HISTORICAL FACTORS THAT HAVE LED TO THE RAMPANT CORRUPTION IN NORTH KOREA

By Jiwoo (Katie) Choi, HRNK Research Intern
Edited by Diletta De Luca, Research Associate
 
Until the division of the Korean Peninsula in 1948, following the end of the Second World War, the people of North and South Korea were united by the same history and culture for thousands of years. Over the 70 years since the division, the two countries have taken almost opposite paths, resulting in their citizens living in completely different political, economic, and cultural environments. One of the most noticeable differences is the level of public corruption. According to the most recent corruption indices by Trace International and Transparency International, South Korea has consistently ranked between 20th and 40th place, while North Korea has been at the bottom of the list of 180-200 countries, making it one of the most corrupt countries in the world.
 
Evaluating the accurate status of corruption in North Korea is challenging. Over the decades, the measurement of corruption has evolved (e.g., perceptions, surveys, estimates from direct observation, graft estimation by subtraction, estimates from market inference). However, there remains little consensus about the magnitude of a country’s corruption due to the highly heterogeneous and multidimensional nature of these estimates.[1] Furthermore, objectively assessing the true extent of North Korea’s corruption is difficult due to the lack of available information for the international audience and the secretive nature of the country. Consequently, it seems inevitable to rely heavily on testimonies and experiences of North Korean defectors, even though perception-based measures may not accurately reflect the level of corruption.

1.Before the Economic Collapse of the Mid-1990s  

It is widely known that autocrats often utilize corruption not only to accumulate wealth but also to reward loyalists and political supporters. Putative anti-corruption efforts are likely a cover for purging rivals and consolidating power.[2] In other words, autocrats can use anti-corruption policies as an excuse to eliminate their enemies and gain more control over the government. However, curbing corruption has been a major agenda item for some “high-performing” authoritarian regimes, such as China and Singapore, for economic development, political stability or international image, and their anti-corruption success is too common to be considered exceptional.[3]
 
At the end of the Second World War, Korea regained independence after 35 years of Japanese rule. However, in 1945, the Yalta Conference agreements divided the Korean Peninsula into two separate countries. Both were poor and characterized by rampant corruption. Newly independent countries often witness high levels of corruption due to underdeveloped governance and opportunities for individuals to exploit the system for personal gain in their politically unstable and developing environments.[4] After the Korean War (1950-1953), both North and South Korea focused on reconstruction of their war-torn countries while grappling with absolute poverty, each competing to prove the superiority of their respective systems.
 
Under these circumstances, political corruption was fairly well curbed under Kim Il-sung’s regime from the 1950s until the 1980s.[5] Kim Il-sung, the first autocratic leader of North Korea, eagerly pursued economic development, not only as part of his ideological commitment to creating a modern socialist state but also to win the inter-Korean competition.[6] He considered corruption a threat to the economy and fought it with the Anti-Corruption Campaign, Anti-Waste Campaign (1952), and the Self-Confession Campaign (1955).[7] In the 1950s, North Korea arguably battled corruption more successfully than its southern counterpart.[8] Anti-corruption campaigns by autocrats often become a means to eliminate their political enemies or to consolidate their own power. However, these developmental imperatives have the potential to stimulate highly authoritarian regimes to curb corruption. Kim Il-sung’s campaigns successfully contributed to post-war reconstruction and rapid development, resulting in higher economic development in North Korea compared to the South until the 1970s.[9] This suggests that structural factors such as regime type might be insufficient to predict a country’s tolerance for corruption. However, Kim Il-sung's anti-corruption policies had structural limitations as they did not rely on the conventional democratic approach such as the rule of law, checks and balances, elections, and government transparency.
 
In South Korea during the same period, political corruption was rampant under military governments until 1992. Despite considerable efforts to achieve self-reliance through critical national industries such as chemicals and steel, the pervasive network of relationships facilitated corruption. The growth of international trade and business made bribes highly beneficial to company owners, granting them access to profitable contracts.[10] Conventional theories suggest that corruption is detrimental to economic growth, but it can sometimes counteract rigid procedures and bureaucratic governments.[11] This approach contributed to South Korea’s post-war prosperity, as business owners played a significant role in transforming a poor agrarian market into the world’s 10th-largest industrial economy despite the negative aspects of corruption.

2. After the Economic Collapse of the Mid-1990s  

Since the economic collapse of North Korea in the 1990s, corruption has rapidly spread and penetrated the daily lives of its people. Bribery has become a common practice among North Koreans for various activities, such as moving residences, engaging in commercial activities, issuing documents, using medical facilities, receiving job assignments, entering schools, and seeking overseas assignments.[12] Bribery and corruption lead to significant human rights concerns in several ways, including access to basic necessities (food, healthcare, shelter, and work), arbitrary arrest and detention, inhumane treatment in detention facilities, vulnerability to exploitation (especially for women), and lack of rule of law. The kleptocratic government mandates and perpetuates corruption through centralized power, a patronage system, lack of transparency, forced labor and exploitation, leading to severe human rights concerns. As a result, the United Nations Office of the High Commissioner for Human Rights recognized corruption as a serious human rights problem in North Korea and analyzed the state’s kleptocracy as a form of corruption.[13]
 
While it is not possible to explain the corruption status of North Korea by analyzing a single theory or factor, it remains meaningful to compare the corruption in both Koreas from political, economic, and socio-cultural perspectives.

A. Authoritarianism versus Democracy / Centrally-planned Economy versus Capitalism  

In the mid-1990s, the North Korean economy, including its state-run public distribution system, collapsed, partly due to “traumatic” events such as the sudden withdrawal of Soviet support after the dissolution of the Soviet Union (1991) and a devastating famine (1994–1998). The death of Kim Il-sung in 1994 also triggered additional political instability in the country. These circumstances led to corruption becoming a ubiquitous and structuralized problem, rampant in many sectors of economic and social life.[14] Pyongyang’s leadership required new sources of revenue, resulting in the regime deeply engaging in illegal activities abroad, including cybercrime, crypto theft, counterfeiting, arms smuggling, and drug trafficking. Such activities continue today and represent major sources of revenue for the country’s leadership. These illegal activities are closely related to corruption, both as a symptom and a driver of the pervasive corruption within the regime. They involve high-ranking officials’ misuse of state power and resources, and they undermine the rule of law.
 
Low wages in the public sector have further contributed to corruption.[15] The crisis of the 1990s pushed even party officials to the brink of starvation, exacerbating bribery and embezzlement driven by desperation rather than greed. The breakdown of the public distribution system led to widespread embezzlement by citizens and officials with access to state resources. Jonathan Corrado, Director of Policy of the Korea Society stated, “The low salaries of state officials and a lack of oversight meant that people, especially those participating in the informal or market economy, are quite vulnerable."[16] For many, corruption has become a survival strategy, as their wages seldom reach the barest subsistence level.[17]
 
In the 1990s, North Korea was forced to accept de facto marketization, which facilitated corruption as beneficial to the regime, representing a major source of revenue for the leadership.[18] The regime initially tried to suppress marketization for maintaining control over economy and political stability, but failed due to undeniable economic necessity and its role in facilitating economic recovery.[19] In 2002, Kim Jong-il’s regime partly formalized economic liberalization through a set of agricultural and financial reforms[20] to impose post hoc control over the market.[21] In the marketized economy, various forms of corruption became financial wins for not only the regime and officials but also for the individuals involved in market activities. New wealthy entrepreneurs, called “donju”, are said to be an invisible hand of economic development. They have a corrupt symbiotic relationship with the regime and officials, allowing them to bypass restrictions on market activities and gain access to state assets. Pseudo-state enterprises, which are state-owned on paper but controlled by private interests in practice,[22] also tie themselves to the regime as their activities lack a legal framework.[23] From an economic point of view, the corruption of these actors seems to help grease the wheels of a highly regulated economy. Additionally, marketization forced citizens to work in informal black markets, known as jangmadang, and engage in illegal activities to survive. They often had to bribe officials to access and sell food and healthcare products.
 
According to a 2019 survey by the Korea Society, 68% of North Korean defectors spent 10-30% of their incomes on bribery.[24] North Korean people are trapped in a vicious cycle of deprivation and repression, with corruption being one of the few ways to escape this oppressive situation.[25] This reflects the desperate measures people must take to navigate an oppressive system that fails to uphold their basic rights and dignity. This economic burden exacerbates poverty and restricts their ability to improve living conditions, directly impacting fundamental human rights. It creates an environment where human rights are routinely violated, and citizens have little recourse to legal protection. Bribery entrenches social inequality, as those who cannot afford to pay bribes are denied essential services and face harsher treatment.[26] This disparity further marginalizes vulnerable populations, including women and children. Corruption in North Korea is both a symptom and a cause of the broader human rights crisis.
 
In contrast, South Korea inaugurated its first civilian government in 1992 and elected its first opposition president in 1997. Since then, institutional reforms have strengthened democracy, civil rights, and governance quality. The peaceful transition of governments through voting and programmatic competition between the two major political parties has continued. Good governance reforms (1993-2007) led to tangible improvements in transparency (including political finances), corruption control, and governance norms, replacing favoritism and nepotism.[27]
 
Even though South Korea exerted considerable effort to achieve economic development and self-reliance based on critical national industries, the vicious circle of close relationships continued to facilitate corruption. The growth of international trade and business made bribes highly beneficial to company owners by giving them access to profitable contracts. However, after the 1997 financial crisis, civil governments focused on economic reforms, partly due to pressure from the International Monetary Fund’s bailout loan, aimed at enhancing “rapid growth and reduced inequality”[28] in the corporate, labor, and financial sectors. Economic growth and well-established education systems expanded the middle class, while civil organizations and the vibrant civil society also played a significant role in restraining the malfeasance of corporations and officials.[29] These reforms also enhanced accountability and transparency in corporate governance and contributed to market competition and equitable wealth distribution.[30]

B. Rule of Law and Judicial Justice  

Corruption tends to increase where the legal system fails to provide sanctions and penalties for bribed officials. For several years, North Korea has received the worst scores on Trace International’s assessment of ‘Anti-bribery Deterrence and Enforcement’. Due to the absence of the rule of law, high-ranking officials have broad discretionary powers, motivating their clients to gain and retain their goodwill by paying bribes.[31] Additionally, the constant threat of arbitrary arrest and prosecution provides law enforcement officials with opportunities to extort money from citizens desperate to avoid inhumane legal actions.[32] According to KINU’s 2019 white paper, there were many reports of bribery and corruption during investigations, preliminary examinations, and in detention facilities, as well as by judges and prosecutors during trials.[33] The 2014 United Nations Commission of Inquiry report also states that “the vast majority of inmates are victims of arbitrary detention, since they are imprisoned without trial or on the basis of a trial that fails to respect the due process and fair trial guarantees set out in international law.”[34]
 
Ever since he took power in 2011, Kim Jong-un has launched several ‘merciless’ anti-corruption campaigns targeting party officials. However, these crackdowns exclusively focused on keeping mid-level officials from siphoning money that would otherwise flow to higher-ups.[35] There were no systematic efforts to control and curb corruption to ensure the protection and fair treatment of North Korean citizens. This indicates the extent to which tolerance for corruption can shift even within the same totalitarian regime, depending on changes in the economic situation and political needs. This is why simple theories based on regime type or culture cannot predict cross-national variations in corruption.
 
In this respect, North Korea and South Korea remain in stark contrast. The most impressive change after the governance reforms (1993-2007) in South Korea is the frequent prosecution and imprisonment of the political and economic elite. For example, four former presidents, as well as former members of the National Assembly and ministers, were sentenced to prison, and another former president committed suicide amid a corruption investigation into his family. The courts have also found many top executives guilty of corruption related to presidents and politicians. Despite concerns that some politicians have used corruption investigations for political revenge, South Korea has impressed the international community with its effective anti-corruption policy and a law enforcement system that is unprecedentedly responsive to public opinion.[36]
 
In addition, the South Korean government amended the Public Service Ethics Act in 2015 to ensure the fairness of official authorities by preventing conflicts of interest. They also enacted the Improper Solicitation and Graft Act in 2015, which set low ceilings on financial benefits regardless of whether the benefits were related to official duties. These legal and institutional changes strengthened the anti-corruption stance by enhancing citizens’ perception and sensitivity to corruption, creating a virtuous circle of rule of law.

C. Other Conventional “Democratic” Factors  

As mentioned above, the anti-corruption policies of the Kim family had structural limitations because they lacked conventional democratic approaches, unlike South Korea. Although political corruption was rampant under military governments until 1992 in South Korea, the seeds of improved political, economic, and social corruption control were sown and began to grow during this period. For example, land reforms in 1948-1950 changed the class structure by dissolving the landed aristocracy, contributing to a relatively equal distribution of wealth.[37] The rapid expansion of education also established the fundamentals of ethical awareness and integrity, leading to anti-authoritarian movements by students and intellectuals in the 1960s-1980s.[38] Gradual civil service reform, including the expansion of civil service examinations, enhanced merit-based bureaucratic recruitment and promotion from the 1950s to the 1990s.[39]
 
Unfortunately, the Kim family’s anti-corruption campaigns and efforts did not go beyond the framework of authoritarianism and failed to lay the basis for establishing systematic structures that suppress corruption. The absence of democratic factors in North Korea has resulted in systemic corruption, repression, and widespread human rights abuses, where human rights are routinely violated. In contrast, the seeds of fundamental changes have blossomed since the mid-1990s in South Korea, and the levels of corruption in the two countries have become completely different.
 
Concluding Remarks
 
The political and economic systems of both Koreas remain fundamentally different today: democracy versus authoritarianism, and capitalism versus a centrally-planned economy. There are notable differences in their socio-economic structures, such as the nature of bureaucracy, prevailing governance norms, rule of law and law enforcement, distribution of wealth, political party systems, and the stability of civil society. Institutional theory emphasizes these factors as a means of understanding how corruption might become entrenched in society.[40] Additional considerations include a country’s tolerance for corruption and the perception of corruption by officials and citizens.[41] Nevertheless, anti-corruption reforms do not happen naturally in accordance with a specific political or economic system and are not just a byproduct of economic development – they remain a gradual process that requires a change in both structural conditions and people’s perceptions.
 
In summary, pervasive corruption in North Korea has profound and extensive impacts on the human rights of its people. The lack of rule of law and the widespread need for bribery to access basic necessities like food, healthcare, and legal protection perpetuate a cycle of deprivation and repression.[42] High-ranking officials exercise broad discretionary powers, leading to systemic abuse and exploitation of ordinary citizens.[43] The absence of democratic institutions and transparent governance means there are no effective mechanisms to hold corrupt officials accountable or protect the rights of citizens. This environment of impunity allows corruption to flourish, undermining efforts to improve living conditions and human rights in North Korea.[44] Addressing corruption in North Korea requires not only structural reforms but also a fundamental shift in the perception and tolerance of corruption among both officials and citizens. International pressure and support for human rights initiatives can play a crucial role in advocating for these changes. Ultimately, the fight against corruption is essential for ensuring the dignity, freedom, and well-being of the North Korean people.


[1] Benjamin A. Olken and Rohini Pande. “Corruption in Developing Countries.” Annual Review of Economics, 2012. https://www.annualreviews.org/doi/pdf/10.1146/annurev-economics-080511-110917.
[2] Christopher Carothers. “Combating Corruption in Authoritarian Regimes.” Harvard University, Graduate School of Arts & Sciences, 2019.
[3] Ibid.
[4] Rajeev K. Goel and Michael A. Nelson. “Causes of corruption: History, geography and government.” Journal of Policy Modeling, Volume 32, Issue 4, 2010.
[5] Christopher Carothers. “The Rise and Fall of Anti-Corruption in North Korea.” Journal of East Asian Studies, 22(1), 2022.
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9] Christopher Carothers. “The Rise and Fall of Anti-Corruption in North Korea.”
[10] Tanzi, Vito. “Corruption Around the World: Causes, Consequences, Scop, and Cures.” International Monetary Found, May 1998. https://www.imf.org/external/pubs/ft/wp/wp9863.pdf
[11] Bajpai, Rajni and Myers,C. Bernard. “Enhancing Government Effectiveness and Transparency: The Fight Against Corruption.” World Bank Group. 
http://documents.worldbank.org/curated/en/235541600116631094/Enhancing-Government-Effectiveness-and-Transparency-The-Fight-Against-Corruption.
[12] Kyu-chang Lee, Sookyung Kim, Ji Sun Yee, Eun Mee Jeong, Yejoon Rim. “White Paper on Human Rights in North Korea 2020.” Korea Institute for National Unification, September 2020. https://www.kinu.or.kr/eng/module/report/view.do?idx=113738&nav_code=eng1674806000
[13] Joshua Stanton. “The Root of All Evil: Money, Rice, Crime & Law in North Korea.” The Committee for Human Rights in North Korea, 2023. https://www.hrnk.org/wp-content/uploads/2024/07/Root_of_All_Evil.pdf.
[14] Changyong Choi and Balazs Szalontai. “The Challenge of Corruption Control in a Post-Unification Korea: Lessons from Germany and the Former Soviet Bloc.” SSRN, 2020.
[15] Vito Tanzi. “Corruption Around the World: Causes, Consequences, Scop, and Cures.”
[16] Taeksung Oh. “North Korea's Corruption Perception Index ranks at the lowest in the world - the Prevalence of bribery compulsion(북한 부패인식지수 세계 최하위권, 뇌물 강요 만연),” VOA Korea. January 29, 2021. https://www.voakorea.com/a/korea_korea-social-issues_corruption-north-korea/6055808.html&sa=D&source=docs&ust=1688014176050971&usg=AOvVaw3Zghn3YahRFF7h3evkgOEF.
[17] Daily NK. “KPA Corruption: A Necessary Evil?.” April 6, 2015. https://www.dailynk.com/english/kpa-corruption-a-necessary-evil/; Daily NK, “In sanctioned North Korea, bribery problem worsens.” January 9, 2018. https://www.dailynk.com/english/in-sanctioned-north-korea-bribery/.
[18] Christopher Carothers. “The Rise and Fall of Anti-Corruption in North Korea.”
[19] Ibid.
[20] Ibid.
[21] Marcus Noland. “Transition from the Bottom-Up: Institutional Change in North Korea.” Comparative Economic Studies, 48(2), February 2006.
[22] Andrei Lankov. “The Real North Korea: Life and Politics in the Failed Stalinist Utopia.” Oxford University Press, 2015. 
[23] Christopher Carothers. “The Rise and Fall of Anti-Corruption in North Korea.”
[24] Taeksung Oh. “North Korea's Corruption Perception Index ranks at the lowest in the world - the Prevalence of bribery compulsion.”
[25] UN Office of the High Commissioner for Human Rights. “The Price Is Rights: The Violation of the Right to an Adequate Standard of Living in the Democratic People’s Republic of Korea,” May 2019. https://www.ohchr.org/Documents/Countries/KP/ ThePriceIsRights_EN.pdf.
[26] Ibid.
[27] Jong-sung You. “Process-tracing paper: Development of Corruption Control in South Korea”. Australian National University. Jul 2015. https://www.againstcorruption.eu/wp-content/uploads/2015/05/Process-Tracing-of-Corruption-Control-in-South-Korea.pdf.  
[28] World Bank. “The East Asian Miracle.” Oxford University Press, 1993. https://documents1.worldbank.org/curated/en/975081468244550798/pdf/multi-page.pdf.
[29] Jong-sung You. “Process-tracing paper: Development of Corruption Control in South Korea.”
[30] Ibid.
[31] Young-Ja Park. “Informal Political System in North Korea: Systematic Corruption of ‘Power-Wealth Symbiosis’.” International Journal of Korean Unification Studies, 24:1, 2015.
[32] UN Office of the High Commissioner for Human Rights. “The Price Is Rights: The Violation of the Right to an Adequate Standard of Living in the Democratic People’s Republic of Korea.”
[33] U.S. Department of State. “2019 Country Reports on Human Rights Practices: Democratic People's Republic of Korea.” Bureau of Democracy, Human Rights, and Labor, 2020.
https://www.state.gov/reports/2019-country-reports-on-human-rights-practices/north-korea/.
[34] Report of the Commission of Inquiry on human rights in the Democratic People’s Republic of Korea -­ A/HRC/25/63. A.HRC.25.63.doc (live.com)
[35] Ethan Jewell. “North Korea the world’s most corrupt country for 3rd straight year: Report.” NK News. Nov 16, 2022. https://www.nknews.org/2022/11/north-korea-the-worlds-most-corrupt-country-for-3rd-straight-year-report/.
[36] Carothers C. “Corruption Control in Authoritarian South Korea. In: Corruption Control in Authoritarian Regimes: Lessons from East Asia.” Cambridge University Press. 2022.
[37] Jong-sung You.  “Process-tracing paper: Development of Corruption Control in South Korea.”
[38] Ibid.
[39] Ibid.
[40] United Nations Office on Drugs and Crime. “Knowledge tools for academics and professionals. Module Series on Anti-Corruption: Module 4 Public Sector Corruption.”
[41] Ibid.
[42] UN Office of the High Commissioner for Human Rights. “The Price Is Rights: The Violation of the Right to an Adequate Standard of Living in the Democratic People’s Republic of Korea.”
[43] Ibid.
[44] Christopher Carothers. “The Rise and Fall of Anti-Corruption in North Korea.”