A Study of Regional Integration and Transaction Mechanisms in North Korea's Rice Market

Abstract

Since the 2000s, North Korea has been shifting away from a socialist planned economy towards a mixed plan-market system, marking a significant transformation in its economic approach. This research concentrates on scrutinizing the North Korean consumer goods market, with a specific focus on rice. The study encompasses nine cities (five/four in Western/Eastern region), covering the period from January 2012 to December 2021. The paper adopts a theoretical framework rooted in the efficient market hypothesis, using statistical analysis to examine absolute and relative prices. Notably, it identifies nearly perfect price parity in two pairs of cities (F-H, West and D-G, East). The relative price analysis shows that all pairs are in relative equilibrium, indicating that market integration has been established across regions. These findings offer statistical evidence of the coexistence of planned and market-based elements in the North Korean rice distribution system. In addition to price analysis, this paper delves into the North Korean rice trading network and associated transaction costs in selected regions. Consequently, this study holds substantial academic distinction, offering valuable insights into North Korea's essential goods distribution system.