Korea Faces Bigger Reunification Burden Than Germany

      November 10, 2009 10:42

      The German government spent at least 1.2 trillion euro on reunification over the two decades since the fall of the Berlin Wall in 1989. Half of that was spent on welfare for East German pensioners or unemployed people, while 160 billion went into infrastructure and 90 billion on the agricultural sector.

      The total is 4.5 times the 1 trillion Deutsche Mark estimated at the time of reunification. Welfare proved much more expensive than the original estimate due to massive unemployment in the East. Even now, 100 billion euro or 4 percent of Germany's GDP is being spent on the former East every year. Germany's GDP in 2008 was 2.5 trillion euro. As the world's third largest economy with a consistent US$150 billion annual trade surplus, it has been able to bear the massive reunification cost without going bankrupt.

      But what about Korea? According to studies by Korea University professor Hwang Eui-gak and the Presidential Commission on Policy Planning, the reunification cost for Korea would be at least US$1.2 trillion, and around 10 percent of South Korea's GDP every year would have to go to North Korea for some time. The proportional burden is 2.5 times greater than West Germany's. Four West Germans had to feed one person in East Germany, the richest of the Socialist countries, but in case of Korea, two South Koreans would have to pay for every one person in North Korea, one of the poorest countries in the world.

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