Kim Jong-un, North Korea's leader and so-called "Great Successor" will not be amused this weekend.

From the capital Pyongyang his officials had spent all last week trumpeting the imminent launch of a long-range ballistic missile capable of carrying a modern communications satellite into space but when the moment arrived the giant rocket plunged back to earth and crashed into the waters of the Yellow Sea.

The humiliation for the newly anointed 28-year-old president is not just a setback for his leadership. It is a major blow for his secretive and cash-strapped country, desperate to cement its position as a regional power. By successfully completing the mission, North Korea would also have cocked a snook at the international community, which had already deplored the launch as an unnecessary provocation and a breach of UN resolutions aimed at curbing North Korea's nuclear ambitions.

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For years North Korea has been a thorn in the side of the West and a danger to its neighbour South Korea – yet it is dependent on handouts from China, mainly foodstuffs and fuel. To get some idea of its precarious position the £533 million spent on developing the failed missile could have provided the country with 2.5 million tons of corn and 1.4 million tons of rice, thereby helping to alleviate poverty for millions of long-suffering ordinary people who will now continue to go hungry.

But all the warnings and timely advice went unheeded by the leadership in Pyongyang. From the outset the exercise had a dual purpose. Not only would it supply North Korea's forces with a potent weapons system to threaten neighbouring countries, but the missile launch was intended to glorify Kim Jong-un and cement his place as the worthy and rightful successor to his father. The timing was significant, too, coming as it did just before today's centenary of the birth of the country's founder Kim Il Sung – King Jong-un's grandfather.

In North Korea this matters. When the new president came to power last year he was simply following in his father's footsteps and had no electoral legitimacy. With the army behind him Kim Jong-un is probably secure for now but political power in North Korea is not just about ownership, it is also about perception.

Since taking power Kim Jong-un has had to demonstrate three distinctive personal qualities – that he was universally accepted as the country's legitimate leader, that he could maintain and retain the concept of "face", and that in him existed the capacity always to be seen as right. In the space of less than two minutes on Friday those hopes were blown away as the ill-starred missile plunged not skywards but back into the sea off the country's west coast.

Normally such an embarrassing turn of events would have been welcomed by North Korea's neighbours who live in fear that the generals in Kim Jong-un's army will one day attack the south, just as they did in 1950 to spark the Korean War and then threaten Japan. But in spite of last week's setback the danger remains. There is a new fear in Seoul and Tokyo that North Korea will find comfort by accelerating the development of a nuclear weapon at its facility at Punggye-ri in the north-east of the country.

This was the site for two previous tests in October 2006 and May 2009, and already US satellite surveillance has picked up enhanced activity hinting at a renewal of nuclear testing.

Two factors suggest a test is imminent. The North Korean regime has long been adamant they have every right to develop nuclear weapons and the fact they have tested two bombs in the past suggests they are capable of detonating a third. With last week's missile failure they will now want to restore "face" by succeeding with a fresh technological venture.

The missile failure was probably due to haste in order to make its launch coincide with today's centenary but, according to North Korean military analyst retired US Air Force Colonel Cedric Leighton, it was also an embarrassing propaganda setback: "The failure to launch this satellite means that they really have a problem with developing technology, delivering technology and then, in the case of these rockets, making it actually work for them."

It is unlikely if the Great Successor will tolerate a second failure.

■north korea