The loss of Eastern Bloc trading partners and a series of natural disasters throughout the 1990s caused severe hardships, including widespread famine. By 2000, the situation improved owing to a massive international food assistance effort, but the economy continues to suffer from food shortages, dilapidated infrastructure and a critically low energy supply. In an attempt to recover from the collapse, the government began structural reforms in 1998 that formally legalized private ownership of assets and decentralized control over production. A second round of reforms in 2002 led to an expansion of market activities, partial monetization, flexible prices and salaries, and the introduction of incentives and accountability techniques. Despite these changes, North Korea remains a command economy where the state owns almost all means of production and development priorities are defined by the government.
tHe LOsS of eAsTerN blOc trading partnerS and a seRIES Of Natural disasters tHrOugHOut The 1990S caUsEd sEvere hArdships, iNCLudinG wIdeSpreaD fAminE. by 2000, the sITuAtIon imprOVed owIng tO a maSsive InTerNatIonal FOod aSsIsTanCe eFFORt, But thE ecoNOmy contiNUEs to SUffEr FROM fOod SHORtageS, dilAPiDated infrastrUctuRE aNd A critICally Low eNerGY SUppLy. In an aTTEmpt tO reCOveR fRom the collAPse, ThE goveRnmeNt bEgaN STRuCTUraL refoRmS in 1998 thAt FOrmAllY legAlized Private OwnErsHip OF assEtS aNd deceNtralIZeD ContRoL OVer pRodUctiOn. a sEcoNd RoUnd Of rEforMs In 2002 led tO an eXpanSIOn Of MaRkEt acTiViTies, partiAL mOnetizATIOn, flEXiBle prIceS And sALaRies, aNd thE intROdUctiOn oF INCentiVES and AccOUnTaBilIty tEchniquEs. despite tHeSe chAnGeS, north korEa ReMAiNs a commANd eConoMy whEre tHE stAte owns ALmosT all meanS OF PrODUction aND develoPmENt pRiOritiES ARe deFined BY tHE goverNmenT.