North and South Korea
estimated $18 billion achieved in 2020. 4 Considering the difference, it SEEMS impossible to raise North Korea up to the same level as its counterpart without the South suffering a large financial burden. Moreover, regarding the population’s lo w wealth status, North Korea faces a poverty crisis, with 60% of its population living under the poverty line, compared with the South ’s 14.4%. 5 If reunification were to occur, it is obvious that South Korea would have to bear the financial costs to provide for 25 million more people, most of whom are malnourished, extremely poor and deprived of basic needs (such as a reliable food and water source). 6 However, South Korea is not itself without financial problems, the most important being a national debt of more than $726 billion. 7 It is estimated that the financial burden on the South totals up to $1 trillion, providing all the more reason against reunification. 8 The consequences would be high taxes for generations, multiplied national debt, low investor confidence and overall economic stagnation. Despite the daunting financial prospects of reuniting the peninsula, it can be argued that the benefits in the long run outweigh the economic costs. The major premise of this argument lies in the abundance of minerals under the mountainous North. In 2012, a South Korean research institute estimated that the total value North Korea’s mineral wealth reaches $10 trillion, ten times larger than the estimated costs of reunification. 9 As well as containing over 200 minerals such as magnesite, coal, uranium and iron ore, it includes an abundance of rare metals needed for the construction of mobile phones – opening a new high-demand market. 10 Also, an added 25 million to the southern 51 million 11 population would deliver more labour. Therefore – taking a macroeconomic perspective – an increase in both natural and human capital would improve productivity (being both factors of production), thus increase Real National Output in the long run. To handle this increase in workers, there are potential infrastructure projects such as building roads, railways and offices which – as well as make trade more efficient – provide jobs for Koreans (thus reducing the risks of unemployment). Moreover, South Korea has already proven that it is capable of overcoming extreme economic distress. Prior to 1960, its GDP 4 North Korea GDP, https://tradingeconomics.com/north- korea/gdp#:~:text=GDP%20in%20North%20Korea%20is,according%20to%20our%20econometric%20models [consulted 1/9/21]. 5 Poverty in North Korea, https://borgenproject.org/tag/poverty-in-north- korea/#:~:text=North%20Korea%20and%20Poverty&text=Since%201948%2C%20its%20population%20has,Korea's %20population%20lives%20in%20poverty [consulted 1/9/21]; see also South Korean Population below poverty line, https://www.indexmundi.com/south_korea/population_below_poverty_line.html [consulted 1/9/21]. 6 World Bank – North Korea, https://datacommons.org/place/country/PRK?utm_medium=explore&mprop=count&popt=Person&hl=en [consulted 31/8/21]. 7 South Korea: National debt from 2016 to 2026, https://www.statista.com/statistics/531663/national-debt-of-south- korea/ [consulted 2/9/21]. 8 What North and South Korea would gain if they were reunited, https://www.economist.com/graphic- detail/2016/05/05/what-north-and-south-korea-would-gain-if-they-were-reunified [consulted 31/8/21] . 9 Ibid. 10 Goldman Sachs – Kwon G, A United Korea? Reassessing North Korea Risks, https://www.nkeconwatch.com/nk- uploads/global_economics_paper_no_188_final.pdf [consulted 1/9/21]. 11 World Bank – South Korea, https://datacommons.org/place/country/KOR?utm_medium=explore&mprop=amount&popt=EconomicActivity&cpv =activitySource%2CGrossDomesticProduction&hl=en [consulted 31/8/21].
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