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Unified Korea Flag for the #winterolympics2018 . #koreanunification #koreanunificationflag #olympicspirit #unifiedkorea #unifiedkoreaflag #southkorea #northkorea #olympics #olympics2018 #winterolympics (at Seoul, South Korea)

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Be the light #northkorea #korea #koreanunification #tongil

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Korean Unification: Bonanza or Risk

by In-Jee Lee

October 15, 2014

Panelists:

Chenggang Xu, Quoin Professor in Economic Development, University of Hong Kong

Stefan Schaible, Deputy CEO, Roland Berger Strategy Consultants, member of the GEC

Josef Brada, Professor of Economics Emeritus, Arizona State University

On the second day of the 15th annual World Knowledge Forum held in Seoul, South Korea, the potential for reunification of the Korean peninsula was discussed by a panel of experts from around the globe. The panelists, including Josef Brada, Professor of Economics Emeritus at Arizona State University, Stefan Schaible, Deputy CEO of Roland Berger Strategy Consultants and member of the Global Executive Committee, and Chenggang Xu, Quoin Professor in Economic Development from the University of Hong Kong, offered different perspectives on reunification.

Mr. Schaible spoke from personal experience as a German citizen.

“Twenty-five years ago brought end to a regime of oppression and deprivation. For Korea, it is longer,” he said, adding that the political circumstances aren’t comparable. “The North,” he said, “is more complex.”

It was generally accepted, however, that a smooth transition would require the South Korea to take the reins. Another critical aspect the panelists addressed is the method of transitioning North Korea into a free market economy.

According to Mr. Brada, East Germany, like Southern Italy and the Southern United States, fell into the same trap of one side prospering while the other lagged behind after unification.

“East Germany got an early bump. The east is still heavily dependent on government  expenditures. Unemployment rates are high. Germans were willing to pay for this. Are Koreans willing to pay for it?” he asked.

Mr. Schaible suggested that North and South Korea might avoid these pitfalls.

“You in Korea are in a much better position than we were at that time. You are drawing from previous collapses of socialist countries,” he said.

Professor Xu, however, focused primarily on the economic transition necessary for North Korea. Using the contributions of Hong Kong to the development of the Chinese economy, he also highlighted differences in the situations.

Mr. Xu argued that South Korea, like Hong Kong, is quickly becoming a major financial center. This, he suggested, could play an important role in North Korea’s economic development following unification.

“South Korea has a GDP 110 times higher than the North,” said Mr. Xu. Reunification would also require the active participation of legal and financial institutions, with private enterprises doing much more than the government.

Mr. Brada discussed other potential difficulties in unifying Korea.

“North Korea is different from these other unifications in the sense that its a pretty militarized place, and not only do they have a military that’s big, you have a party and government apparatus that has a lot of people, too. What are you going to do with those people? Send them on vacation? Send them to an island?”

Mr. Brada continued in a somewhat negative tone by questioning whether there are any historical success stories of reunification.

“I didn’t mean to cool down anyone’s zeal for unification,” he said. “I meant to go in with eyes open. Don’t think we can’t make it.”

Despite the overall theme of the discussion centering around managing expectations, preparedness, and a slow economic transition for the North’s economy to join the South Korean economy, Mr. Schaible reminded everyone that unification is about more than just integrating economies - it’s integrating people.

When I was young,” Mr. Schaible recalled, “I could not really imagine a unified Germany. When I was sitting next to my daughter, she said she couldn’t imagine that Germany was ever divided. What a wonderful change in just one generation. I am convinced that this experience is not too far away from you in Korea, and that my grandchildren will not remember a divided Korea.”