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Writer's pictureSoEun Park

Reconsidering the Costs and Benefits of Korean Reunification: From Two to One Nation

By SoEun Park

Foreign Affairs


The Korean War and Prospects of Korean Reunification 

In the years since the Korean War ended in 1953, North and South Korea have been divided by the 38th parallel with no prospect of reunification in sight. The Korean War was primarily a proxy war and a symptom of the Cold War between the United States and the Soviet Union. As the United States supported the South and the Soviet Union the North, both sides viewed themselves as the rightful government of the whole of Korea, and neither acknowledged the opposite side as being legitimate. As tension escalated, North Korea invaded South Korea and captured Seoul. On June 25th, 1950, President Truman “announced the U.S. would resist North Korean aggression” and received support in the UN to put together “an international, mostly American, military force,” thereby initiating a military intervention in the Korean War. [1]


In the aftermath of this devastating war, North and South Korea transitioned from one country to two neighboring but foreign countries. Seventy years later, these two countries have not compromised their different systems and ideologies, and reunification has constantly been challenged.


There seems to be reluctance among young people in South Korea about unification. In 2011, President Lee Myung-bak stated, “Young people think the financial sacrifice will be huge. That’s why they may have negative emotions toward unification.” [2] Although reunification remains the preferred method of ending the long division of the peninsula, many South Koreans consider North Korea a foreign country, albeit they share the same language and ancestry. Thus, Korean youth are increasingly contemplating alternatives such as permanent separation.


When exploring the reasons for attitudes changing, a lot of factors need to be taken into account. Because it has been about almost seventy years since the Korean War, there have been reduced familial ties and linkages with the North as time passed. In addition, South Korea’s mindset has been moving closer to the west, with rapid increases in wealth and advances in communications and transportation, in contrast to the North, where these increases are nearly stagnant. However, the most potent catalyst is the monetary cost of unification, which could surpass $2 trillion. [2] Thus, for reunification to occur, the Republic of Korea would need to highlight the economic benefits of reunification and portray the costs as benefits. This investigation will explore both the benefits and costs of reunification. 


Benefits of Korean Reunification

In considering reunification, economic factors are among the most important. Immediate economic benefits will allow both sides to profit from this unification. North Korea can benefit from the capital and technology from South Korea and neighboring countries. In contrast, South Korea would benefit from North Korea's abundant labor, land, and natural resources, including its mineral reserves. [3] This would also include North Korea's inexpensive labor, which averts the South Korean economy from hallowing out in manufacturing sectors. In addition, South Korean construction firms will also benefit due to the infrastructure requirement in North Korea. [2] 

 

With the unification of the two Koreas, South Korea will also be able to ease the burden of its low birth rate and aging population, which has increased dramatically in recent years. Since North Korea consists of a relatively young demographic, this will significantly aid these rates. Furthermore, North Korea's underutilized landmass and mineral resources provide opportunities for further development of the unified Korean economy. These landmasses can be utilized for activities involving external capital, and North Korea's abundant and diverse mineral wealth could also develop the economy. [3]

 

Reunification will not only alleviate South Korea's greatest challenges but will also create substantial savings that will result from reduced military expenses. This will redirect more capital to more productive parts of the Korean economy. [4] Reunification also means a decrease in transportation; currently, South Korea resembles an island economy troubled by high transportation costs. 

 

Security and political situations will improve in Northeast Asia; Japan can efficiently resolve the abduction issue, China doesn't have to be concerned about potential refugees into the Jilin province, and South Korea and Japan wouldn't have to worry about nuclear attacks from North Korea. [4] By affirming commitment by both Korean states to renovate North Korea's transport infrastructure, this will bring political and security benefits for the region and substantial economic benefits. Transport between the Koreas and other neighboring countries such as China, Russia, and Japan will be more accessible and less costly. [5] Furthermore, there would be more economic opportunities for trade and investment for China, Korea, and Japan. [4]

 

As North Korea's missiles, weapons of mass destruction, provocations, and so forth are no longer a threat on a global scale, the likelihood of a war in or over Korea is reduced. [6] This demonstrates that the considerable land left along the demilitarized zone in the 38th parallel can also be used for more productive civilian purposes as well. On a global humanitarian scale, reunification will also aid in stopping human rights abuses in North Korea, which have been increasingly escalating since the Korean war. 


Costs of Korean Reunification

However, unification comes at a heavy economic and monetary price. In 2021, South Korea's GDP per capita was $27,490. [7] In contrast, North Korea's GDP per capita was approximately $1,700. [8] For South Korea, financial sacrifice and investment would be significant: one reason why many South Korean youth are leaning towards the anti-reunification sentiment. Doubling North Korean GDP range from $50 billion to $700 billion will require a mid-range of investment costs between $330 and $350 billion. This would mean that the annual investment would range from $60 to $70 billion if spread over five years. [4] Along with humanitarian assistance and resettlement, this cost could rise further if a threatening conflict occurs before the nations reunify, akin to what happened in Vietnam. [9] This will lead to decreases in wealth for South Korea, at least temporarily. 

 

Additionally, infrastructure expenditures will substantially increase the cost of reunification. When looking at North Korea's infrastructure, its utility and transportation grids are subordinate to South Korea's. South Korea is one of the most developed and high technological countries in the world, while internet connectivity is infrequent in North Korea. North Korea also has inadequate underinvestment in human capital. Basic literacy is low, and due to famine and continuing malnutrition in the mid-1990s, this has "stunted the cognitive and physical growth of an entire generation of North Koreans." [2]

 

A great amount of investment would be required for the South's assimilation of a population half its size and far poorer. Since a quick attempt to harmonize Northern and Southern incomes will ultimately fail, one solution would be a RAND model––the model that aims only to triple the existing Northern GDP rather than pegging North Koreans' income as a percentage of Southerners' income––suggested by the RAND Corporation. [2]

 

Looking Forward  

Both costs and benefits should certainly be considered when scrutinizing the prospect of Korean reunification from two countries into one nation. While there are economic benefits and improved security and political situations internationally on a global scale, the monetary and financial cost of unification might stagnate progress. Currently, many South Koreans are against the idea of reunification as they focus on the costs rather than the benefits. Reshaping public opinion is no easy task and will require great patience and, furthermore, significant resourcing. Although many difficulties and compromises will entail, the costs don't have to be considered a non-starter, rather a factor for two countries to become one unified country once again. 



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