October 27, 2014
Satellite lights study shows sanctions against North Korea create urban-rural divide, Stanford scholar says
Stanford economist Yong Suk Lee found that North Korea's dictatorship counters the effects of international economic sanctions by reallocating resources to urban centers and away from poor, rural areas. The research involved the use of satellite lights data to determine economic activity.
By Clifton B. Parker
The government of North Korea shifts the burden of international sanctions away from the cities and to the countryside, according to Stanford economist Yong Suk Lee. (Photo: jensowagner/Wikimedia Commons)
The North Korean regime has adjusted to international sanctions by shifting that economic pain away from cities to the countryside, new Stanford research using satellite night lights data shows.
U.S. policy toward North Korea has been based on the expectation that economic sanctions could deter North Korea from developing nuclear weapons or change the behavior of the regime, according to Yong Suk Lee, a Stanford economist at the Freeman Spogli Institute for International Studies.
Since 1950, both the United States and the global community have adopted a series of economic sanctions against North Korea. The latest came in 2013 when the United Nations approved restrictions on banking, travel and trade in response to North Korea's underground nuclear test and threat to launch nuclear strikes against the United States and South Korea.
In a working paper, Lee examined how North Korea's Communist rulers have adapted to the increasingly tougher sanctions through the years.
"North Korea is one of many autocratic regimes that refuse to yield to sanctions, and its isolation and hereditary dictatorship make it a particularly good example to study the impact of economic sanctions in autocratic regimes," said Lee, the SK Center Fellow and a member of the Korean Studies Program at Stanford's Walter H. Shorenstein Asia-Pacific Research Center.
North Korea is one of the poorest countries in the world, Lee noted. Its leaders follow an economic model based on a centrally planned economy and self-imposed isolation from the rest of the world.
Lee's research was based on nighttime views of lights from data collected by the U.S. Defense Meteorological Satellite Program. The researcher created "average luminosity" measures of lights across North Korea based on a 1-mile-by-1-mile grid for the years 1992 through 2010. Light usage was examined for brightness on one-minute intervals.
To predict the impact of sanctions on economic activity in North Korea, Lee used a formula that transformed the luminosity measures into GDP measures. For example, a 10 percent change in the satellite lights is associated with about a 3 percent change in GDP.
According to Lee, satellite data is of greatest utility in assessing the economies of cities and regions in the developing world. In a country like North Korea, a large part of economic activity happens during the evening and night and involves light. For example, lights at night are generated by peoples' consumption of goods and services as well as transportation. And some production activities happen during the evening hours.
"Economists have found that how bright night lights are can predict national and sub-national GDP quite well, especially in countries where GDP data is not reliable," he said.
Lee found that economic sanctions decreased luminosity in the hinterlands, but increased luminosity in urban areas, especially toward the centers. As for whether additional sanctions affected luminosity, he found they increased the urban-rural luminosity gap by about 1 percent. When he examined the more central urban areas, the gap increased by about 2.6 percent.
"The results suggest that the dictatorship countered the effects of sanctions by reallocating resources to the urban areas," Lee said. One could surmise that the economic sanctions do not affect the country's leadership much, he said.
The hinterlands responded to declining economic fortunes by relying more on trade with China near those border areas, Lee added. In fact, the sanctions generated more North Korean migration to China and reliance on Chinese merchants and goods. North Korea's border with China is relatively porous as opposed to its heavily militarized border with South Korea.
The upshot, Lee said, is that sanctions that fail to change the behavior of an autocratic regime may eventually increase urban-rural inequality.
"Sanctions will likely be inefficient as long as North Korea can maintain powerful centralized control and oppress any discontent that arises due to increasing inequality," he said.
Lee added that sanctions will most likely not deter North Korea's nuclear weapons activities. They have not done so yet, and at this point, North Korea's leaders view sanctions as inconveniences, but not regime-threatening. Plus, even the harshest sanctions would be unlikely to stem the flow of all goods, energy and money into North Korea. Not all countries would go along with draconian trade restrictions that hurt the poorest people the hardest, he said.
"Even if sanctions were imposed to full capacity, the marginalized population would suffer the most," said Lee, adding that he was actually surprised about his project's findings.
"One can always hypothesize a story but to actually find such effect in the data was quite exciting. Frankly, I pursued this project expecting that I wouldn't find any impact of sanctions on lights," he said.