North Korea far poorer than reported: expert

By Jack Kim

SEOUL (Reuters) - Impoverished North Korea is far poorer than earlier estimates have shown with a per capita income that places it among the world's most destitute states, a former minister for managing relations with the North said on Friday.

The South's Bank of Korea said last August that the North's economy in 2006 stood at $22.8 billion but the survey from Lee Jong-seok said the figure was closer to $9 billion.

This means that the average North Korean makes the equivalent of about a dollar a day, which puts the North among the world's 25 poorest countries in terms of per capita income.

But the Bank of Korea's estimate put annual per capita income at closer to $1,100, about the same as Nepal.

"If you had the slightest bit of interest or knowledge about the North, you would have asked the question: 'In that case, why is the majority of North Koreans starving?'" Lee, who was Minister of Unification in 2006, said in a report published on Friday.

Lee said the Bank of Korea's estimates were fundamentally flawed because they used a cost base applicable for the richer South and not the destitute North.

Last year's figures by the central bank put the size of the North Korea's economy between the war-torn countries of Sri Lanka and Lebanon according to World Bank tables. It was also less than 3 percent of the South Korean economy.

Lee said he commissioned a study as minister that concluded the North's per capita income was probably about $400 and its gross national income $8.9 billion, which makes the North's economy about one-one hundredth of the South's.

He said better estimates were needed in order to better tailor aid policy and understand how much of the North's scarce resources were going to its powerful military.

While the North's economy surpassed the South's in the early years after the 1950-53 Korean War, it has since sharply slipped in wealth, largely because of years of misguided central control that focused heavily on military spending.

In the late 1990s, an estimated 10 percent of the North's 23 million people died during due to famine.

The North has for years relied on international aid to make up for a large and persistent food shortage.

(Editing by Jon Herskovitz and Bill Tarrant)