FACT CHECK: Is North Korea Poorer Than Afghanistan?

Emily Larsen | Fact Check Reporter

Evan Osnos, a staff writer at The New Yorker, said on ABC’s “This Week” Sunday that North Korea is poorer than Afghanistan.

Verdict: Unsubstantiated

North Korea runs a closed economy, meaning estimates of its gross domestic product (GDP) – a measure of wealth – are largely guesswork. Official estimates for Afghanistan are more reliable, although these figures don’t account for the country’s substantial black market.

GDP may not be the best way to measure a country’s wealth or the well-being of its citizens.

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President Donald Trump is scheduled to meet with North Korean Leader Kim Jong Un in June. Diplomatic agreements with North Korea have fallen apart in the past, but Osnos believes that Kim may sincerely want improved relations to help the isolated nation’s economic situation.

“We know that Kim Jong Un believes that his country cannot stay as poor as it is forever. It’s poorer than Afghanistan,” Osnos said. “That’s an unstable state if you’re a leader trying to keep your people at bay.”

Other commentators have said that North Korea is poorer than Afghanistan or other countries like Ethiopia and Guatemala, typically using GDP to measure wealth.

U.N. figures show that in 2016, North Korea’s GDP was $17 billion and Afghanistan’s was $20 billion. The CIA’s World Factbook, which estimates GDP at purchasing power parity (PPP), found that North Korea’s GDP was $40 billion in 2015 and Afghanistan‘s was $66 billion.

Afghanistan’s economy appears to be larger than North Korea’s, but it also has more people. About 36 million people live in Afghanistan, and about 25 million live in North Korea.

To make up for population differences, economists often use GDP per capita to compare general economic well-being. By that measure, North Korea may be better off. The U.N. says that GDP per capita was $665 in North Korea and $584 in Afghanistan in 2016. According to the CIA, North Korea’s GDP (PPP) per capita in 2015 was $1,700, and Afghanistan’s was $2,100.

Measures of North Korea’s GDP are far from precise, though. “Any numbers given today about the GDP for North Korea are an educated guess at best,” Gianluca Spezza, a North Korea researcher and writer, told The Daily Caller News Foundation in an email.

The reclusive regime does not give outsiders data. Those who estimate North Korea’s GDP rely on information from private companies, informants inside the country, data from China (North Korea’s biggest trading partner) and satellite images of farms.

Experts have trouble estimating not only how much North Korea’s economy produces, but also the prices of those goods.

“Prices matter. In North Korea, prices are dictated by the state for most of the economy. In Afghanistan, they’re mostly dictated by supply and demand,” William Brown, an adjunct professor at Georgetown University who teaches courses on Asian economies, told TheDCNF. “It’s possible to get a GDP number for Afghanistan by adding all that up,” but translating North Korea’s prices into GDP requires guesswork, he said.

The U.N. derives its GDP estimates using figures from the Bank of Korea, which issues South Korean currency. The Bank estimated that North Korea’s GDP rose to $28.5 billion in 2016 – a 17-year high despite new sanctions.

Some experts think that South Korea’s estimates are too low. The CIA figures are based on an estimate from 1999 in a study for The Organisation for Economic Cooperation and Development (OECD).

Afghanistan’s GDP doesn’t tell the whole story either. U.N. figures show that it only surpassed North Korea’s in 2009.

Afghanistan’s economy dramatically increased over the last decade, largely due to foreign assistance. The U.S. and others funded 90 percent of Afghanistan’s budget from 2006 to 2010. Its economy has shrunk a little since 2014 as foreign troops, who artificially inflated economic growth, left the region.

Figures from Afghanistan’s Central Statistics Organization don’t include its shadow economy. Land cultivated for opium poppy production in Afghanistan reached a record high in 2017, worth about $1.4 billion, but the opium trade is not reflected in official GDP figures.

Brown said that GDP is not a particularly useful tool to compare poverty in North Korea to poverty in other countries. “Living standards are better measured by consumption than by production,” he said.

In a typical market economy like the U.S. or Afghanistan, most of what’s produced is consumed by families and individuals. But in North Korea’s centrally-controlled socialist economy, “I would say probably not more than half of [North Korea’s] production goes to consumption,” Brown said, meaning that North Korea’s GDP is not comparable to Afghanistan’s as a measure of well-being.

Other statistics, such as those in the U.N.’s Human Development Index, can provide more insight.

Though North Korea is poor, Spezza said that it is more developed than many people in the West think. “North Korea has way more and better infrastructure, technology, public services and health levels than Afghanistan,” he said in an email. “Afghanistan produces very little that goes around the world (opium aside). That is not the case with North Korea at all.”

North Korea exported almost $3 billion worth of commodities like coal, iron ore and textiles in 2016, mostly to China. Afghanistan only exported $596 million worth of goods like carpets and rugs, dried fruits and medicinal plants.

People in Afghanistan are worse off by many metrics. The country has about a 38 percent adult literacy rate, while almost everyone in North Korea can read and write. People in North Korea are expected to live about 10 years longer than people in Afghanistan. More mothers die during childbirth in Afghanistan than in North Korea. About 41 percent of children under age five suffer from malnutrition in Afghanistan, compared to 28 percent in North Korea.

Brown said that North Korea’s infrastructure can be deceiving. “You might look at a North Korean city and say, ‘Oh, this is better than an Afghanistan city.’ But what you’re looking at is the state part of the economy,” not individual wealth, Brown said. “Imagine being in an apartment 20 stories tall and you don’t have running water in your bathroom.” (Both countries struggle with access to clean water.)

About 84 percent of Afghanistan has access to electricity, compared to only 39 percent in North Korea. The malnourished are hungrier in North Korea, with a deficit of 344 calories per person per day on average, compared to 166 in Afghanistan.

Brown said that people in Afghanistan have more opportunity to create wealth in a market economy. “A big problem in North Korea is that people can’t own property legally. They’re a socialist system, so they’re all renters, in a way. They don’t have any financial savings because of that system.”

Which country is worse may come down to a matter of opinion, but both Spezza and Brown agree that Afghanistan and North Korea are among the poorest countries in the world.

Osnos did not respond to requests for comment.

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Emily Larsen

Fact Check Reporter

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