overriding concern, which will
likely inhibit the loosening of economic regulations.

Korea, South
Since the 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. In 2004, South Korea
joined the trillion dollar club of world economies. Today its GDP
per capita is equal to the lesser economies of the EU. This success
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,
including high debt/equity ratios, massive foreign borrowing, and an
undisciplined financial sector. GDP plunged by 6.9% in 1998, then
recovered 9.5% in 1999 and 8.5% in 2000. Growth fell back to 3.3% in
2001 because of the slowing global economy, falling exports, and the
percept