KINU study looks to mineral wealth to cover unification costs

According to Yonhap:

South and North Korea can drastically reduce the costs of their potential unification by taking advantage of natural and human resources in the North, a [South Korean] state-run institute said Tuesday.

North Korea has about 300 kinds of mineral resources, including magnesite, iron ore and rare earths, the Korea Institute for National Unification said in a report.

The potential value of North Korean mineral resources is as much as 6,984 trillion won (US$6.6 trillion), which could far outweigh the costs of unification, it said.

Experts estimate it could cost South Korea about US$1 trillion to $5 trillion to unify with the impoverished North, whose per capita income is about 5 percent the size of Asia’s fourth-largest economy.

Still, the institute said the benefits of unification could far outweigh its costs as the unified Korea could enjoy unimaginable economic synergy effects of their economic integration.

The think tank forecast the unification cost can be reduced to one-tenth of the estimates, as long as the North embraces the Chinese-style reform and opening policies.

The potential unification would marry South Korean capital and technology with cheap North Korean labor and rich natural resources, a prospect that could make the unified Korea an economic powerhouse, the institute said.

The institute also held out the prospect of building social infrastructure in North Korea and linking Russia’s gas pipeline to the peninsula as well as rebuilding houses in the North.

The report comes amid no clear signs that the two Koreas, divided for nearly six decades, could be reunited anytime soon.

Seoul has been working on the details of a special tax that would help finance the costs of potential unification. The move came as President Lee Myung-bak last year floated the idea of using taxpayers’ money to cushion the cost of unification.

North Korea, which has long suspected that Seoul could seek to absorb the North, has lashed out at the proposed unification tax.

Read the full story here:
Think tank says unification cost can be reduced to one-tenth of estimates


One Response to “KINU study looks to mineral wealth to cover unification costs”

  1. Gag Halfrunt says:

    I suppose that by “potential unification” they mean a transitional period of gradual economic integration during which South Korean companies would take advantage of cheap North Korean labour. The North surely won’t still be a convenient reserve of cheap labour after unification has taken place.