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Korean Reunification Costs Rising, OECD Says

Posted June. 19, 2010 17:34,   


The Organization for Economic Cooperation and Development has warned that South Korea’s reunification costs could skyrocket given the sharply widening gap in economy and public health between the two Koreas.

According to the Strategy and Finance in Seoul Friday, the OECD said in its latest economic survey of South Korea that the gap between the two Koreas in economy and public health could ultimately jack up reunification costs. It said private sector trade and inter-governmental economic cooperation strategy can help reduce the gap.

The OECD report said North Korea’s population was 23.3 million in 2008, slightly less than half of that of the South. The communist country’s gross domestic product, however, was just 2.47 million U.S. dollars, or 2.7 percent of the South’s, and per-capita income was 1,060 dollars, or 5.6 percent.

North Korea’s international trade reached 3.8 billion dollars, or just 0.4 percent of that of the South. Other major industrial indexes, including those for electricity, steel, cement and fertilizer, ranged between two to 15 percent of the South’s.

The OECD also emphasized the serious gap between the two Koreas in public health. The North’s infant mortality rate increased from 14.1 per 1,000 in 1993 to 19.3 in 2008, and the life expectancy of a North Korean woman also fell three years to 69.3 over the same period.

Cho Myung-chul, director of the Center for International Development Cooperation at the Korea Institute for International Economic Policy in Seoul, said that if the South is to absorb the impact of sudden reunification with the North, the communist country’s economic and social indexes should be 50 to 60 percent of those of the South. He added that the gap keeps expanding.

“To reduce reunification costs, there is no clear way but to seek the North’s economic growth through economic cooperation and attraction of foreign investment through reform and openness,” Cho said.