Growth Disasters and Growth Miracles: Korea

North and South Korea were practically the same before it was split into two countries. If anything, North Korea was wealthier than the south. However, after the end of the Korean War, two countries were formed. North Korea was seized by communists and run as a military state. South Korea was seized by capitalists. Now, North Korea is a poor country with a starving population. Meanwhile, South Korea has a very good economy, exporting everything from cars, movies, and cosmetics. Why the difference? North Korea is run very tightly, people aren't allowed to own businesses or own profit. Everything is controlled by the state. In South Korea, people are allowed to open businesses, sell products and services, and earn profit. The incentive is to create. Meanwhile, North Korea does not have this incentive, that is why people do not create products, not even enough food.