BRUSSELS -- In July 2002, North Korea instituted wage and price reforms that officially introduced the market into the economy. Such change had been on the horizon since the famine of the late 1990s, driven by a certain inevitability as the distribution system started to creak and stutter. Informal -- but tolerated -- farmers markets had been slowly growing as farmers traded food for consumer goods or cash in cities and towns across the country. The increasingly normal was to become formal.
Instead of an economy where food and essential goods like clothing were delivered either by the Peoples Distribution Service (PDS) or through chits issued by section leaders, they were to be delivered through the price mechanism. In the case of staple foods like rice, the change was buffered by the PDS continuing to supply about half the daily needs -- albeit fitfully in many cases -- at highly subsidized prices. Apart from that, families were now on their own.
Wages went up by nearly 20 times, food by 25 and the won-to-euro exchange rate by almost 70. Rent and electricity charges, which had either been nonexistent or nominal, were imposed and raised.