South Korea could save more than W170 billion in reunification cost and speed up reunification by 11 years if it gives substantial aid to North Korea, a study suggests (US$1=W1,125).
Park Yong-joo of the National Assembly Budget Office announced his findings at a forum hosted by the Chosun Ilbo on Monday. Supposing the two Koreas reunite in 2026, the study says the cost of reunification would vary significantly depending on the amount of money South Korea spends to aid North Korea over the next 10 years.
If Seoul continues its limited engagement with Pyongyang, North Korea would only reach two-thirds of the income level of South Korea in 2076, while reunification cost would balloon to W4,822 trillion.
But if South Korea were to give W272 trillion to North Korea to develop its food and agriculture industries and W193 trillion in medical aid over the next 10 years, the North would reach the two-thirds income level 11 years earlier or in 2065, while reunification cost would fall to W3,100 trillion.
The study said as North Korea's birthrate rises, the chronic aging of South Korean society could be eased, boosting both the labor productivity and economic growth potential.
It forecast that South Korea's medical spending and other welfare costs would also decrease following reunification.