Unable to agree on a formula for unification, in 1948 the Republic of Korea (ROK) was proclaimed in the zone of US occupation in the South with a capitalist economic system while the Democratic People's Republic of Korea (DPRK) was established in the North adopting a Stalinist style communist system of government.
Mountains cover about 80 percent of North Korea and has a colder climate. Plains stretch along the western and northeastern coasts of the country. Most of North Korean people live on the coastal plains or in river valleys. The division of the Korean Peninsula resulted in around 65 percent of the heavy industry and infrastructure in the North, but the majority of the population in the largely agrarian South.
Until the 1900's, the economy of the Korean Peninsula was based entirely on agriculture, and almost all Koreans worked as farmers. Today, industry is more important than agriculture in both North and South Korea. In North Korea, the economy is dependent on heavy industry, and the government controls nearly all economic activity. North Korea's economy is far less developed than that of South Korea. Even before the partition of the Korean Peninsula in 1945, the economy of the colder and more mountainous north was focused on industrial production and imported food from the south (Bhatia et al, 2002).
After partition, North Korea relied on trade and food subsidies from the former Soviet Union to help meet its food needs, while pursuing environmentally aggressive and unsustainable techniques to maximize the output of its land, only 20 percent of which is arable. Continuous cropping has led to soil depletion and the overuse of ammonium sulfate, as nitrogen fertilizer has contributed to acidification of the soil and a reduction in yields. The need to bring more and more marginal land into production has caused deforestation that in turn has increased the rapidity of runoff, soil erosion, and riverbed silting and, ultimately, has led to flooding (Noland 2000).