May 30, 2012 09:41
A reunified Korea would be capable of joining a select group of countries with a per-capita income of over US$30,000 and a population of 80 million, some pundits believe.
South Korea's population is expected to reach 50 million next month amid a per-capita income of nearly $20,000. Reunification with North Korea would bring the population to about 72 million.
Only the U.S., Japan and Germany have managed a per-capita income of over $30,000 with populations over 80 million. The rest are either populous but poorer or rich but smaller.
To reach that level, Korea would have to rely far more than it does now on domestic consumption and reduce its dependence on exports. Domestic consumption accounts for 70 to 80 percent of the U.S. and Japanese economies. "If the economy gets bigger due to a growth in the population, it would become less vulnerable to external shocks despite trials and errors as it pursues innovative steps," said Kim Hyung-joo at the LG Economic Research Institute.
But a unified Korea would have a long road ahead boosting per-capita GNI to $30,000, since North Korea's was a mere $720 or 1/20 of the South’s last year. Even in the case of unified Germany, it was not until the mid-2000s for the index to reach that level again even though the gap was much smaller. The per-capita income of East Germany was around one-third of West Germany's before reunification.
"We could end up mired in problems without ever nearing the $30,000 per-capita GNI level if we fail to prepare for reunification," said Yoon Chang-hyun at the Korea Institute of Finance.
Korea needs to bolster its capital reserves for reunification, develop its industrial base and take other economic preparatory steps, as well as strengthening diplomatic efforts for such a scenario, pundits said.
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