OECD on Korean unification costs

According to Yonhap:

The widening inter-Korean economic and social gaps could eventually increase the cost of unification, a report showed Friday, highlighting the importance of the private sector’s role in “limiting the gap.”

According to the report compiled by the Organization for Economic Cooperation and Development, South Korea’s economy is about 38 times larger than the North’s and 18 times larger on a per-capita basis as of the end of 2008.

North Korea’s total trade volume remains just 0.4 percent of South Korea’s, while production of electricity and steel stands at a mere 6 percent and 2.4 percent, respectively, the report showed.

The report also noted that the North Korean economy grew 3.7 percent in 2008 following two years of contraction but its currency reform in late 2009 triggered “serious economic problems,” pointing to a tough road for the reclusive country’s future growth.

The North is also showing a marked gap with the South not just in the economic field but also in social and welfare areas such as high infant mortality rates and relatively short life expectancy, according to the report.

“The large gap in income and health will boost the eventual cost of economic integration,” said the report.

“The expansion of trade driven by private sector firms in the South, in line with the government’s strategy of limiting cooperation to projects that are economically viable and that do not overburden taxpayers in the South, provides the best hope for limiting the gap,” it added.

The report comes as inter-Korean trade and investment except for an industrial park in the border town of Kaesong was suspended after a multinational investigation recently proved that the North torpedoed one of South Korea’s patrol ships in March, killing 46 sailors.

The two Koreas are still technically at war as no peace treaty was signed at the end of the 1950-53 Korean War.

Of course, Yonhap does not bother to tell us the name of the study or provide a link!

I think I found it however. I am 99% confident that Yonhap is citing the OECD Economic Surveys: Korea 2010.

The reason I was able to locate the report was because one of the quotes Yonhap provided above was used word-for-word in the OECD Economic Surveys: Korea 2008. Check out the last sentence of paragraph 2 on page 54.


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