Effects of Unification
Minister of Unification Ryu Gil-jae delivered a congratulatory speech at the international seminar for “analyzing benefits and costs of Korean unification for four surrounding countries” hosted by the Korea Institute for International Economic Policy (KIEP) in the Conrad Hotel located in Yeouido, Seoul on Sept. 17.
Professionals from the U.S., China, Japan, and Russia all claimed that unification of Korea would be a jackpot for all the surrounding countries. Over US$200 billion in economic benefits were calculated from analyses on various simulations.
Marcus Noland, executive vice president at the Peterson Institute for International Economics, evaluated, “If Korea is unified upon the rapid breakdown of North Korea, and North Korea is absorbed into South Korea, economic sanctions on North Korea will be lifted immediately without any complicated legal and political problems. Then trading with the U.S. will increase at least US$960 million, and growth will reach US$20 billion after ten years.”
Jin Jingyi, professor at Peking University, analyzed, “If Korea is unified peacefully, the GDP of three Northeast provinces in China – Liaoning, Jilin and Heilongjiang – which have been underdeveloped due to insufficient trading and foreign investment, will enhanced by more than US$162.6 billion.”
Fukao Kyoji, professor at Hitotsubashi University of Japan, said, “If Korea is unified peacefully, the GDP of Japan will increase by US$24.6 billion (0.5 percent of GDP of Japan in 2015) and 210,000 new jobs will be created due to an increase in exports.” Professor Fukao assessed, “Demand expansion from a unified Korea will increase the GDP and employment of trading counter-parties such as the U.S. and Japan, which are currently suffering from low demand.” Alexander Zhebin, director of the Centre for Korean Studies at the Russian Academy of Sciences in Moscow, diagnosed, “Unification through reconciliation and cooperation is the most likely scenario. In this case, Russia will be able to earn US$5 billion through connecting an oil pipeline.” He also expected that trading with Korea will increase and investment in the Far East will expand.
However, not everyone projected a positive outcome at this event. Sung Han-kyung, a professor of the School of Economics at the University of Seoul, pointed out, “Imports might surge right after unification, and this could lead to high volatility in foreign exchange rates. Foreign loans might increase as well.” Regarding this, Professor Fukao added, “Right after unification, the current deficit of Korea would reach 10 percent of GDP due to rising imports.”