Private Markets for Food Aid

From Escape from Camp 14: One Man's Remarkable Odyssey from North Korea to Freedom in the West, by Blaine Harden (Penguin, 2012), Kindle Loc. 1129-1146:

Food aid from the United States, Japan, South Korea, and other donors mitigated the worst of the famine by the late 1990s. But in an indirect and accidental way, it also energized the market ladies and traveling entrepreneurs who would give Shin sustenance, cover, and guidance in his escape to China.

Unlike any other aid recipient in the world, North Korea’s government insisted on sole authority for transporting donated food. The demand angered the United States, the largest aid donor, and it frustrated the monitoring techniques that the U.N. World Food Program had developed around the world to track aid and make sure it reached intended recipients. But since the need was so urgent and the death toll so high, the West swallowed its disgust and delivered more than one billion dollars’ worth of food to North Korea between 1995 and 2003.

During these years, refugees from North Korea arrived in the South and told government officials that they had seen donated rice, wheat, corn, vegetable oil, nonfat dry milk, fertilizer, medicine, winter clothing, blankets, bicycles, and other aid items on sale in private markets. Pictures and videos taken in the markets showed bags of grain marked as “A Gift from the American People.”

Bureaucrats, party officials, army officers, and other well-placed government elites ended up stealing about thirty percent of the aid, according to estimates by outside scholars and international aid agencies. They sold it to private traders, often for dollars or euros, and delivered the goods using government vehicles.

Without intending to do so, wealthy donor countries injected a kind of adrenaline rush into the grubby world of North Korean street trading. The lucrative theft of international food aid whetted the appetite of higher-ups for easy money as it helped transform private markets into the country’s primary economic engine.

Private markets, which today supply most of the food North Koreans eat, have become the fundamental reason why most outside experts say a catastrophic 1990s-style famine is unlikely to happen again.

The markets, though, have not come close to eliminating hunger or malnutrition. They also appear to have increased inequity, creating a chasm between those who have figured out how to trade and those who have not.