Korean Reunification Would Be At High Price

Nearly all South Koreans say reunification with North Korea will come someday. But many analysts in Korea and the United States say hopes for a unified Korea within the next decade are probably too optimistic.

“The South Koreans are not unique in engaging periodically in wishful thinking,” said Norman D. Levin, a senior analyst at Rand Corp. in Santa Monica, Calif. “The same thing can be said of some folks I know in Washington.”

Nevertheless, scholars are trying to pinpoint the costs of reunification, mostly based on comparisons with Germany.

To bring North Korean incomes, estimated at $910 per capita in 1996, up to 50 percent of the standard of living in the South, where per capita income that year was $10,548, would cost an estimated $200 billion to $260 billion, according to Lee So Hang of the Institute of Foreign Affairs and National Security. Matching South Korean standards could cost $1.86 trillion.

But things might not be so grim, argued economist Marcus Noland of the Institute for International Economics in Washington.

In a new calculation based on computer modeling, Noland found that in the best-case scenario, reunification could leave South Korea at least $3.5 billion a year richer than it is now. At worst, it would spend at least $50 billion per year supporting its northern comrades.

What is most interesting about Noland’s scenario is that the best-case option for South Korea also turned out to be the best for North Korea. “It means there is no necessity for conflict between the economic interests of South and North Koreans,” Noland said.