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Worldwide remittances to developing countries reached $325 billion in 2010. A whole subfield of development economics studies these financial flows. Among the commonly accepted findings is that household receipt of remittances is associated with greater schooling for children, better access to medicine, and higher rates of business formation.
For some time, it has been known that the roughly 20,000 North Korean defectors in the South send remittances back to the North. A preliminary survey conducted in October by the Organization for One Korea, which supports North Korean defectors in the South, found that nearly 80 percent of those surveyed had sent money back to relatives in the North, with individuals surveyed on average remitting between 1.5 and 2 million won a year ($1350-1800). The Chosun Ilbo now reports an unnamed South Korean government official claiming that remittances have reached $10 million a year.
Commissions on these transactions--which are technically illegal in the South--are 30 percent and higher because of the risk to the Chinese-Korean brokers who undertake the transactions. It has been alleged that only 1 out of every 2 won eventually reaches its intended recipient in the North.
Whatever does get through is subject to extortion in North Korea as well, particularly around the holidays. It has been claimed that in North Hamgyong province in particular, remittances are now the basis of a non-negligible share of the economy—and of income for local officials. More interesting is the suggestion by the Daily NK that such predation is not only personal, but reflects quotas allocated to NSA agents to secure desirable luxury items for higher-ups.
If the patterns observed in other countries hold in North Korea, it could amount to the revenge of the politically unreliable. Households receiving remittances from defectors—including nominally traitorous ones residing in South Korea—would be better able to afford education and health care (which costs money regardless of regime claims) and would be better placed to take advantage of the opportunities created by the economy’s partial marketization.
